Promotion of environmental or social characteristics as part of discretionary management (Article 8)
The majority of funds selected under the directives promoting environmental and social criteria must meet extremely strict standards. Our external provider’s selection team takes this into account by integrating environmental, social and governance (ESG) considerations into the selection process for these financial products, thus guiding investments into investment funds that promote environmental or social characteristics or themselves have sustainable investment objectives.
Choosen approach to respecting the environmental or social characteristics as part of discretionary management (Article 8)
The ESG criteria are an integral part of the selection process for investment funds. The financial products selected are the result of close collaboration between investment specialists and sustainability experts at our external provider. Through this procedure, neither financial performance nor sustainability performance are compromised.
How is adherence to these characteristics guaranteed?
When is selecting investment funds, particular attention is paid to the traceability and transparency of the sustainability processes, for instance by documenting processes and drawing up ESG reports by the funds. The concept of integrating sustainability risks, including controversial issues, must be a key component of the strategies of the investment funds selected.
To be selected as a product, the investment funds must exclude from their investments:
- companies involved in the controversial arms trade;
- companies that generate more than a specific percentage of their revenues from either arms and tobacco, or nuclear or coal-based energy (unless these companies can demonstrate that they have an exit strategy towards more sustainable energy sources).
Companies involved in gambling and the alcohol trade shall be scrutinised very closely.
In addition to these exclusion criteria, our external provider’s team supports and appreciates proactive attempts by the fund managers to engage in dialogue with the companies involved in critical sectors. An additional requirement for the funds selected is that they invest in companies that comply with the UN Global Compact Principles.
Our external provider’s selection team obtains information on ESG metrics from fund managers and third-party data suppliers. This information is compiled at the level of the directive to verify that the funds selected adhere to the ESG pillars (e.g. having E, S and G ratings or contributing to sustainable development causes).
Furthermore, our external provider’s team works alongside the fund managers in order to accept, implement and improve ESG themes and processes.
Sustainable investments as part of discretionary management (Article 9)
In accordance with the sustainable directive, our external provider’s selection team chooses investment funds with a strong ESG focus, thus prioritising investments in funds that have sustainable investment as an objective.
The distinguishing feature of these investment funds is their pursuit of unambiguous, sustainable objectives. Typical examples are:
- green and social bonds forming part of the fixed income; and
- initiatives relating to thematic funds that invest in companies proposing solutions to environmental and social problems.
The sustainable directive primarily draws from funds that have a sustainable investment objective.
Although such an objective may not be specifically targeted, it forms part of the sustainable directive due to its strong alignment with the United Nations’ Sustainable Development Goals (SDGs) and a carbon intensity well below the index.