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SPOV (Delisted)

PRI reporting framework 2019

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You are in Direct - Listed Equity Incorporation » ESG incorporation in actively managed listed equities » Implementation processes

Implementation processes

LEI 01. Percentage of each incorporation strategy

01.1. Indicate (1) which ESG incorporation strategy and/or combination of strategies you apply to your actively managed listed equities and (2) the breakdown of your actively managed listed equities by strategy or combination of strategies (+/- 5%)

ESG incorporation strategy (select all that apply)

Percentage of active listed equity to which the strategy is applied
100 %
Total actively managed listed equities 100%

01.2. Describe your organisation’s approach to incorporation and the reasons for choosing the particular ESG incorporation strategy/strategies.

Portfolio managed by SPF Beheer – Strategic Listed Equity Portfolio / Strategische Aandelen Portefeuille (SAP) – applies long-term investing vision which incorporates an ESG strategy that is not only aims to generate sufficiently high financial return to fulfill all our (future) commitments while trying to select good quality and sustainable businesses. The SAP portfolio is a concentrated portfolio which includes 60-80 names and is not bound by any benchmark. This allows for careful scrutinization of every company we invest in and to truly integrate ESG issues in every investment decision.

The SAP portfolio applies a bottom-up selection approach. Whenever an investment proposal is made (for a company that is not on the exclusion list), the company is screened against the ESG policy of the funds. The UN Global Compact principles are leading; but also the Ruggie Framework and the OECD guidelines are taken into consideration. In addition to these international standards SPF Beheer, on behalf of its clients, has developed its own policy guidelines. Specific focus is placed on the topics human rights, child labour and the environment. In addition company-specific ESG-risks are considered and research as well. If major ESG-issues are identified, these can lead to rejecting an investment opportunity.

If after investment smaller issues and potential areas for (ESG) improvement at the company are identified, these are addressed via regular dialogue with the company. When breaches of ESG standards are discovered, an engagement process will be set-up. SPF Beheer defines KPIs and improvements which it wants to see within a defined timeframe (depending on the nature of the issue, but usually 2 year to see initial progress). If change is not seen or is stagnant, the company will be divested from and placed on the exclusion list.

The entire portfolio is subject to an exclusion list and companies that are on the exclusion list can under no circumstances be invested in. The exclusion list covers companies which are involved in the production, sale, maintenance and/or refurbishment of controversial weapons and/or the greater part of such a weapon and/or essential components of such a weapon. Controversial weapons are defined as: nuclear, biological and chemical weapons, cluster bombs, anti-personal landmines, weapons containing depleted uranium and white phosphorous. Tobacco producers are also excluded from the investment universe. In addition, companies which have been subject to unsuccessful engagement are placed on the exclusion list. Companies that are considered to be added on the exclusion list are first directly contacted and given the opportunity to respond to our investigation and provide evidence that their business activities fall outside the scope of the exclusion list. When a company denies allegations, we will balance their answer with the proof we collected, to determine whether a company will stay or be removed on the exclusion list. Other sectors (e.g. coal winning) are currently subjected to further analysis. 

We also employ a thematic strategy, yet not in the actively managed listed equity portfolio. A separate part of the portfolio is fully dedicated to such investments. Themed-like investments (sustainable energy, green bonds, etc.) do also occur in other portfolios, yet not by a pre-determined percentage. We just select the best investments from a combined financial-ESG perspective.

01.3. If assets are managed using a combination of ESG incorporation strategies, briefly describe how these combinations are used. [Optional]


LEI 02. Type of ESG information used in investment decision

02.1. Indicate what ESG information you use in your ESG incorporation strategies and who provides this information.

Type of ESG information

Indicate who provides this information  

Indicate who provides this information 

Indicate who provides this information 

Indicate who provides this information 

Indicate who provides this information 

02.2. Indicate if you incentivise brokers to provide ESG research.

02.4. Additional information.[Optional]


LEI 03. Information from engagement and/or voting used in investment decision-making (Private)


(A) Implementation: Screening

LEI 04. Types of screening applied

04.1. Indicate and describe the type of screening you apply to your internally managed active listed equities.

Type of screening

Screened by

Description

The entire portfolio is subject to an exclusion and applies to all asset classes. In addition, within the internally managed listed equity and fixed income portfolio, certain sectors are viewed as irresponsible in general or pose/ represent high ESG risk. Furthermore, each company is extensively reviewed with focus on ESG-risks. In case the research concludes that a company is, for example, the most polluting activities of the fossil fuel sector, we can make the decision not to invest (irrespective of whether the company is on our exclusion list). Companies that breach human rights or pollute the environment can be excluded based on their specific conduct after a process of engagement. Lastly, we exclude countries that are on the UN sanction list. Also businesses that are more than 20% state owned in these countries are excluded.

Screened by

Description

The above mentioned conventions represent the basis of SPF Beheer and its clients RI policy. They are used as reason to engage with companies, as a factor of ESG-integration and as input for our exclusion list.

We do not specifically endorse the Convention against Corruption. We believe that the topic is included in other conventions (such as the Global Compact principles and OECD Guidelines) by which we demonstrate that we do not support corruption. Therefore, a breach of these principles can still result in SPF Beheer not investing in a company.

04.2. Describe how you notify clients and/or beneficiaries when changes are made to your screening criteria.

Screening criteria are established by SPOV in collaboration with SPF Beheer. Certain key criteria were established at the start of the ESG policy. Over time these criteria were expanded with other issues that deserve our attention. Criteria, for example, depend upon what is deemed important in our sector, the public transport sector. A clear example is union/collective bargaining rights (exclusion of Walmart).

The screening criteria are reviewed by SPF Beheer at least once a year, at the time that also the entire ESG policy is reviewed. The results of this review are reported to us in a Board meeting. From time to time an extra thorough review is planned together with us. Whenever other (innovative) issues reach us or SPF Beheer throughout the year, the issue is discussed in a meeting with the boards of the funds.

 


LEI 05. Processes to ensure screening is based on robust analysis

05.1. Indicate which processes your organisation uses to ensure screening is based on robust analysis.

05.2. Indicate the proportion of your actively managed listed equity portfolio that is subject to comprehensive ESG research as part your ESG screening strategy.

05.3. Indicate how frequently third party ESG ratings are updated for screening purposes.

05.5. Additional information. [Optional]

Besides the annual update of third party ESG ratings, controversies are monitored continuously.


LEI 06. Processes to ensure fund criteria are not breached (Private)


(C) Implementation: Integration of ESG factors

LEI 08. Review ESG issues while researching companies/sectors

08.1. Indicate the ESG factors you systematically research as part of your investment analysis and the proportion of actively managed listed equity portfolios that is impacted by this analysis.

ESG issues

Proportion impacted by analysis
Environmental

Environmental

Social

Social

Corporate Governance

Corporate Governance

08.2. Additional information. [Optional]

An ESG analysis is integrated in financial analysis. The focus is on SASB materiality ESG risk. In addition, Corporate Governance aspects are always included in the ESG analysis. The analysis also looks at controversies and reputational risk. Ultimately, all elements covered under ESG are included. 


LEI 09. Processes to ensure integration is based on robust analysis

09.1. Indicate which processes your organisation uses to ensure ESG integration is based on a robust analysis.

09.2. Indicate the proportion of your actively managed listed equity portfolio that is subject to comprehensive ESG research as part your integration strategy.

09.3. Indicate how frequently third party ESG ratings that inform your ESG integration strategy are updated.

09.4. Indicate how frequently you review internal research that builds your ESG integration strategy.

09.5. Describe how ESG information is held and used by your portfolio managers.

09.6. Additional information.[Optional]

Once a month there is a meeting between responsible investment staff and the investment team at SPF Beheer. However, because the portfoliomanager SRI, portfoliomanagers equity, and analysts sit together at one desk, interaction is much more frequent. Analysts and portfoliomanagers write the RI reports on the companies that are eligible for investment. On the other hand, the portfoliomanager SRI also writes financial reports. This to promote a better exchange of knowledge on the companies in the portfolio. The focus for everyone, however, will remain on his/hers primairy tasks (i.e. the portfoliomanager ESG will remain responsible for ESG-related aspects in the portfolio).


LEI 10. Aspects of analysis ESG information is integrated into (Private)


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