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.