MIFID Engagements

The Markets in Financial Instruments Directive (MiFID) entered into effect on Nov. 1, 2007. It is a legislative and regulatory framework designed to:

• harmonize the regulations which apply to providers of investment services;
• promote competition in order to ensure the best possible results when clients’ orders are executed; and
• strengthen investor protections.

Policy for Selecting Providers of Investment Decision Support and Order Execution Services

Since 1 January 2018, the funding of research has been governed by the Markets in Financial Instruments Directive (MiFID II) and the Delegated Directive of 7 April 2016 to protect investors and reduce the risk of conflicts of interest. Mirova has established and implemented a policy for the selection and assessment of providers of investment decision support and order execution services, as defined by Articles 321-119 and 319-14 of the AMF's General Regulation, by taking into account the following criteria:

• The quality of the research,
• The relevance of analysts’ recommendations,
• The cost of the service,
• The quality of the relationship.

Investment decision support services are defined as all the economic research and financial analysis products and services¹ provided by market intermediaries. More specifically, they include:

• Basic research and recommendations on securities,
• Macroeconomic and strategic research,
• Quantitative research and asset allocation,
• ESG research.

To diversify its sources of information, Mirova has the possibility to rely on third parties – not necessarily involved in the provision of investment services – mainly to obtain investment decision support services other than research services. These decision support services, the cost of which may be borne by the portfolios (UCIs), must not be included in the list of "unauthorized services² " defined by the AMF.

1 - Please, refer to the description provided by the AMF guide on the methods of financing research by investment service providers within the framework of the MIFID II Directive
2 - Please, refer to the AMF instruction No. 2007-02 relating to Articles 321-119 and 319-14 of the AMF General Regulations

Policy for Selecting Intermediaries/Counterparties and Executing Orders

In the framework of the management of discretionary mandates, Mirova must perform its functions independently and in the exclusive interest of its clients.
Pursuant to the Directive on Markets in Financial Instruments (MiFID II), Mirova has set the following principles as a guideline:

• Respect for the integrity, transparency and security of markets,
• Compliance with the applicable regulations and the general rules of good conduct laid down by the industry,
• Respect for best interests of clients.

This policy applies when the management company directly manages the portfolios, except for portfolios where the management company delegates management to a third party.
This policy is reviewed annually and is subject to change without notice at any time.
The present policy applies to professional and non-professional clients of Mirova within the meaning of MiFID II.

In accordance with the Markets in Financial Instruments Directive (MiFID II), Mirova has set up an overall organization with the purpose of delivering the best possible result to its clients when transmitting and executing orders.
Mirova opts for professional client status as far as intermediaries/counterparties are concerned.

Policy for identifying and preventing conflicts of interest

In accordance with article 321-46 of the AMF’s General Regulation, Mirova has taken reasonable measures to detect any conflicts of interest that might arise in the course of normal business operations:

• between Mirova and any concerned parties, or any parties directly or indirectly connected to the asset management company by control, Mirova’s clients, and the UCITS Mirova manages;
• between two clients or two UCITS;
• or between an UCITS and a client.

Mirova has mapped potential conflicts of interest and identified particular situations that give rise to, or are likely to give rise to, conflicts of interest, and which involve a significant risk of damage to the interests of one or more clients through the provision of an investment service or related service or through the management of UCITS or AIFs.

At Mirova, identifying, preventing, and managing risks of conflicts of interest follows the process described in the document below.

Information on compensation, commissions, and benefits

The AMF’s (Autorité des Marchés Financiers) general regulations govern the compensation, commissions, and non-monetary benefits (the “benefits”) that Mirova, as an investment service provider, may pay and collect in connection with the investment services it provides.

A “benefit” is a type of compensation that a client can accept indirectly for services provided by an investment service provider.

Mirova informs its clients and prospective clients that it is likely to:

• receive “benefits” from third-party management companies for making their UCITSs available to clients;
• receive “benefits” from shared commission contracts related to investment decisions and the execution of orders (see report on intermediation costs);
• offer “benefits” to third-party management companies
  • for making Mirova’s UCITSs available to their clients.
  • to pay business providers and advisors “benefits” in return for referring clients or giving advice.

These “benefits” may be either a fixed sum or a percentage of Mirova or the third party’s earnings. Further details will be provided to clients and prospective clients upon request.