La mise en pratique des SDG’s: au-delà de l’instrument

marketing? Dries Dury

Ophélie Mortier

GFSI June 2018

www.dpamfunds.com

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SUSTAINABLE DEVELOPMENT GOALS

Source: United Nations, April 2018

- Addressing the world’s pressing needs -

Need for additional efforts from non-market players

Limited scale & scope to address these challenges by private investments

Public investments can make a difference

But not all SDG’s are easily translatable under their current form into investment

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Not reinventing the wheel Challenging

existing methodologies for impact

Ensuring diversification

Being driven by conviction

A diverse set of sustainable impact businesses for competitive returns

Refraining from marketing cynism

Driven by belief and conviction

SDG’S INTEGRATION IN INVESTMENT PROCESS - Challenging but possible -

4 GFSI June 2018

NOT REINVENTING THE WHEEL

Source: DPAM, April 2018

- Our sustainability country model predates the 17 SDG’s! -

DPAM is pioneer in sustainable sovereign bonds – developed and emerging market

The proprietary model, created in 2007, predates the SDG’s (2007) but fully aligned with these

The Advisory Board, meeting twice a year, has reviewed the model from a global perspective Thematic approach Reinforcement of specific SDG’s (education,

equality)

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TRANSPARENCY & DEMOCRATIC

VALUES Liberties

Governance

Security

Rights

Equality

ENVIRONMENT EDUCATION INNOVATION

POPULATION, WEALTH

DISTRIBUTION HEALTH Climate

change

Biodiversity

Air & emissions

Energy efficiency

Participation

Investments

Quality

Equality

Innovation

Basic human needs

Demography

Health

Inequality

GLOBAL OVERVIEW OF A SUSTAINABLE COUNTRY - Country Sustainability Model -

ECONOMICS

Indebtedness

Competitive-ness

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SOVEREIGN BONDS – SUSTAINABILITY IS POSSIBLE AS WELL! Not too premature for emerging economies

Source: Barclays, DPAM, April 2018

Sustainability adds value

7 GFSI June 2018

SOVEREIGN BONDS – SUSTAINABILITY IS POSSIBLE AS WELL!

Source: Barclays, DPAM, April 2018

- Sustainability adds value - Sovereign bonds as financing instruments -

80

90

100

110

120

130

140 DPAM L Bonds Emerging Sustainablevs Sustainability Screening and reference universe

Sustainability Screening DPAM L Bonds Emerging Markets Sustainable - F Reference Universe

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ENSURING DIVERSIFICATION

Source: DPAM Equities World Sustainable, April 2018, DPAM

- Investing in the proven winners - A diverse set of sustainable impact businesses for competitive returns -

Investing in companies addressing world’s major environment & social problems with significant business opportunities – underserved & rapidly growing market

Analysing investment themes that make more sense from a global perspective

High convictions well positioned to benefit from faster growth

PROVEN WINNERS ANSWERING UNMET NEEDS

- Looking for secular growth - A diverse set of sustainable impact businesses for competitive returns -

Water efficiency Xylem

Recycling Tomra

Clean technologies Wartsila

Healthier eating Kerry

Non-profit organisations Blackbaud

Electrical Vehicles Infineon

Financial inclusion HDFC Bank

Energy efficiency Spirax-Sarco

Source: Degroof Petercam AM, April 2018

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ENSURING DIVERSIFICATION

ENSURING DIVERSIFICATION A diverse set of sustainable impact businesses for competitive returns

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Top down view Resulting in bottom carbon footprint

Stock picking with high ESG profiles

Carbon intensity*

* CO2/$ million sales

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(1) Carbon footprint DPAM Equities World Sustainable – 31/12/2017

Investing in the proven winners

11 GFSI June 2018

ENSURING DIVERSIFICATION

Source: DPAM, April 2018

- Investing in the future winners - Investing in tomorrow’s themes - -

Key driver of future asset growth: millenials’ generation

Social & environmental values in the heart of their consumption behaviour

DPAM has developed a proprietary sustainability model regarding tomorrow’s investment themes Relevant Specific Material

NEWGEMS SUSTAINABLE

GFSI June 2018

INVESTING IN FUTURE WINNERS Big Data IQVIA

Cyber Security Varonis

Telehealth Teladoc

Next-gen procurement Coupa Software

Cyber insurance Beazley

Generation Z Sea

Robotics Intuitive Surgical

Innovative healthcare Abiomed

Food Technology Kerry

E-society Paypal

Source: Degroof Petercam AM, 14.02.2018

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BEING DRIVEN BY CONVICTION & BELIEF

Source: DPAM Equities Food Trends Sustainable, DPAM, April 2018

- SDG’s: Meaningful in appropriate strategies - Away from marketing greenwashing -

The agricultural industry is poised to benefit from global population growth, increasing urbanisation, increased income in developing countries and structural demand from biofuels.

Global warming and other factors have led to an increase of the cost curve of growing crops. These trends signify the importance of integrating environmental, social and governance factors into the investment process.

Achieving the Sustainable Development Goals will not be possible without a strong and sustainable agricultural sector. We have therefore identified the main goals relevant for each sub-theme within the portfolio and will continue to monitor how our portfolio companies are playing a role in meeting the targets outlined in the Sustainable Development Goals.

FOOD TRENDS SUSTAINABLE

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PROPRIETARY ESG SCORECARD

Incorporating the relevant SDG’S in our investment process

The KPI’s have been designed both in conjunction with the fund manager and the responsible investment team to ensure they capture relevant factors. These ESG KPI's are used as basis for engagement with companies

When selecting companies Fundamental KPIs and Sustainable KPIs are integrated

Impact assessment is integral to a holistic, fundamental valuation of a company

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Food tech

Food safety regulation is on the rise

Innovation in this sector will require a greater focus on improved fermentation technology

Product labelling standards are also becoming more stringent

Responsible production means a greater focus on the environmental impact of the entire supply chain

These companies are contributing to achieving the Sustainable Development Goals and increasingly are explicitly referencing the SDGs in their corporate strategy

BEING DRIVEN BY CONVICTION & BELIEF - Away from marketing greenwashing -

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PROPIETARY ESG SCORECARD EXAMPLE

Source: DPAM Equities NewGems Sustainable, DPAM, May 2018

Varonis Trend Micro Splunk Sophos Current offering 5 3 5 3 Future offering 5 4 5 3 Competitive environment 5 3 5 4 Barriers to entry 4 3 5 3 Underlying drivers 5 3 5 4 M&A capacity 3 4 3 2 Valuation 3 5 3 4 30 25 31 23 Data privacy 3 4 3 3 Collection, retention and usage of data 2 3 3 2 Environmental considerations & energy efficiency 1 3 2 3 Human capital 3 4 3 2 PSD2 compliance enabler (EU regulation) 5 3 3 3 Innovation 4 3 5 2 18 20 19 15 Total 48 45 50 38

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SDG’S INVESTING INSTRUMENTS SDG’s are not a cynical assigning exercise to existing investment themes

Great tool to challenge models and investment decision making processes Analysts focus on longer term goals of companies; not restrictive view on financial

results only

Need for impact Pushing the boundaries of sustainable and responsible investments Demonstrate the societal impact of investments Need for standardised measurement & reporting metrics for some leeway to

select & benchmark relevant societal impacts Transparency and reporting Qualitative assessment is equally important to identify the clear corporate purpose and the true intentionality

DPAM is an independent active asset manager part of a family owned GROUP WITH ITS ORIGINS IN 1871

DPAM is a PIONEER IN SUSTAINABLE INVESTING since 2002. Active ownership and ESG across asset classes and themes

CLIENT-DRIVEN, creating long-term partnerships with our customers with an international network of 8 local offices across Europe

PERFORMANCE-DRIVEN, centralized asset management in Brussels and Paris

PROPRIETARY fundamental and quantitative research provided by in-house Credit, Equity and SRI analyst teams

GOOD TRACK RECORD since new management

SUSTAINABILITY APPROACH based on a combination of screenings, analysis and engagement. Externally recognized by an independent third party LUXFLAG ESG LABEL

EXPERIENCED MANAGEMENT TEAMS supported by in-house Buy Side Research Team.

DIFFERENT APPROACH structural bias to emerging markets and high quality companies

WHY DPAM SUSTAINABILITY EXPERTISE?

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SUSTAINABLE INVESTOR

ACTIVE ASSET MANAGER

RESEARCH DRIVEN

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