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.