This information policy explains how Easyvest integrates sustainability into its investment policy and its portfolio management service.
The safeguarding of economic, environmental and social resources is a prerequisite for a sound economy and for generating attractive returns in the future. We are strongly supportive of the change underway in the investment sector: the shift from wealth creation to wealth and well-being creation.
Easyvest’s mission is to enable its clients to achieve their financial objectives through short, medium and long-term investment solutions. Sustainable development is essential to fulfilling this obligation. We are convinced that companies in which we invest and that pursue sustainable business practices enjoy a competitive advantage and perform better in the long run. We also believe that sustainability has the power to bring about positive economic, environmental and social change.
Easyvest’s approach to sustainable and responsible investment must be analysed in light of its activities and particularities.
In general, there are two main categories of socially responsible investment strategies: so-called “exclusion” strategies and so-called “activist” strategies.
An exclusion strategy consists of excluding certain business sectors based on environmental, social or governance criteria, i.e. the so-called “ESG” criteria. This type of strategy can take several forms:
An activist strategy consists of recognising that sustainability challenges will not be solved by excluding companies, but rather by supporting them in their transition towards more sustainable practices.
This activist strategy is also called an engagement strategy, and consists of influencing, as a shareholder, a company’s or a country’s medium- and long-term behaviour with respect to environmental, ethical, social and governance requirements. For example, by engaging in dialogue with management, exercising voting rights, or introducing resolutions at the General Meeting.
Currently, Easyvest believes that these socially responsible activist strategies are more relevant and will, in the long term, produce more positive results in terms of sustainability.
Easyvest advocates a proven investment methodology to grow your money. This methodology does not seek to select a limited number of specific stocks and does not attempt to outperform the market. It simply follows the market, ignoring the predictions of financial “gurus”, and focusing on the long-term growth of your money. This approach is simple, proven, and conservative. It may not be very “sexy”, but in the long run it is extremely effective.
This methodology is based on modern portfolio theory established by Nobel Prize in Economics laureate Harry Markowitz. It was developed by Matthieu Remy, co-founder of Easyvest, at Harvard Business School with the assistance of financial experts.
When it comes to stock market investment, we consider it extremely difficult to outperform the average market return in the long term. Rather than spending resources trying to find the “right” stock, we prefer to purchase diversified funds of equities and bonds that track the overall trend of stock markets.
Easyvest’s portfolio management is carried out exclusively through “ETF trackers”, i.e. investment funds that replicate the performance of a stock market index by investing in the basket of equities and/or bonds that constitute that index.
Hundreds, even thousands, of trackers are available on financial markets. To select which ones will be included in the portfolio, Easyvest applies several criteria :
Article 2 of Regulation (EU) 2019/2088 on sustainability-related disclosures in the financial services sector (hereinafter “SFDR”) defines a sustainability risk as “an environmental, social or governance event or condition that, if it occurs, could cause an actual or potential material negative impact on the value of the investment”.
First, as it recommends for mitigating investment risks in general, Easyvest believes that the best way to mitigate sustainability risks is to broadly diversify portfolios. This is precisely what Easyvest does by investing in diversified trackers.
In addition, Easyvest ensures that the fund managers of the trackers in which it invests actively commit to complying with international standards relating to environmental, social awareness and good governance requirements. For example, Easyvest verifies whether tracker fund managers are signatories to the United Nations Global Compact and the United Nations Principles for Responsible Investment.
Finally, Easyvest monitors commitment to sustainability. Concretely, Easyvest verifies that tracker fund managers actively engage with the companies in which they invest on sustainability issues and exercise their voting rights at general meetings. These fund managers report on such engagement annually and sometimes on an ad hoc basis. If necessary, we may question fund managers about their concrete commitment to sustainability.
These various controls are exercised (i) at the time of fund selection and (ii) as part of annual monitoring.
For example, as at 28 March 2022, the global equity fund in which Easyvest invests obtained an overall rating of 7/10 from Refinitiv, an independent ESG rating agency. In addition, the final manager of this fund, State Street, regularly reports on its socially responsible activism activities. For example, in May 2021, State Street voted to appoint to Exxon Mobil’s Board of Directors two directors whose mission is to ensure the company’s energy transition towards more sustainable energy.
In addition to its standard “global” portfolio, Easyvest offers a global portfolio with a climate action bias. This “climate” portfolio selects, through trackers, companies that are aligned with the Paris Climate Agreement and committed to limiting global warming to 2 degrees above pre-industrial levels.
For example, the climate portfolio excludes companies active in coal, gas or oil, as well as producers of tobacco or armaments, and companies highly controversial in terms of sustainability.
Details on similarities and differences between the “global” and “climate” portfolios, as well as explanations on when to choose one or the other, can be found on the next page of our blog.
When opening an account with Easyvest, and periodically thereafter, Easyvest asks its clients about their sustainability preferences. In particular, clients are invited to indicate whether they have preferences, and if so, which ones. These responses enable Easyvest managers to recommend an investment portfolio that adequately matches these preferences, as well as the client’s objectives and investor profile.
The SFDR also requires financial institutions to be transparent about whether or not they take into account the impacts of investment decisions on sustainability factors.
The notion of sustainability risk refers to any environmental, social or corporate governance event or condition which, if it occurs, could have a significant, actual or potential negative impact on the value of the investment.
Adverse impacts on sustainability are the consequences of investment decisions on sustainability issues, i.e. environmental, social and governance matters.
The SFDR allows financial institutions not to take into account the principal adverse impacts on sustainability under certain conditions, provided that such decision and its justification are published on their website.
For the purposes of the SFDR, Easyvest does not take into account the principal adverse impacts on sustainability.
Indeed, Easyvest considers that the data necessary for such an assessment are currently not always available in a standardised and consistent manner across all financial instruments, which prevents the systematic and efficient collection and analysis of the data required to reliably identify and assess the principal adverse impacts on sustainability, and therefore to comply with the reporting obligations set by the SFDR.
Easyvest monitors regulatory developments and market practices and regularly re-evaluates its position on the matter. In particular, Easyvest adheres to the principles set out below in relation to the concept of sustainability.
The management committee evaluates annually whether this policy should be updated, with the assistance, if necessary, of the Compliance Officer and/or the Risk Manager.
The Risk Manager is responsible for enforcing this policy within the company. The Compliance Officer is responsible for verifying that the policy complies with regulatory requirements.