Investing for future generations

Norm-based exclusions

We exclude companies that manufacture or distribute anti-personnel mines from all of our funds according to the Ottawa Treaty (entered into force in 1999).
We exclude companies that manufacture or distribute cluster munitions from all of our funds in accordance with the Convention on Cluster Munitions (entered into force in 2010).
We exclude companies that do not comply with fundamental ethical standards (UN Global Compact), such as violation of individual rights, non-respect of human rights, major environmental damage, etc.
We exclude companies domiciled in controversial “Call to Action” jurisdictions (e.g. Iran and North Korea) identified by the Financial Action Task Force.

Sectors and activity-related exclusions

We have decided to exclude certain sectors and practices from our entirerange of funds, and not to invest in companies facing one of the following cases:

Weapons sector

• The company is active in the production, sales and distribution of non-conventional or controversial weapons. It involves cluster bombs, anti-personnel mines, biological, chemical or depleted uranium weapons, as well as white phosphorus and nuclear weapons;

Energy sector

• The revenue from coal mining activities (thermal coal, metallurgical coal, coke) exceeds 10% of total turnover or its production exceeds 20 million tons per year;
• If the sum of activities related to unconventional oil and gas, such as oil sands extraction, shale oil, shale gas and Artic drilling represents more than 5% of revenues;

Power generation sector

• The coal-fired electricity generation represents more than 10% of turnover, or the generation capacity exceeds 10,000 MW;
• Production, sale or distribution of nuclear-based power generation exceeds 5% of turnover. This includes uranium extraction, uranium concentration, refining, conversion and enrichment, the production of nuclear fuel structures, construction and use of nuclear reactors. It also includes treatment of spent nuclear fuel, nuclear decommissioning and radioactive waste management;

Tobacco sector

• The production of traditional tobacco or related tobacco (such as e-cigarettes, new generation tobacco/nicotine products) exceeds 5% of sales;
• Tobacco sale or distribution represents more than 5% of total turnover;

Biodiversity

• The production of pesticides, palm oil or genetically modified organisms (GMOs) represents more than 5% of turnover;

Other sectors

– Income from activities related to:

• Gambling exceeds 5% of sales;
• Alcohol represents more than 20% of the turnover;
• Non-medicinal drugs exceeds 5% of the turnover;
• Adult entertainment (pornography) represents more than 5% of turnover.

ESG controversies monitoring and risk control

We have supplemented our existing daily-risk policy with a component related to ESG reputational risks. Indeed, business conduct risks related to human rights, labour, the environment and corruption can result in risks to a company’s reputation and finances, and therefore in a risk for the final investor.
Thus, we exclude companies with a high level of ESG controversy (levels defined in our ESG Risk Control procedure, available on demand). We use the external RepRisk database for this purpose.

Chahine Capital has set up an SRI voting policy with ISS as a partner. 

We therefore vote at all shareholders’ meetings of the companies held in the Digital Funds and apply by default the SRI voting recommendations provided by ISS research. The detailed SRI voting policy is available here.

As a quantitative investment managers, access to data is crucial for Chahine Capital, in particular for our all-cap and smallcap funds. With that in mind, we are seeking to improve the availability of ESG data, especially for small and midcapitalisation companies. For stocks not covered by ESG data providers (Sustainalytics, RepRisk, etc.), Chahine Capital seeks to approach these data providers and also companies concerned to encourage them to disclose the necessary information.

The detailed engagement policy is available here.

A sustainable commitment Chahine Capital is a UN PRI signatory since 2019. Chahine Capital is committed to all of its principles.

An ESG activity report is produced every quarter and contains:

• The list of excluded companies and the detailed reasons for their exclusion;
• The average ESG indicators of each fund and each benchmark, for comparison

A report on the exercise of voting rights is produced every quarter as well.
This report is also available below.

This responsible investment policy is specific to our five funds: Digital Stars Europe, Digital Stars Continental Europe, Digital Stars Europe Smaller Companies, Digital Stars US Equities and Digital Stars Eurozone. A specific policy is applicable to our Digital Stars Eurozone fund. All these policies are available below.

Chahine Capital considers the adverse impacts of its investment decisions on ESG factors for its SFDR Article 8 Sub-Funds through the use of RepRisk (https://www.reprisk.com/) indicators. RepRisk’s core research scope is comprised of 28 ESG issues that are broad, comprehensive, and mutually exclusive. These 28 issues drive the entire research process, and every risk incident in RepRisk’s ESG Risk Platform is linked to at least one of these Issues. RepRisk’s covers issues like climate change, GHG emissions, global pollution, impacts on landscapes, ecosystems and biodiversity, local pollution, waste issues.