We require our managers to have due regard to relevant recognised standards. All our external managers are signatories of UN PRI as a minimum. Furthermore, we expect them to demonstrate that the principles of responsible investment are complied with in practice. We can therefore delegate much of the day-to-day environmental, social and governance activities to our managers, but with robust oversight, dialogue and transparency between both parties.
For our active investment strategies: We strongly believe that sustainability risk should be a natural part of the risk- and investment-management process, and we do not accept this as being a separate activity by our managers or by ourselves. We seek active managers who consider sustainability risk to be a natural ingredient of the investment thesis, ensuring the flexibility to invest in technological, regulatory changes and consumer trends; an active, future-oriented and dynamic approach rather than a static, backward-looking and passive approach. We prefer an open, change-driven process rather than predefined criteria and/or an exclusion list. For an active manager, we believe responsible investment is more about investing in sustainability trends and managing change, rather than avoiding certain companies on a predefined exclusion list. We believe that active managers in their daily decision-making are in a better position to influence current business practice as well as the future direction of companies and industries where there are sustainability issues. Active fund managers typically know their companies and management very well, and are in a better position to influence and impact on a higher strategic level through their ownership discussions. Unlike passive managers, who are dependent on predefined exclusion lists to improve their ESG characteristics, the active manager should be ahead of the game, as they are investing in what they perceive to be future sustainable businesses. This approach takes more time and effort, but we firmly believe that engagement drives real and tangible change on the issues that are important to our clients and to us.
In our passive portfolios, we use index providers who exercise their ownership responsibility through exclusion lists and proxy voting, as these do not know the companies they invest in. We want to use managers who have expertise and knowledge of sustainability, and who have values and sufficient resources to exercise their ownership responsibility in a professional and responsible manner when problems arise in companies in which we have invested.