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NN Investment Partners

PRI reporting framework 2019

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Engagement

LEA 02. Reasoning for interaction on ESG issues

Indicate the method of engagement, giving reasons for the interaction.

Type of engagement

Reason for interaction

Individual / Internal staff engagements
Collaborative engagements
Service provider engagements

02.2. Indicate whether your organisation plays a role in the engagement process that your service provider conducts.

02.3. Indicate the role(s) you play in engagements that your service provider conducts on your behalf.

02.4. Additional information. [Optional]

From June 2015 to June 2018, NNIP participated in a three-year investor initiative on carbon risk engagement. Twenty public power utility companies were invited to enter a dialogue with a group of investors, including NN IP. The objective of this engagement, which started prior to the Paris Agreement, was to move companies forward in terms of their carbon risk levels, reporting of greenhouse gas emissions, inventories, targets, their action plans for reducing emissions and finally their climate risk assessments and mitigation strategies. We also use GES, an active ownership service provider recently acquired by Sustainalytics, to carry out active ownership and engagement on our behalf. We have a long-standing partnership with GES.


LEA 03. Process for identifying and prioritising engagement activities

New selection options have been added to this indicator. Please review your prefilled responses carefully.

03.1. Indicate whether your organisation has a formal process for identifying and prioritising engagements.

Indicate the criteria used to identify and prioritise engagements for each type of engagement.
Type of engagement
Criteria used to identify/prioritise engagements
Individual / Internal engagements

Internal / Individual engagements

Collaborative engagements

Collaborative engagements

Service Provider engagements

Service Provider engagements

03.3. Additional information. [Optional]

Our investment universe is screened on a quarterly basis with a view to identify companies that are violating (or at risk of violating) NN's norms-based RI criteria.

The set of companies for which potential violations are structurally monitored is based on the investment universe of NN Group/NN IP. This screening will be applied to the extent that data is available, on the basis of input provided by external data/research providers. A specialised external engagement provider may provide additional advice.

In case there are strong indications that an issuer may be in violation of any of NN's norms-based RI criteria, a decision needs to be taken with regard to whether NN considers this a violation. Examples of such indications can be research from NN's external ESG research or engagement provider(s), inputs from NN's own (investment) staff or information from NGOs or media sources.

Violations can currently occur in relation to the following areas:

·         Governance

·         Human Rights

·         Labour Rights

·         Environment

·         Bribery and Corruption

The responsibility to assess whether or not issuers are in violation of NN's norms-based RI criteria to the ESG Committee of NN IP. The ESG Committee is advised by the Controversy and Engagement Council. This council consists of representatives from NN IP as well as NN Group staff (from Investment Office and Corporate Citizenship), which will ensure relevant perspectives are included in the decision making and communicated back to the respective stakeholders.

The four key decisions to be taken by the ESG Committee in relation to the application of NN's norms-based RI criteria are:

1. Whether or not an issuer is considered in violation of NN's norms-based RI criteria;

2. Whether or not engagement to address the violation is considered feasible;

3. Whether or not to formally include the issuer in NN's engagement program; and

4. If the issuer is in violation and not included in NN's engagement program, whether to recommend the NN Group Management Board to put the issuer only on the Internal Restricted List or also on the (publicly available) Exclusion List.

If the ESG Committee determines an company is in violation of NN's norms-based RI criteria, and considers engagement to address the violation feasible, the company can be formally included in NN's engagement program.

 

Each engagement has to be supported by an engagement plan that outlines the objectives, milestones, timeframes, and engagement activities to be carried out. The executors of the engagement will maintain an archive of these reports.

The potential executors (or coordinators) of the engagements, depending on the context, type of engagement, and available capacity, are:

·         Analysts NN IP

·         Portfolio Managers NN IP

·         RI team representatives NN IP

·         Through collaborative engagements other institutional investors can engage on behalf of NN

·         External Engagement provider(s)

 


LEA 04. Objectives for engagement activities

New selection options have been added to this indicator. Please review your prefilled responses carefully.
Indicate whether you define specific objectives for your organisation’s engagement activities.
Individual / Internal engagements
Collaborative engagements
Service provider engagements

04.2. Additional information. [Optional]


LEA 05. Process for identifying and prioritising collaborative engagement

Indicate if you monitor and/or review engagement outcomes.
Individual / Internal engagements
Collaborative engagements
Service provider engagements
Indicate if you do any of the following to monitor and review the progress of engagement activities.
Individual / Internal staff engagements
Collaborative engagements
Service provider engagements

05.3. Additional information [Optional]


LEA 06. Role in engagement process

06.1. Indicate whether your organisation has an escalation strategy when engagements are unsuccessful.

06.2. Indicate the escalation strategies used at your organisation following unsuccessful engagements.

06.3. Additional information. [Optional]

NNIP engages with investee companies on ESG topics in order to understand the risks and opportunities of each specific investment case and to use our influence as an investor to encourage companies to improve their ESG practices, thereby ensuring sustainable long-term value that also benefits society as whole. We believe that engagement can be fruitful in fostering positive change and therefore apply an inclusion approach to first engage with companies to address issues before excluding outright and therefore losing a great amount of potential influence on the company. Only when engagement is not considered feasible (such as in most cases of involvement in Controversial Weapons) the company will be directly put on the Restricted List. If engagement to address the violation is considered feasible, a formal engagement process need to be started in order for the company to remain eligible for investment. If after a three year period the engagement does not lead to the desired changes, NNIP will consider the company ineligible for investment and will decide to remove the company from its investment universe.


LEA 07. Share insights from engagements with internal/external managers

07.1. Indicate whether insights gained from your organisation's engagements are shared with investment decision-makers.

Type of engagement

Insights shared

Individual / Internal staff engagements

Collaborative engagements

Service provider engagements

07.2. Indicate the practices used to ensure information and insights collected through engagements are shared with investment decision-makers.

          investment decision makers (i.e. portfolio mgmt.. & analysts) conduct engagement themselves
        

07.3. Indicate whether insights gained from your organisation’s engagements are shared with your clients/beneficiaries.

Type of engagement

Insights shared

Individual/Internal staff engagements

Collaborative engagements

Service provider engagements

07.4. Additional information. [Optional]

We share engagement information with our clients via quarterly reports and the annual reports. In case a client has a specific request we will provide them with all the information regarding the engagement case, including the status and milestones.


LEA 08. Tracking number of engagements

08.1. Indicate if you track the number of your engagement activities.

Type of engagement
Tracking engagements

Individual / Internal staff engagements

Collaborative engagements

Service provider engagements

08.2. Additional information. [OPTIONAL]


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