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ACTIAM

PRI reporting framework 2019

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Investment policy

SG 01. RI policy and coverage

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

01.1. Indicate if you have an investment policy that covers your responsible investment approach.

01.2. Indicate the components/types and coverage of your policy.

Select all that apply

Policy components/types

Coverage by AUM

          Green, social & sustainability bonds policy
        
          Energy transition policy
        

01.3. Indicate if the investment policy covers any of the following

01.4. Describe your organisation’s investment principles and overall investment strategy, interpretation of fiduciary (or equivalent) duties,and how they consider ESG factors and real economy impact.

It is the mission of ACTIAM to offer relevant investment solutions where we maximize financial, social and environmental returns. We see it as our duty to play a leading role in the transition that is necessary to achieve a sustainable society. The starting point of our investments is ethical: we do not want to invest in companies that violate our Fundamental Investment Principles. These principles are based on international treaties and best practices. Companies in violation are excluded from investment.

In addition to these ethical principles, ACTIAM has defined three focus themes: climate, water and land. Each theme has a long-term and 'science-based' target for all investments. With these objectives ACTIAM wants to invest within the planetary boundaries and in line with the SDGs. 

Furthermore, we conduct sustainability research per company in which we analyse ethical components, the top-down policy based on climate, water and land and bottom up /or company-specific relevant sustainability topics. This research is reflected in our so-called ACTIAM ESG score. This results in the higher the score, the more sustainable (also from a financial-material perspective) the company and the greater the chance that it will be included in the portfolio.

01.5. Provide a brief description of the key elements, any variations or exceptions to your investment policy that covers your responsible investment approach. [Optional]

The starting point of investing at ACTIAM is ethical and written down in our Fundamental Investment Principles (FIP). We do not want to invest - from an ethical perspective - in companies that violate our FIP. The principles are based on international treaties and best practices and cover the following subjects: Human rights, Labour rights, Corruption, the environment, Weapons, customer and product integrity, and Animal welfare. Next to our FIP, we have several sector specific, issue specific and asset class specific policy documents, see https://www.actiam.com/en/responsible-investments/  In addition these policies, ACTIAM has a focus on climate, water and land with long-term and 'science-based' objectives for all its investments. These are: 1. Climate: 40% less Co2 emissions in 2040 (compared to 2010), in line with the climate agreement of Paris; 2. Water: water-neutral investment portfolios in 2030 3. Land: no deforestation and no loss of biodiversity in 2030.  With these objectives, ACTIAM aims to ultimately invest within the planetary boundaries and in line with the Sustainable Developments Goals (SDGs). 

To achieve these objectives, we use different instruments. The first is to exclude. We are aware that excluding a company has no impact on the real world and the real economy. Investing only in the companies that do good ultimately does not lead to a sustainable society, and as described in our vision: a transition is needed. The majority of companies will also have to be encouraged to change their behaviour. We do this via engagements. We will enter into a dialogue with companies and aim for a change in behaviour. We make a distinction between responsive and proactive engagement. The first result as a response to (potential) controversies or violations of our Fundamental Investment Principles. When responsive engagements are not successful within a reasonable timeframe, the next step is to exclude the company. For some of our strategies, responsive engaged companies are not investable. The third option is to vote at shareholders' meetings. In addition to casting our vote, we also actively file for items on the agenda. The fourth option is to invest extra in companies with a positive impact. For example, we invest in companies that demonstrably contribute to the SDGs. And in our Credits fund (corporate bonds), where we strive to invest as much as possible in Green Bonds. Finally, we look at financial and material sustainability issues per company and per sector. Here, we look at ethical components, top-down policy based on climate, water and land and bottom up or company-specific relevant sustainability topics. This research is reflected in the ACTIAM ESG score. This score looks at the company specifically, the climate, water and land focus themes and the positive contribution to the SDGs. On the basis of these three steps, a score is given per company between 0 and 100. The higher the score, the more sustainable (also from a financial-material perspective) the company. For some of our strategies, we have a minimum ESG score. For all investment; the average ESG score should be at least as high as the relevant benchmark. 

The responsible investment policy is drafted by the in-house ESG team (9 FTE and 2 interns on average). All policies and exclusion decisions need to pass by the ACTIAM ESG Committee, which consists of the CEO (performing the role of Chair), CIO, Head of Fund Management and Head of ESG Research and an external expert who is also a Professor of Ethics. This committee meets at least once every quarter. The policies are reviewed and updated on a regular basis. 

Several instruments used in our investment universe, such as Green Bonds and the ACTIAM ESG Score, asked for collaboration between Portfolio Management and the ESG team. Therefore, we meet on a regular based and continuously discuss content and developments. 
 

01.6. Additional information [Optional].

          For more information, see https://www.actiam.com/en/responsible-investments/
        
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SG 01 CC. Climate risk

01.6 CC. Indicate the climate-related risks and opportunities that have been identified and factored into the investment strategies and products, within the organisation's investment time horizon.

ACTIAM has taken several important steps to reduce climate-related risks over the past years. Both transition risks and physical risks are addressed. 

  • Transition risks: ACTIAM developed an energy transition policy in 2014 that addressed carbon intensive sources of energy. This policy has been amended over the years and is now the basis for exclusion of thermal coal mining, responsive engagement with utilities that generate power based on coal, responsive engagement with poor performing shale oil/gas producers, and responsive engagement with oil sands producers. Responsive engagement can lead to exclusion if there is insufficient progress. The decision to exclude companies based on this policy has been made multiple times since 2014. At the same time, extensive (proactive) engagement is conducted with companies that face transition risks. ACTIAM has also set a goal of reducing the carbon footprint of its investments by 40% in 2040 -compared to 2010- in order to minimize climate-related risks. 
  • Physical risks: many companies face both transition and physical risks. Physical risks are part of our dialogue with companies. It is also an important element of ACTIAM's focus on water. ACTIAM has a "water neutral portfolio" target for 2030. In order to achieve this, companies need to demonstrate long-term planning and scenario analyses. 

Both transition and physical risks are also addressed through the integration of ESG scores in the investment process.

Investment in companies with climate-related opportunities, and green bonds, are stimulated by an increase in their ESG score. The majority of these are opportunities relating to resource efficiency, energy sources, and products and services. 

01.7 CC. Indicate whether the organisation has assessed the likelihood and impact of these climate risks?

01.9 CC. Indicate whether the organisation publicly supports the TCFD?

Explain the rationale

We are supportive of the TCFD recommendations and have endorsed the findings of the Task Force on numerous occasions. We have not yet officially registered as a "TCFD Supporter" as we first wanted to make sure ACTIAM adheres to the recommendations.

01.10 CC. Indicate whether there is an organisation-wide strategy in place to identify and manage material climate-related risks and opportunities.

01.11 CC. Describe how and over what time frame the organisation will implement an organisation-wide strategy that manages climate-related risks and opportunities.

1.12 CC. Indicate the documents and/or communications the organisation uses to publish TCFD disclosures.


SG 02. Publicly available RI policy or guidance documents

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

02.1. Indicate which of your investment policy documents (if any) are publicly available. Provide a URL and an attachment of the document.

URL/Attachment

URL/Attachment

URL/Attachment

URL/Attachment

URL/Attachment

Other, specify (1) description

          Green, social & sustainability bonds policy
        

Other, specify (2) description

          Energy transition policy
        

URL/Attachment

02.2. Indicate if any of your investment policy components are publicly available. Provide URL and an attachment of the document.

URL/Attachment

02.3. Additional information [Optional].

More information, policies and procedures can be found on our websites

https://www.actiam.com/nl/verantwoord-beleggen/

or 

https://www.actiam.com/en/responsible-investments/


SG 03. Conflicts of interest

03.1. Indicate if your organisation has a policy on managing potential conflicts of interest in the investment process.

03.2. Describe your policy on managing potential conflicts of interest in the investment process.

There is a company wide policy on conflicts of interest and Chinese Walls. The goal of this policy is to limit the possibility of any potential conflict of interest and respond properly if a conflict of interest does occur. Compliance with the policy is monitored by the responsible management of a business unit and an independent compliance officer. Besides that an internal audit committee provides an independent assessment on the overall effectiveness of the control measures of all business units. An example of a control measure is the development of so called 'Chinese Walls'.
With respect to conflict of interests regarding exclusions, engagement or voting decisions, ACTIAM has a committee including an external expert that reviews RI policies and exclusion decisions. ACTIAM does not accept mandates of clients that want to invest in entities which are excluded based on the responsible investment policy.

03.3. Additional information. [Optional]


SG 04. Identifying incidents occurring within portfolios

04.1. Indicate if your organisation has a process for identifying and managing incidents that occur within portfolio companies.

04.2. Describe your process on managing incidents

Our investment universe is screened at least every quarter. Please see Fundamental Investment Principles compliance process and ACTIAM ESG Committee process in other parts of this questionnaire. If any incidents occurred in the relevant quarter, this will be reflected in the screening results. Depending on the severity of the incident, a proper response will be sought. This could include engagement or exclusion. Next to the regular, quarterly ACTIAM ESG Committee meetings in which such an incident is discussed and decisions are made, we have the possibility to use the "FIP Fast Track". This means that the ESG department will prepare a case description and proper advice and the request is sent to the ACTIAM ESG Committee. Within five working days, a response is given and a decision is made.

Next to this compliance process, compliance with Fundamental Investment Principles, we can manage incidents through our ESG scoring methodology. If an incident occurs, the ESG score of the company can be adjusted and/or downgraded. This is not mutually exclusive to the above process. A company’s ESG score can be downgraded while at the same time an engagement is set up. By the latter two actions, the company is excluded from some of our strategies. 

Within the above processes, there is a close collaboration between the ESG department and other relevant departments within ACTIAM. For example, the sector specialist from the Portfolio Management team is involved in the discussions and seeking the appropriate solution for each case. The final advise is given by the ESG department, and the ultimate decision is made by the ACTIAM ESG Committee. 


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