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VBV Vorsorgekasse AG

PRI reporting framework 2020

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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

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.

We manage assets in the sole interest of our beneficiaries. Our severance-pay fund has the objective to generate long-term constant returns and our annual reference-target is to outperform the Austrian Consumer Price Index.

Sustainability is an integral part of our corporate and investment philosophy. We believe that in the long-run sustainable companies and countries generate more stable returns. Investing in sustainable companies and countries  is also a way of mitigating investment risks. For example, VBV has decided to exclude all companies that realise at least 5% of their sales revenue or trading from coal in order to reduce the risk of "stranded assets". All our investments must be in line with our ethical, social and environmental guidelines. These are defined in our inclusion and exclusion investment criteria. After defining our investment universe, we follow a best-in-class stock selection through integrated financial and sustainability analysis. We discuss and decide on potential engagement activities and proxy voting together with our  partners. As a large part of our assets is managed by external managers, the manager selection and monitoring process are very important. Each asset manager has to complete a detailed questionnaire which includes a dedicated section covering ESG and climate related issues.

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 Ethics Committee meets quarterly and is responsible for the definition of our investment universe through the development of our investment guidelines.

Our investment criteria are:

  1. good relations with stakeholders
  2. sustainable products
  3. environmentally and socially sustainable countries and international organisations
  4. environmental protection

Our exclusion investment criteria are:

  1. violation of labour law and human rights
  2. nuclear energy
  3. authoritarian regimes
  4. gene technology
  5. controversial economic practices
  6. massive ecological damage
  7. tobacco
  8. death penalty
  9. weapons and munitions
  10. coal

A best-in class approach is applied for the asset selection, either directly or through our external managers.

Our external asset managers must send us the ESG and carbon report every quarter.

We measure the carbon footprint of our bonds and equities once a year and publish it on our website.

We do care about the positive impact of our investments, so we classify these impacts under the Social Development Goals. Then, we ranked the SDGs according to the kind of impact that our investments can contribute to. SInce 2018 we have a third party SDG report for our equity holdings.

We register for various national and international sustainability labels so that our investment policy that covers responsible investment approach can be tested and verified by independen third parties.

 

01.6. Additional information [Optional].

          
        

SG 01 CC. Climate risk

01.6 CC. Indicate whether your organisation has identified transition and physical climate-related risks and opportunities and factored this into the investment strategies and products, within the organisation’s investment time horizon.

Describe the identified transition and physical climate-related risks and opportunities and how they have been factored into the investment strategies/products.

In 2019,  VBV has conducted a heat map scenario analysis of climate-related risks and opportunities for our invested securities with assistance from pwc Germany. The scenario analysis tested the resilience of our equity portfolio against a climate-related scenario of 2° Celsius or lower. The 2° Celsius scenario has been based on International Energy Agency with the time horizons 2025 and 2030. The result of the analysis for the time horizon 2025 showed that overall, under a 2° C pathway, the portfolio would be mostly resilient regarding transition risks. Until 2030, the portfolio might become less resilient and the geographic differences more profound. A deep dive into sectors showed that some sectors and sub sectors are more exposed to transition risks. For instance, North American and European food and agriculture companies may be more strongly affected by water stress, CO2 prices and demand changes. On the other hand, there is a strong development of Asian Pacific companies in the financial sector mainly mirroring developments in the real estate sector and low CO2 prices.

VBV has already been working on factoring in transition risks and opportunities into our investment strategy and products:

- VBV has decided to exclude all companies that realise at least 5% of their sales revenue or trading from coal from its investment universe.

- We measure the carbon footprint of our  equity portfolios at least once a year. Our target is to produce one third fewer emissions than our benchmark (MSCI World Index) every year.

- We invest in the renewable energy sector, mainly in solar and wind, to follow governments´shift from non-renewables to renewables source of energy.

- We monitor our positions in fossil fuels and are gradually reducing our exposure. We are also discussing with our Ethics Committee to sell all our positions in fossil fuels, as fossil fuels  are highly exposed to climate risks.

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

Describe the associated timescales linked to these risks and opportunities.

In 2019, we conducted a scenario analysis of climate-related risks and opportunities for our equity portfolio.  We chose two timescales for conducting the analysis, i.e. 2025 and 2030. As both timescales are rather short, the results of the analysis cover only transition risks. The result of the analysis for the shorter time horizon (2025) showed that under a 2° C pathway, the portfolio is mostly resilient regarding transition risks. Until 2030, the portfolio might become less resilient and the geographic differences more profound.

In the past years, action has already been taken by VBV on a sector level and on a stock specific level as regards mitigating transition risks: 

- We do not invest in coal since four years and this is checked every year from Austrian Governmental authorities for sustainability

- We monitor our positions in fossil fuels and are gradually reducing our exposure.

- We measure the carbon footprint of our equity portfolio since 2016 at least once a year. Our target is to produce one third fewer emissions than our benchmark (MSIC World Index) every year. So far, this goal has always been achieved.

- We invest in the renewable energy sector, mainly in solar and wind, to follow governments`shift from non-renewables to renewables source of energy.

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

Explain the rationale

In 2019, we did not label our disclosures related to sustainable investments according to the TCFD recommendations, although our disclosures are to some extent already in line with them.
Last year we started an organisation-wide project together with our sister company, VBV-Pensionskasse AG,  concerning sustainable investments, with an emphasis on climate risks and opportunities and the forthcoming EU regulation on sustainability related disclosures. At the moment we are working on our governance strategy and framework to include climate-related risks and opportunities. In this context we are closely following the TCFD recommendations.

We are confident that starting in 2020 VBV-Vorsorgekasse will publicly support the TCFD. 

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

Describe

Last year we started an organisation-wide project together with our sister company, VBV-Pensionskasse AG, concerning sustainable investments, with an emphasis on climate risks and opportunities and the forthcoming EU regulation on sustainability related disclosures. At the moment we are working on our governance strategy and framework to include climate-related risks and opportunities.


From an operational and management point of view, VBV has already taken several measures in the past few years to identify and manage climate-related risks and opportunities:

- VBV has decided to exclude all companies that realise at least 5% of their sales revenue or trading from coal from its investment universe

- We measure the carbon footprint of our equity portfolio at least once a year. Our target is to produce one third fewer emissions than our benchmark every year.

- We invest in the renewable energy sector, mainly in solar and wind, to follow  governments´shift from non-renewables to renewables source of energy.

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

specify

          In 2019,  we did not label our disclosures related to sustainable investments according to the TCFD recommendations, although our disclosures are in line with them.
        

SG 02. Publicly available RI policy or guidance documents

 

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

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].

Our Proxy Voting Policy is the same as that of Erste Asset Management for more than 90% of our equity portfolio, as Erste Asset Management serves as management company for the large majority of our equity investment funds.                                                                                                                          

 


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.

VBV has implemented a conflict of interest policy. Possible conflicts of interest are reported to the Compliance Officer. He documents the possible or actual conflicts of interest as well as the measures taken to prevent the possible or actual conflicts of interest. These measures may include: prevention of internal communication which might cause conflicts of interest; cancellation of conflicting trades; principle of priority (the interests of customers have the highest priority).

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 investee entities.

04.2. Describe your process on managing incidents

- VBV equities and fixed income instruments receive an external ESG rating.

- The equity and fixed income breakdown by ESG rating is published every quarter together with the quarterly newsletter.

- Most of our external managers divest the position with incidents within one month from the ESG rating downgrade to a not-sufficient level.

- The same is true for our internally managed portfolio (equity and bonds).

 

 

 

 

 

 

 

 


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