As from 2002, the Constitutional Reserve Fund of the Principality decided to include “green financing” funds in its investment portfolio. This policy was confirmed on the occasion of a major international call for proposals launched in 2009, the first of its kind for the management of State reserves. In the process of a strategic reallocation of the portfolio to diversify asset classes, a significant part of the allocation is now devoted to an “Environment Sustainable Development Shares” pocket.
As early as 2002 H.S.H. Prince Albert II wished to encourage the launching in Monaco of a fund devoted to sustainable development, and so the State, through the investment policy of the Reserve Fund, made a commitment to support “green financing” by participating in the launch of a specialized fund open to the public, entitled “Monaco Environnement Développement Durable”.
This fund of funds looks for the best products in the fields of protection of the planet and renewable energy sources. It therefore invests mainly in general “sustainable development” funds that focus on companies taking into account the three dimensions (economy, environment, society) with a long-term perspective, and complements this with investments in specialized funds, sectors or themes: ecology, natural resources, and renewable energy.
In that same year the Reserve Fund also began to set up its own dedicated fund, “Monaco Ethique”.
Selection of securities
The fund is based on a genuine policy of social responsibility, and its selection principle is based on the choice of securities that correspond to traditional financial ratios while also fulfilling nonfinancial criteria such as respect for the environment, social policies and corporate governance.
This policy was renewed in 2006 with the participation of the Reserve Fund in the “Monaco Eco +” fund, whose aim is to invest in listed companies working in the environmental sector. Targeted activities concern in particular services and technologies such as water treatment and distribution, waste processing and reduction, and activities linked with energy production from renewable sources or aiming at optimization of the use of resources, and in particular energy.
Creation of the dedicated environmental equities fund: “Monaco Terra Munda”
In 2009 a major international call for proposals was launched in the context of the modernization of the strategic allocation of the Reserve Fund. The procedure was carried out with the aid of a consultant specializing in such international tenders. This gave a fresh boost to the “Environment and Sustainable Development” theme in the allocation of the Reserve Fund’s portfolio. The aim was to select an international manager who, right from the start, had focused on environmental issues, and set up a dedicated equity fund.
320 management companies were consulted in this way, 10 were short-listed following a quantitative and qualitative analysis, and 4 took part in a final “viva voice” exam organized by the State Fund’s Investment Committee.
A strategy for investment
The fund created following this call for proposals, “Monaco Terra Munda”, uses a “Pure Plays” investment strategy, i.e. investment in companies which devote the major part of their activity to the following sectors: renewable energies, energy savings, water treatment and distribution infrastructure, pollution control, waste management, and environmental services.
These orientations all comply with the repeatedly-affirmed commitment of H.S.H. Prince Albert II in favour of environmental protection and sustainable development: issues which, in his own words, represent “a global challenge common to us all which requires urgent concrete action to respond to the three great environmental issues: climate change, biodiversity and water.”
