1. Exclusion strategy
• Since 2007, Lyxor has implemented an exclusion list based on the defence sector, which is systematically applied to the assets in its ETF portfolios with an indirect replication method, as well as its Absolute Return, Risk-Based & Solutions funds, as well as “ex controversial weapons” Managed Account Platform, wherever legally possible and at its sole discretion1.
This “Defence exclusion list applies to companies that deal with the following weapons considered prohibited or controversial:
- Anti-personnel mines, cluster bombs or their key components
- Depleted uranium munitions, as well as biological, chemical, nuclear or radiological weapons.
For investment vehicles where it is not yet possible to apply this exclusion list, Lyxor will carefully monitor the percentage held for this type of asset.
• Lyxor is also able to provide its clients with a norm-based exclusion list, which is used in some of its sustainable investment solutions and excludes companies associated with serious and repeated breaches of the UN Global Compact principles.
• Moreover, Lyxor offers the possibility to implement tailor-made multi-criteria exclusions that are in line with our institutional clients’ SRI concerns, such as the exclusion of companies associated with a major ESG controversy or involved in particular activities or sectors.
Lastly, Lyxor refrains from creating funds that may participate in the inflation of agricultural commodities prices:
- Lyxor does not proactively market products primarily invested in agricultural commodities.
- For any new product which may be exposed to agricultural commodities, a Lyxor carries out a specific analysis in order to ensure that this new fund or investment product complies with the Agriculture, Fisheries and Food Sector Policy of the Société Générale Group2.
2. ESG Selection
This approach involves the selection or weighting of the best-performing companies as identified by the ESG analysis, within a defined investment universe. This approach also avoids non-financial risks that could compromise their long-term financial return.
Lyxor applies this ESG approach within some of its active and passive solutions.
Lyxor has also developed for a dedicated mandate for a French institutional investor to finance French mid-caps, which implements a pre- and post-investment ESG analysis. Lyxor thus integrates the growing theme of ESG responsibility in the financing of SMEs and mid-caps.
3. Sustainability Themed Investments
The diverse range of themes allows investors to choose an investment universe that contributes to sustainable development.
Lyxor offers investment opportunities that are compatible with four of the United Nations’ Sustainable Development Goals: clean water and sanitation, climate action, affordable and clean energy, and gender equality.
Over the next few years, we aim to offer a full range of innovative solutions focused on ESG best practices
A COMMITTED AND RESPONSIBLE SHAREHOLDER
Well aware of the environmental, social and governance challenges facing civil society, Lyxor has defined a shareholder engagement policy for the securities held by the funds (AIFs and UCITS) it manages.
This policy is built on two complementary pillars:
1. An engagement policy
In order to promote best ESG practices, Lyxor has defined an engagement policy that takes the form of:
- Proactive dialogue before general meetings
- Thematic engagement to environmental, social, or governance themes, with the aim of influencing companies to improve or adopt best practices in Corporate Social Responsibility.
2. A voting rights policy
By exercising its voting rights, Lyxor can contribute to improve the economic and financial performance of the companies in which it invests on behalf of its clients, with the aim of encouraging the adoption of best practices and mitigating the risk that the business defaults on payment.
We believe that good corporate governance reflects:
- The protection of the long-term interests and rights of shareholders, supporting the “one share, one vote” principle, where shareholders have voting rights in direct proportion to their economic interest in a company
- The independence and diversity of boards of directors to avoid conflicts of interests and to foster optimal effectiveness and efficiency
- The balance of the company’s financial structure allowing it to have the essential conditions to deploy its strategy while also preserving shareholders’ positions
- A fair and transparent remuneration policy for executives that is in line with the company’s performance
- The quality and integrity of financial information and related communication to shareholders
- The integration of environmental and social responsibility in the company’s operations for its own benefit, as well as that of its shareholders and other stakeholders
Lyxor’s shareholder engagement policy is reviewed on a yearly basis. Voting policies and reports are available at the following links:
- Voting Policy for Lyxor Asset Management
- 2018 Annual Voting Report for Lyxor Asset Management SAS
- 2018 Voting Details for Lyxor Asset Management SAS
- Voting Policy for Lyxor International Asset Management SAS
- 2018 Annual Voting Report for Lyxor International Asset Management SAS
- 2018 Voting Details for Lyxor International Asset Management SAS
ESG CRITERIA AT THE HEART OF OUR MODEL
We take ESG criteria into consideration because we believe that non-financial analysis enriches selection and contributes to robust management processes and long-term value creation.
Lyxor has also developed a proprietary methodology to achieve an ESG & Climate rating (including the carbon footprint) of its investment vehicles.
This tool covers all asset classes (equities and bonds, including companies, countries, government organisations), and identifies ESG risks and opportunities. It also includes indicators on the risks associated with climate change.
This means that investors can analyse their exposure to these risks and take advantage of ESG and Climate Reporting for their investment vehicles.
Lyxor reserves the right to modify this Responsible Investment Policy at any time in order to reflect the evolution of Responsible Investments standards and market practices. The Responsible Investment Policy is publicly available on Lyxor’s website. This document cannot be interpreted as a contractual commitment.
 The Defence policy is available on the Société Générale website www.societegenerale.com. The Environmental & Social General Guidelines and the sectoral policies can also be consulted by visiting http://www.societegenerale.com/en/measuring-our-performance/csr/responsible-finance
 The Agriculture, Fisheries and Food Sector Policy is available on the Société Générale website www.societegenerale.com.