It is ACTIAM’s mission to deliver relevant investment solutions, maximizing longer-term financial, environmental and social returns. We believe that an entity that considers the interests of all stakeholders is a better managed entity, and therefore represents a natural investment proposition for long-term investors. As shareholders of - or providers of loans to - companies and governments, investors have a voice that they can use to steer investee entities towards a more sustainable practice. At ACTIAM we believe we can make an impact by changing the behavior of the companies we invest in, as such exercising our rights to influence the way businesses we invest in are managed. Being an active owner of an investee entity means using this voice and the tools that institutional investors have.
Through active ownership, ACTIAM stimulates entities to maximize their environmental and social returns, creating value to us as an investor and to the world as a sustainable member of society. We offer concrete suggestions for improvement, create awareness about risks, and encourage companies to strive for best practice and innovative solutions. ACTIAM believes that the financial sector has the fiduciary duty to lead the transition towards a sustainable society.
It is ACTIAM’s belief that investing sustainably makes for a better investment proposition in the long term. Companies and governments can profit from a forward-looking approach by maximizing opportunities and avoiding risks that stem from the transition to a sustainable society. To achieve our mission, it’s not enough to have an investment portfolio that is free of human rights abuses, has a low carbon footprint or high governance practices. To have a sustainable society, we need to see change in the real world. The financial sector thus needs to move away from a 2-dimensional model of risk and return, towards a 3-dimensional model that includes real-world impact. ACTIAM integrates this real-world impact into its investment approach, stimulates entities to change their practices, and holds them accountable if there is lack of progress.
Active ownership plays a key role in this process because entities have an incentive to enter into conversation with providers of capital to their organization. This means that while we have an exposure to the entity, through shares or loans, we can communicate what kind of change we expect to see. There are additional tools that we use to strengthen this message, such as excluding companies from our investment universe if insufficient progress is made.
Our active ownership strategy consists of three areas: engagement, voting and exclusion. The three areas are not used separately but are connected and used to reinforce one another.
ACTIAM distinguishes two forms of engagement: proactive and responsive. Responsive engagement occurs after the occurrence of a controversy or conduct that violates ACTIAM's investment policy, and may lead to exclusion if the company is not demonstrating progress. The screening of such violations occurs on a quarterly basis and is proscribed in a governance process. Proactive engagement is carried out to prevent violation of ACTIAM's policy or consolidation of a risk. Progress of engagement is tracked through a milestone system and monitoring of progress towards the objectives established. These are discussed by the ESG Committee on a quarterly basis. Engagement can be carried out by ACTIAM, independently or in collaboration with others, or through our external service provider. Both are subject to the same process and evaluation.
In May 2019, ACTIAM's active ownership policy was updated to reflect changes in policy, regulatory frameworks, and investment strategy. The active ownership policy is reviewed on an annual basis to keep track with sector and societal developments. Please see our policy document for further information: https://www.actiam.com/48df26/siteassets/4_verantwoord/documenten/en/actiam_sustainable-investment-instruments.pdf