“It is essential to guide investors towards truly sustainable products”
Redacción Mapfre
In the MAPFRE AM interview of the month, we spoke with Inès Segueni, portfolio manager and analyst at La Financière Responsable (LFR), a French asset management firm specialized in responsible investment. MAPFRE has been present in LFR’s capital since 2017 and in 2023, it became the majority shareholder. In the interview, Segueni points out how essential it is to guide investors towards truly sustainable products to avoid greenwashing. How long have you worked at LFR and what are your responsibilities? I’ve joined La Financière Responsable (LFR), a French SRI investment company, an affiliate of MAPFRE, in May 2021, i.e. 3.5 years ago. I’m a Portfolio Manager and Analyst, responsible for the “LFR Inclusion Responsable ISR” fund, a European equity fund holding both the French SRI label “Label ISR” and the SFDR Article 9 classification. What makes LFR special? Which value does it offer to investors? LFR is quite unique because of its integral investment approach and commitment to ESG. The companies we select for our portfolios are growth-oriented and high-quality, with strong competitive advantage in their markets. On top of that, they implement robust ESG policies. For our Inclusion fund, this specifically includes an additional focus on integrating people with disabilities. What also sets us apart is our proprietary ESG analysis. Instead of relying on external rating agencies, we gather data directly from companies through our annual surveys. This allows us to conduct more detailed and personalized analyses, both quantitatively and qualitatively. Our funds are focused, typically holding a concentrated selection of around 35 stocks : we may thus perform in-depth and detailed analysis of each investment, delivering genuine added value for our investors. LFR has developed a specific investment process: the Integral Value Approach® (IVA®). How does it work? Our Integral Value Approach is based on a three-step analysis, jointly performed: a “Strategy + ESG + Financial analysis” equation, specially “made in LFR” ! First, we conduct a macroeconomic review to identify key trends and market dynamics that are likely to drive long-term growth. This helps us pinpoint sectors and companies that are best positioned for future opportunities. Thanks to this, we perform an in-depth strategic analysis using Michael Porter’s model to evaluate a specific company’s resilience and growth drivers. This step is combined with an ESG assessment to understand how this company manages risks related to its activities and what measures it implements to address ESG challenges. These insights are closely tied to the company’s broader strategy and the specific challenges of its sector. To refine our analysis, we rely on our in-house ESG data collection, which allows us to benchmark the company’s ESG performance against competitors, its industry, and other strategies. Finally, we conduct a detailed financial analysis, focusing on valuation, profitability and the strength of the company’s balance sheet. In summary, LFR’s Integral Value Approach provides a comprehensive view of each company by integrating strategic, ESG and financial analyses to support our investment decisions. The firm has several ESG funds classified as Article 8 or 9 under SFDR. How are they performing this year in terms of profitability? I manage the “LFR Inclusion Responsable ISR” fund, classified as SFDR Article 9. It’s a fund featuring a strong social focus, aiming at encouraging listed companies to improve employment opportunities for people with disabilities within their workforce. We are proudly the only asset management firm in France proposing such an investment offer, via a fund completely dedicated to this inclusion theme. Our fund’s strategy directly contributes to the United Nations’ Sustainable Development Goals, specifically focusing on disability inclusion in employment (Target 8.5) and social integration (Target 10.2). The fund was launched 5 years ago (end June 2019), and, as of October 31, 2024* , has delivered a cumulative return of +35.3%, equivalent to an annualized performance of 5.83%. Being invested in large-cap European growth companies, the fund faced challenges in 2022 and 2024, due to various factors. In 2022, it was affected by rising interest rates, geopolitical instability stemming from the Russia-Ukraine war and increasing inflation. Whilst in 2024, its predominantly French exposure and substantial weighting in cyclical sectors like technology or discretionary consumer goods were impacted by China/US geopolitical tensions and weaker Chinese consumer spending. Despite these challenges, the fund remains the most defensive strategy in our range and demonstrates strong resilience during crises : it outperformed its benchmark in 2020, 2021, and 2023. *Past performances are no guarantee for future performances and are not constant over time. The capital is not guaranteed. Investors should read carefully the most recent prospectus and relevant Fund’s financial reports before any investment. How’s the coordination with MAPFRE AM? Back to 2018, the strategy has been initiated upon the vision of Alberto Matellàn, MAPFRE's Chief Economist at MAPFRE Inversión, at that time: we then created a twin fund in collaboration with MAPFRE, named “MAPFRE Inclusion Responsable". It is a replica of the French fund, following the same investment process and maintaining identical weightings. Manuel Rodriguez and Thomas Nugent are responsible for managing the fund in Spain. For the past five years, we have held jointly monthly committees to review the macroeconomic environment, portfolio movements and performance or to analyze ESG subjects and the "Inclusive Company of the Month" business cases. Looking ahead, we are keen to strengthen collaboration and exchanges between our French and Spanish teams, an excellent opportunity to share our ESG expertise within the group. Regulation has been one of the biggest concerns in ESG investing. Which is the role of regulation in ESG investment? What can we expect in the social side? Regulation has been a key concern in ESG investing, as it plays a crucial role in ensuring greater transparency, standardizing products and improving comparability, which ultimately helps investors better understand ESG offerings. It is essential to prevent greenwashing and to guide investors towards truly sustainable products. This is what the SFDR regulation has aimed to achieve, facilitating the comparison of sustainable investment strategies by standardizing information on ESG processes, reporting and data. All financial actors are required to report on the negative impacts linked to the double materiality of ESG and investment. The European Taxonomy primarily focuses on the environmental (E) aspect, establishing a common classification for sustainable activities to combat greenwashing and build trust. It requires alignment of investments with the taxonomy, along with an annual reporting on the degree of alignment. However, there has been limited progress on the social aspect of the taxonomy, which is still under development, and discussions on specific criteria are ongoing. At LFR, we do strongly believe that the social component is just as crucial for achieving truly sustainable investments. Clients’ interest has increased over the years, but there are still some differences between countries. How is it in France in comparison with others like Spain? Indeed, there are noticeable differences between countries, particularly between France and Spain. France has positioned itself as a leader in sustainable finance, which is why in 2024, a major overhaul of the French SRI label “Label ISR” was initiated. The goal of the ISR Label Committee and the Ministry of Finance is to create a more rigorous and transparent label, with greater selectivity in portfolios and an improved balance across the E/S/G pillars. This new label, effective from January 1, 2025, will become one of the most demanding in Europe. It will introduce formal exclusions on hydrocarbons activities, aligned with the Paris Agreement goals, will require the integration of PAI (Principal Adverse Impact) indicators from issuers to align with SFDR regulations, and will implement more robust voting and controversy management policies. We view these requirements as a very positive development for our investment management approach. This is why we have already decided to adopt and align ourselves with this more demanding version of the label, which perfectly matches our investment philosophy and IVA® process, while resolutely supporting it across all our portfolio investments. Hobbies: Formula 1 (I’m still convinced that Lewis Hamilton should have been an 8 times champion after the 2021 Abu Dhabi Grand Prix), Tennis (as a huge Nadal supporter, I’m sad that he just retired ☹) A favourite dish:: Beef Bourguignon … with a glass of Sancerre A city/country: Ischia, this tiny dream island in front of Napoli, in the summer … or Paris in the springtime, and its so romantic “quais de Seine”. Favourite musical group/singer: MUSE and its memorable 2010 concert at Stade de France / Paris with Matthew Bellamy’s voice … and of course Queen forever (Bohemian Rhapsody)!
