Terms and conditions for taking environmental, social and governance (ESG) criteria into account in investment policy

March 2020

A) ESG INVESTOR INFORMATION

  1. Information on the management company

Smart Lenders Asset Management SAS (hereinafter «SLAM”) is an independent portfolio management company authorised by the Autorité des Marchés Financiers under the number GP-17000031.

SLAM is specialised in the US and European consumer credit markets and in lending to small and medium-sized enterprises through online financing platforms (Marketplace Lending). Only professional investors are eligible.

SLAM invests mainly on the following instruments:

  • single issuer of loans/ debt obligations
  • single issuer of bonds or similar instruments
  1. Regulatory Context

Following the Decree No. 2015-1850 of 31 December 2015 on the Article 173 application of the Energy Transition Act of 17 August 2015, portfolio management companies are required to publish information on whether or not ESG criteria are taken into account in their investment policy. In accordance with the regulations, SLAM makes information available to the public concerning the terms and conditions for taking ESG criteria into account in its investment process. This information is available on its website www.smartlenders-am.com

  1. Definition

ESG criteria allow the quality of corporate social responsibility to be taken into account. Companies implement ESG-related procedures to contribute to sustainable development. These procedures can potentially improve a company’s financial performance and also improve its overall reputation.

The ESG criteria consist of three components:

  • Environment: climate impact, waste management, greenhouse gas emissions management, etc.
  • Social: working conditions of employees, well-being at work, gender parity, relationship with suppliers and customers, etc.
  • Governance: conflict of interest management, executive compensation, board independence, anti-corruption, etc.
  1. Investment approach and consideration of ESG criteria

As part of the company’s investment process, borrowers are selected directly or indirectly through online funding platforms supported by an algorithmic model (logistic regression). On the one hand, debt instruments do not influence the borrowers’ management, nor do they provide commitments or even information on ESG criteria. On the other hand, given the granularity of these financing operations (high number of borrowers) and the nature of the debtors (legal persons, TPE), it is practically impossible for SLAM to take ESG criteria into account in the loan selection process.

However, SLAM is sensitive to non-financial considerations, particularly in relation to social and environmental impacts. For example, SLAM finances only the best individual borrowers, who are likely to repay their loan without placing them in situations of unsustainable indebtedness (for example, borrowers qualified as prime and super-prime in the USA). In addition, funding platforms for small and medium-sized enterprises are committed to ESG criteria by refraining from selecting certain sectors of activity such as, for example, the production and/or marketing of weapons.

B) ESG INVESTMENT INFORMATION

SLAM only manages foreign OPCs, whose net assets are below the €500 million threshold, the management company only makes a declaration “ESG Investor Information”. The elements of this declaration are presented in this document.