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.

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.

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.

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. 

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.

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).