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MN

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

02.4. Additional information. [Optional]


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

03.3. Additional information. [Optional]

We have agreed a formal process for selecting the companies to engage with.

  1. Regional: Our engagement with Dutch companies is carried out in collaboration with Dutch peers (via institutional investor platform EUMEDION, MN is a lead investor with respect to three of the company engagement trajectories, and contributor (opt-in) to eight others. The main reason for engaging with this category is that MN’s clients are Dutch pension funds. They expect MN to consider proximity as a factor in evaluating material ESG-risks as a matter of responsibility to the pension funds beneficiaries’ home market. Dutch companies’ corporate governance arrangements and general sustainable performance often get widely discussed in Dutch media and financial markets. Sometimes, they might even have a big impact on Dutch politics and regulation.
  2. Downside risk: Engagement with significant holdings that possess a Global Compact violator status (or are on the watchlist) have a substantial weight in our client portfolios and may be an imminent threat to the principles of long-term shareholder value creation. Companies that fail to respond to engagement or fail to show improvements may be nominated for divestment following a certain period of time.
  3. Thematic: Engagement with significant holdings that present material ESG-risks within a few key sustainability themes as prioritized by our clients allow MN to choose quality over quantity. We have defined focus areas in the Environmental, Social and Governance space. Those themes equally define our engagement efforts. By focusing our attention to a few limited sustainability themes the team’s experts have the opportunity to specialize. The key themes and engagement objectives identified by clients are the companies’ ability:
  • To fully participate in the low-carbon economy energy transition (E);
  • To protect human rights and labour rights in the global supply chain (S);
  • To reward company executives according to an adequate and balanced remuneration scheme in line with the interests of (minority) shareholders (G).

This focused approach allows our team to deepen our dialogues with target companies and create bigger impact in terms of changing company conduct. For a selection of companies in this category we work in collaboration with other institutional investors (for instance PRI engagement working groups).

4. Adhoc/incidents: All portfolio companies are monitored on a constant basis by our data service providers. Any changes in sustainability performance will affect ESG-scores and companies might be flagged up for engagement. These types of concerns are often also confirmed/supported by articles from media outlets and NGO reports. These kind of issus will require further internal analysis from the responsible investment team and analysts. In this matter evidence of effective remediation and better processes is key. Divestment might be considered if incidents continue to occur for a longer period of time.


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

04.2. Additional information. [Optional]

1. As discussed above, engagement objectives for companies are set by either qualifying as a Dutch holding; holdings falling within the ESG-risk themes as prioritized by our clients; or by presenting high material ESG-risks and/or are widely being recognized as Global Compact violators.

2. Based on research and specialist input, for each of these companies company best practices are being identified. Based on the established best practice gaps it is possible to develop engagement trajectories tailored to the needs of each individual company, set goals and define specific engagement topics. At the start of an engagement trajectory a starting point is defined by setting the lowest relevant milestone and ambitions are defined by setting the to-be achieved milestones, formulating the necessary in-between SMART-goals and choosing the required timeline. Milestones are general and similar for all types and themes of company engagement as they solely discuss the level of integration and mitigation of a certain ESG-risk:

1) no awareness;

2) awareness;

3) policy;

4) programme, practice; and

5) completion.

The in-between SMART-goals define the steps required to move a company up from one milestones to another and are tailored to the specific risks and awareness trajectory of a company. When progress on engagement is slow it can be decided to start working in collaboration with peers or other parties and intensify the engagement frequency. 

3. To stay up-to-date with changes in company conduct and practices, we monitor all company publications, receive third-party research from multiple providers, and actively engage with NGOs, academic and government representatives to receive sufficient variety in views.

4. Progress on company engagement is being reviewed on a quarterly basis. Every quarter is also is decided whether new companies with a sudden increase in material ESG-risks and/or Global Compact violator status should be added to the engagement list. Overall, on an ongoing basis it is decided which companies should be added or delisted from the engagement list:

  • Added to the engagement list: companies that according to our engagement selection rules qualify within the MN engagement scope.
  • Prolonged on the engagement list: companies that show sufficient commitment, are still within the set timeline, and are clearly in the middle of processes implementing change.
  • Delisted from the engagement list: companies that have shown sufficient progress in conduct and have achieved desired milestone(s) within the set timeline.
  • Delisted from the engagement list: after a minimum period of two years, companies that according to our engagement selection rules do not longer present material ESG-risks.
  • Escalation – divestment nomination: after a minimum period of two years, companies that fail to show any willingness to engage, that fail to produce any improvements in conduct may be nominated to be delisted. The final decision is made by the management team of MN asset management (comprising the MN CEO and CIO).

5. MN registers all engagement activities in an internal database (CRM) that allows to log all points of contact and tracks company engagement progress overtime. This database caters for organising company engagement logs by ESG-themes, milestones, smart-goals, date, etc and for filing all evidence on company engagement (including emails, meeting notes, company communication, notes, research, progress analysis, yearly summaries etc). Insights on companies from the database are often shared with investment teams on request. In addition, there exist various ways of cooperation with the investments teams. Either for reasons of knowledge sharing on material ESG-risk topics retrieved from engagement (such as energy transition, freedom of association, annual bonus) or in preparation of voting and AGMs.

6. The engagement coordinator is responsible for the complete engagement value-chain, from design of policies to final output. Think quality of work, actual progress on company improvements realized and the availability of high quality information management support systems. Other responsibilities regard developing policies in coordination with client expectations, control of full execution of policies and quality of company contact, managing the team of engagement specialists, prioritization of engagement companies, quality of contact with companies and client company progress reports. MN’s overall engagement policy is being reviewed on a two-yearly basis which allows for improvement of processes, updates on standards and benchmarks and integration of lesson learned.


LEA 05. Process for identifying and prioritising collaborative engagement

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

The strategies indicated above are possibilities, that is to say, it differs from decision to decision.


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

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

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

07.4. Additional information. [Optional]

We conduct quarterly meetings with investment managers to discuss prioritized themes and/or companies. We are exploring ways how to best systematically share engagement insights with investment managers. External ESG data feeds into internal investment platforms but we see a clear need for more background information to clarify the high-over/high-level ESG-scores. We expect investment managers to use our input as another source of research relevant for investment decision making. At this point we do not monitor how and whether the engagement insights are taken into consideration. 


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

08.2. Additional information. [OPTIONAL]

Tracking progress of engagements is logged in the same database as where we log milestones and goals for engagement. As discussed before, we track all company related activities and evaluations in this database. A summary of these transcripts is provided to clients on a quarterly basis. 


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