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NN Investment Partners

PRI reporting framework 2019

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You are in Direct - Listed Equity Incorporation » ESG incorporation in actively managed listed equities » Implementation processes » (A) Implementation: Screening

(A) Implementation: Screening

LEI 04. Types of screening applied

04.1. Indicate and describe the type of screening you apply to your internally managed active listed equities.

Type of screening

Screened by

Description

NN IP follows NN’s exclusion list, which includes the involvement in the following activities/products: controversial weapons, arms trade with entities that are subject to arms embargoes, tobacco production

Screened by

Description

NNIP uses input from Sustainalytics, MSCI, Refinitiv, Bloomberg, ISS and various other ESG data providers, as well as its own analysts, to determine how a company fares on ESG parameters within its sector. This leads to best-in-class companies receiving a high score on the analysts’ scorecards and a corresponding investment recommendation of the analysts towards portfolio managers. NNIP also offers Global and European Sustainable funds as well as an Impact fund, which follow strict positive screening criteria.

Screened by

Description

NN IP follows NN’s exclusion list, which includes the involvement in the following controversial conducts: companies that severely and systematically violate the UNGC principles and/or the OECD Guidelines. NNIP also uses Sustainalytics controversy categorisations as input for its own Controversy Council to determine whether a company’s conduct violates our norms. If so, we engage with the company and unsuccessful engagement can lead to divestment.

04.2. Describe how you notify clients and/or beneficiaries when changes are made to your screening criteria.

Changes to our list of criteria that we apply negative exclusions to (NN Restriction List) are announced via press releases. Furthermore, our Framework Policy is updated accordingly. Our fund prospectuses and contracts of mandates refer to this Framework Policy. Moreover, clients are also made aware of changes in the conversations with our relationship managers or other representatives of NNIP (i.e. portfolio managers, client portfolio managers). In addition, NNIP’s presentations are updated accordingly and used for clients. As we make changes on the subject after in-depth and well thought-through deliberations, we also seek media attention regarding the changes and use channels like our website to widely publicise them.


LEI 05. Processes to ensure screening is based on robust analysis

05.1. Indicate which processes your organisation uses to ensure screening is based on robust analysis.

          We partner with Yale University and the European Centre for Corporate Engagement (ECCE) at Maastricht University to find academically robust ESG input
        

05.2. Indicate the proportion of your actively managed listed equity portfolio that is subject to comprehensive ESG research as part your ESG screening strategy.

05.3. Indicate how frequently third party ESG ratings are updated for screening purposes.

05.4. Indicate how frequently you review internal research that builds your ESG screens.

05.5. Additional information. [Optional]

At NN IP, we consider it of great benefits to have access to a broad range of relevant ESG data providers. We source ESG information from several data providers, for example, Sustainalytics, MSCI, ISS, Refinitiv and Bloomberg, amongst others. These provide a solid starting position for our screening.

We analyse the available data and incorporate it into our investment analysis and decision-making process (including screening and engagement). This is performed by the investment teams themselves supported by an in-house Responsible Investment team, which acts as a knowledge centre  to all asset strategies across NN IP and consists of 4 professionals (as per December 2018). Potential restrictions applicable to our eligible investment universe are being regularly discussed and decided on in the ESG Committee which is chaired by our the CIO.

Furthermore, NN IP stays close to relevant academic research that helps us to better understand ESG risks and opportunities and thereby create better outcomes for our clients. To that end, we started a cooperation in 2014 with the European Center for Corporate Engagement (ECCE), part of the Maastricht University Business School, The Netherlands. As a focus of this partnership, ECCE conducts research on the materiality of ESG factors for investment returns in equity markets. We likewise have an academic cooperation with Yale University on the subject of ESG in equity investment portfolios.

In addition, NN IP is encouraging companies to publish integrated annual reports, combining financial and (non-financial) ESG information and metrics in a clear, consistent format that elaborates on opportunity and risk aspects of these data with regards to their strategy, operations and results.


LEI 06. Processes to ensure fund criteria are not breached

06.1. Indicate which processes your organisation uses to ensure fund criteria are not breached.

          KPMG for annual report of NN Group and due diligence of auditors/ employees of our (external) clients and prospects.
        

06.2. If breaches of fund screening criteria are identified - describe the process followed to correct those breaches.

In the unlikely event of a breach, the Restriction Monitoring System will report this and the breach will be investigated. Necessary actions will then be taken to rectify the breach and bring the portfolio back within the restrictions. The classification of the breach is such that it is either an active breach or a passive breach (also dependent on data updates and market movements). Resolution of breaches need to be in line with the relevant client guidelines and restrictions and this is actively monitored, and logged.

06.3. Additional information.[Optional]


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