Businesses whose activities or the way they pursue those activities are seriously at odds with the principles of sustainability are automatically excluded. We operate exclusion criteria that apply to all KBC funds as well as ones specifically for the SRI funds.
Each sustainable universe at Asset Management is subject to positive as well as negative screening. What this means is that we examine which companies and governments are fully committed to sustainability or whose products and services have a positive impact on the environment and society. We apply three types of positive screening: Best-in-Class (BiC), Theme and Impact Investing. Once sustainable universes have been finalised, the managers of the portfolios can select shares and corporate and government bonds.
THREE TYPES OF SUSTAINABLE FUNDS
- Best-in-class funds invest in companies from a broad range of sectors, that are the best performers in terms of sound corporate governance, social policy and environmental approach. By working only with the best 40% of businesses, and as few as 20% in the mining sector, companies are challenged to operate more sustainably. The funds also include bonds from the most sustainable countries. Criteria for this include the welfare of the population, care of the environment and international relations.
- Theme funds invest in companies that make a sustainable contribution to solving a societal problem like climate change, the threat of water shortages and the quest for alternative energy.
- Impact Investing funds comprise 50 innovative businesses that are completely rethinking themes like mobility, energy, health and population ageing, and formulating surprising solutions to them. These are often slightly smaller (listed) players, but they have still come through KBC Asset Management’s stringent screening.
We review our sustainability criteria on an ongoing basis. KBC Asset Management places a great deal of emphasis on transparency, which is why it makes all its research results and the full list of exclusions available on www.kbc.be.
Sustainable and responsible investing stands or falls by its credibility. The sustainability policy and criteria are therefore monitored by the SRI Advisory Board, which is fully independent of KBC. The body consists of leading academics from several universities, who are experts in fields like human rights, business ethics, biology and ecology. They operate in their own name and do not represent the institutions at which they are employed. They decide which screening methodology we should use and set the criteria for rating companies. They also ensure that screening is complete, thorough and accurate.
KBC Asset Management pursues an active policy of proxy voting and engagement. By exercising the rights attached to shares held by the investment funds and by making our voice heard at the annual general meetings of these companies, KBC aims to defend the interests of our clients and investors. We do so by proxy voting, when deemed appropriate and necessary. KBC Asset Management applies this active voting policy to several different themes, recognising that business, corporate governance and sustainability issues all determine the value of a company in the medium and long term. All these factors can have a significant impact on value creation or the return enjoyed by clients and investors.