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Santander Empleados Pensiones, F.P.

PRI reporting framework 2019

You are in Strategy and Governance » Investment policy

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

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.

The Santander Empleados Pensiones pension fund's investment principles are rooted on ESG factors and a socially responsible investment approach. From an SRI standpoint, ESG factors add an added value to a company when it comes to its investment potential. The pension fund builds on this statement as a base when looking to get a global vision and valuation of a companies and sovereign entities, with the aim of generating value and promoting a sustainable economic development. 

The investable universe for Santander Empleados Pensiones is the result of the incorporation of ESG factors into the investment strategy. This is done via the application of 2 different criteria in our analysis and evaluation of companies:

  1. Exclusion Criteria: these aim to identify controversial activities or behaviours in a company which would result in direct exclusion from the investable universe. 
  2. Value Criteria: these aim to provide a picture of a company's ESG performance, and are therefore used to determine its value in terms of SRI.

Furthermore, ESG factors are divided into 5 different impact areas that collectively provide an assessment of a company's dedication to sustainability and responsible business practices. These are: 

  • Environment 
  • Corporate Governance
  • Human Rights
  • Stakeholder Relationship
  • Other Ethical Concerns

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]

Our responsible investment approach seeks to provide an investable universe composed of companies that stand out due to their commitment to mitigate ESG issues and act in a socially responsible manner.

The incorporation of a socially responsible investment approach into Santander Empleados Pensiones pension fund is done with the aim of obtaining a global vision of enterprises’ behavior via an analysis of their social responsibility. Furthermore, this investment approach leads to a promotion of sustainable capital markets and a reduction of systemic risks within our portfolio. Our investment approach is based on UN PRI’s responsible investment guidelines, seeking an alignment of our investment strategy with international SRI frameworks.

The investment policy for Santander Empleados Pensiones is approved by the Control Commission, the governance organ of the pension fund. It is characterized with a flexible and dynamic structure, as this will allow the policy to reflect the evolution of corporate social responsibility over time. Currently, the policy covers the main ESG issues that are present in the 5 impact areas aforementioned in different manners through our exclusion and value criteria.

  1. Exclusion Criteria

Participation in the following activities will lead to a direct exclusion of a company from our investable universe.

  • Environment:
    • Inappropriate use of nuclear energy
    • Toxic waste-related activities
    • Environmental Pollution
  • Huma Rights:
    • Child Labour
    • Universal Decalration of Human Rights breaches
  • Other Ethical Concerns:
    • Child Pornography
    • Manufacturing or sale of a finished product/strategic parts of cluster ammunition, anti-personnel landmines or nuclear weapons
    • Irresponsible advertisement of alcohol, tobacco, pornography or gambling related products

          2. Value Criteria:

Environment:

Within this field we aim to assess different procedures and initiatives of companies related to their environmental impact. Our investment policy looks at environmental policies, management and other systems that an enterprise might have to mitigate their impact on the environment, concentrating on the implementation and evolution of these. Moreover, it also takes into account the adherence to international environmental treaties (such as the Kyoto Protocol). Our investment policy also takes into account emissions control, adding value to those companies that make efforts on reducing their GHG emissions or have systems in place to avoid these. In addition, those that promote and operate on renewable energy sources are considered as more valuable under our policy. Ultimately, those companies that follow a sustainable approach to timber-related practices are rewarded. Firms that underperform in these areas or avoid their environmental responsibilities will be penalized and are therefore seen as less valuable under our analysis.

Corporate Governance:

We believe that corporate governance reflects executives’ commitment to the firm’s social responsibilities. When upper-management is directly involved with the ethical functioning and behaviour of the enterprise, this will be transferred across all levels of the company. Under these ideas, we analyze a company’s corporate governance looking at several factors which we believe are key in this area. Its executive board’s membership and activities are assessed to ensure an appropriate and representative composition of the board and alignment with their responsibilities. Furthermore, firms must have a clear and transparent policy to deal with bribery and corruption and concise code of ethics that is applied and reaches all employees. Executives’ commitment to their CSR commitments are assessed via their relationship with the firm’s stakeholders. The success of gender equality policies and practices and the higher percentage of women in upper management is rewarded in our investment policy.

Human Rights:

Any firm that considers itself as socially responsible must present and apply clear policies in relation to human and labor rights. In order to assess a firm’s performance in this area, our investment policy looks at the existence and quality of human rights policies in an enterprise and the way in which this is implemented in all of its business activities, including its supply chain. Furthermore, compliance with the ILO’s International Labor Standards is analyzed in order to ensure that those companies that are underperforming in this area are penalized. Much like human rights policies, we believe that these standards must be maintained across all levels of a company’s supply chain in order to consider them socially responsible in this regard.  Some other specific ESG issues are also analyzed in this area, such as: child or forced labor, discrimination in the workplace or freedom of association and the workers’ right to unionize.

Stakeholder Relationship:

We firmly believe that a good relationship between a firm and its stakeholders leads to tangible and intangible benefits for the company, therefore adding value to it. As a result, in regards to the establishment and maintenance of a good relationship with its stakeholders, we assess firms on their policies of stakeholder management and communication. These must have the objective of benefitting all parties involved in any discussion or dispute. Furthermore, we look for initiatives that promote: equal opportunities, health and safety at the workplace, employee training or job creation and security. The existence of these demonstrates a firm’s intent to better the position of its stakeholders, which we deem as a valuable approach to social responsibility. Thus, resulting in a greater value for the firm overall.

Other Ethical Concerns:

In this case, we look at firms’ activities to assess the negative impact that these might have on society or the environment. We perceive the relationship with these sort of activities as detrimental for a company and therefore its value. In this regard, we penalize companies for their involvement in:

  • Animal testing (with the exception of medicine)
  • Genetic engineering
  • Production or sale of military products or armament
  • Intensive farming

01.6. Additional information [Optional].

          
        
I confirm I have read and understood the Accountability tab for SG 01 I confirm I have read and understood the Accountability tab for SG 01

SG 01 CC. Climate risk (Not Applicable)


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.

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

02.3. Additional information [Optional].

As a corporate pension fund only available for Santander employees (closed to the general public), our investment strategy and responsible investing approaches are not disclosed to the public.


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.

All of the activities under the Santander Group (that includes the management of the Santadner Empleados Pensiones pension fund by the Santander Pensiones Pension fund manager) are held liable under the Group´s Policy on Conflict of Interests. This policy covers:

  • Subjective Scope
  • Objective Scope
  • Purpose 
  • General Responsibilities of Compliance Management
  • Specific Actions
  • Procedures
  • Disclosure of Conflict of Interests to Clients
  • Register of Conflict of Interests

This policy is available to the public here: 

https://www.santander.com/csgs/StaticBS?blobcol=urldata&blobheadername1=content-type&blobheadername2=Content-Disposition&blobheadername3=appID&blobheadervalue1=application%2Fpdf&blobheadervalue2=inline%3Bfilename%3D223%5C69%5C3.1MiFID_General+Conflicts+of+Interest+Policy+201411.pdf&blobheadervalue3=santander.wc.CFWCSancomQP01&blobkey=id&blobtable=MungoBlobs&blobwhere=1278706204121&ssbinary=true

03.3. Additional information. [Optional]

As the supervisory board of the pension fund, we do not have a policy for managing potential conflicts of interest. However, our pension fund's manager does have one.


SG 04. Identifying incidents occurring within portfolios (Private)


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