Listed Equity: When selecting managers the managers are evaluated on 5 main topics, Planet (responsible investment, RI) is one of the topics. Underlying factors are commitment to RI, being a UN PRI signatory or not, integration of ESG in the investment process, evidence of integration& reporting, voting & engagement and the integration of an exclusion policy. The IMA contains guidelines for RI like being obliged to fill in an annual questionnaire on RI. In the monitoring the same factors are looked at as during the selection process.
Fixed income: ESG considerations are explicitly incorporated in MN's manager selection& monitoring processes. The manager's are assessed on five factors; parent, people, process, performance and planet (ESG). Therefore responsible investment considerations are part and parcel of MN's continuous assessment of managers. In addition, the MN ESG team has an explicit say in the appointment of new managers where the team checks if the new manager meetsPME's ESG criteria. In European sovereign bonds we use positive screening whereby we rank the countries by looking at several governance indicators. Only the top 25% ranking countries are eligible for inclusion. We take into account Governance data from the World Bank Worldwide Governance Index.
We apply negative screening in Emerging Market Debt (MSCI country scores) and we use ESG issues in the analysis. We take into account ESG data that covers E, S and G. like United Nations Human Development Index, World Bank Worldwide Governance Index, Heritage Index of Economic Freedom, World Bank Ease of Doing Business Index, World Bank Dependency Ratio, MSCI environmental data to score countries.
For our PE and infrastructure investments we select managers that adhere to UNPRI principles or similar policies, provide an exclusion policy, provide annual reporting on ESG and show progress in adhering to or developing internal responsible investment policies for making investments, monitoring and reporting to investors.
Our Indirect property investment newly appointed managers need to sign our ESG declaration in which they state that they will underwrite the PRI and will participate in GRESB. In addition for our monitoring we send a tailored questionnaire annually. We monitor our manager to score them on five P's of which one is Planet.
When MN starts the search for an external manager on behalf of PME it takes ESG into consideration. Every manager that responds to a Request for Proposal has to include how it deals with responsible investing. Via a dedicated strategy specific questionnaire the manager has to show if there is RI-commitment on a board level, if it has a RI-policy and how ESG-criteria are implemented in the investment process. Also PME prefers managers who are PRI-signatories. If a manager does not meet these criteria and does not show that it will work on meeting the criteria the manager is not eligible for selection.
Managers that are selected should incorporate ESG-issues into their portfolio construction. Also in the quarterly report a manager has to report on ESG-related issues and the internal manager selection team uses this information to score each external manager. If there is room for improvement MN will engage the manager on behalf of PME.
For pooled vehicles, due to contractual restrictions, it is not always possible to implement RI-policy into the fund.
All investments are monitored via the 5 P's as mentioned above, of which planet is one. We send out an annual questionnaire on ESG related matters, including carbon, to all our managers, which is used to rank them on their ESG score (planet). We update our scoring quarterly when if changes occur which might affect the scoring.