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Pensioenfonds Vervoer

PRI reporting framework 2020

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Contractual agreements and mandate design

IFI 03. Including issues referred to in the PIIF

03.1. When agreeing contracts and designing mandates with investment managers, in the process, indicate if you consider including the following issues referred to in the PIIF:

Actively supporting retail providers to innovate and expand the range of financial services to low-income people (Principle 1)

Describe and indicate how.

We have asked our external managers how principle 1 has been applied. 

By financing Financial Institutions with an SME portfolio, the external managers aim to increase access to finance and business growth of SMEs, thereby supporting job creation, inclusive development and economic growth. The external managers target SMEs because they are financially underserved and typically provide more jobs than corporates relative to capital invested. The external managers specifically target women-owned SMEs, rural SMEs and SMEs owned by young people. These groups are among the groups recognised by FMO’s Reducing Inequalities label and are often best reached through digital solutions.

Integration of client protection in investment policies and practices (Principle 2)

Describe and indicate how.

We have asked our external managers how principle 2 has been applied. 

For all investments ithe managers' responsible finance approach defines the exclusion of certain consumer finance activities, and the adoption of the Client Protection Principles (CPPs) which provide a risk-based approach similar to the ESG processes. The CPPs aim to facilitate a risk-based assessment of financial institutions, non-banking financial institutions and corporates providing finance to natural persons. CPPs define the minimum standards that end-clients should expect to receive when doing business with an entity providing financing to natural persons. The annual Responsibility & Impact Report of the Fund includes the CPP risk category for all Fund investment companies. There is also a section presenting all new financial institutions to the Fund with a retail portfolio exceeding 50% of their total portfolio. For these cases we described hoe CPP risks are mitigated by the financial institutions and potential assistance of FMO in doing so.

Treating investees fairly with appropriate financing needs that meets demand, clear and balanced contracts and fair processes for resolving disputes (Principle 3)

Describe and indicate how.

We have asked our external managers how principle 3 has been applied. 

The external managers provide average tenors of 4 to 5 years and can provide local currency to meet investor’s needs. Furthermore, external managers strive to achieve positive sustainable development outcomes through its investments and has high standards when it comes to good and transparent provision of services. External managers also offer a platform for conflict resolution via its Independent Complaints Mechanism (Mechanism) and accompanying procedures. The Mechanism describes the structure and governance of the complaints procedure, which allows affected external parties to file a complaint concerning a project. They will not condone reprisals against individuals or organizations that raise issues with its Independent Complaints Mechanism. In this way they strive to implement a robust and independent procedure and to transparently communicate to stakeholders.

The inclusion of ESG issues in investment policies and reporting (Principle 4)

Describe and indicate how.

We have ask our external managers how principle 4 has been applied. 

Screening of financial institutions and their SME portfolios on environmental and social performance is an integral part of the investment selection process. In order to ensure that the Fund can measure and monitor the environmental and social performance the financial institutions underlying the Fund Investments should commit themselves to the following requirements:

  • Systematic management of the environmental and social performance based on a policy framework that is guided by national laws and/ or the IFC Performance Standards; and
  • Systematic environmental and social risk assessment, monitoring and reporting with respect to the SME portfolios.

In addition to the environmental and social screening the Fund will also take into account the economic and social impact a Fund's investment generates. In order to ensure that the Fund creates real and measurable impact, the Fund Manager has identified a number of key themes on which it aims to distinguish itself as a committed responsible impact investor:

Active promotion of transparency in all aspects (Principle 5)

Describe and indicate how.

We have asked our external managers how principle 5 has been applied. 

This ranges from relations with the investees to reporting for the investors in the fund. See also the other anwers where transparency is reflected. 

Striving for a balanced long-term social and financial risk-adjusted return that recognises the interests of clients, retail providers and investors (Principle 6)

Describe and indicate how.

We have asked our external managers how principle 6 has been applied. 

This is key to the set-up of the Fund and safeguarded by the managers' Impact Investing Investment Committee: “Providing investors with an attractive financial return while at the same time contributing to fostering a dynamic SME sector in developing and emerging economies.”

The Fund does not only concentrate on realizing an attractive financial return. It also aims to make socially and environmentally responsible investments, hereby providing investors with an attractive financial return while at the same time contributing to fostering a dynamic SME sector in developing and emerging economies. In practice, this means that investees are required to meet certain minimum ESG standards (part of the investment criteria) or agree to improve to these minimum levels. On top of that, the managers aim to support investees that are willing to improve its ESG standards beyond the minimum required levels.

Collaborating to set harmonised investor standards that support the further development of inclusive finance (Principle 7)

Describe and indicate how.

We have ask our external managers how principle 7 has been applied. 

The managers are active players in a various range of industry initiatives over time to promote further professionalization of the financial inclusion industry. The Fund’s annual report describes relevant activities to the Fund in the specific year and the managers provide an annual Responsibility and Impact report (investor version and public version) with detailed information on the Fund’s ESG and impact performance, related to investor standards.

03.2. Additional information. [Optional]

As we invest in the Actiam-FMO SME Finance Fund, there is no contract. However, one of our selection criteria is beining PIIF signatory. Our managers of inclusive finance (Actiam and FMO) both received the highest rating (A+) for applying the PIIF principles. 


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