Investors have influence

Transcription

1 ING Investment Office Publication date: 15 May :20:39, 2.45 p.m. Responsible investment Investors have influence At ING you always invest with an eye for the social impact of a company As an investor you have a lot of influence: with your money, companies can start doing business and invest in, for example, new machinery or offices. ING believes that this role also includes a responsibility. Where possible, we want to take that responsibility. This means that when investing we not only look at the returns on the money, but also at what a company does with the money. That is why we not only assess a company s figures, but also its non-financial information. ING has a Responsible investment policy. This policy means that our investment strategies take as much account as possible of the social impact of the companies in which we invest. We therefore look beyond the figures alone, although we are obviously mindful of a good return. The starting point is a return that is at least comparable to the benchmark, while companies with highly controversial behaviour and controversial products are excluded as an investment. Four categories Sustainability is therefore integrated into all our investment strategies. There is, however, a difference in the extent to which this takes place. We distinguish four categories, see the diagram below: Jochen Harkema has been a sustainable investment analyst since He studied economics at the University of Maastricht and Sevilla and investment analysis at the VU University Peter Tros has been working at the Investment Office as a sustainable investment analyst since He studied business economics at Ichthus University of Professional Education Rotterdam and philosophy at the University of Tilburg.

2 From traditional investment to impact investment On the left is traditional investment, where investors only include financial criteria (the hard figures) in their assessment. Impact investment appears on the right. The sustainable content and the impact of an investment on people, the environment and society are the most important selection criteria. Numerical data has an important role in impact investment, but this is rather more modest: the sustainable impact of an investment is decisive. Sustainability plays a role in all our strategies As you can see, sustainability is a factor of importance in ING s investment strategies. The experts from the ING Investment Office always take non-financial information into account in the investment process, thus in the composition of all our investment strategies. We therefore only opt for Responsible Investment, Sustainable Investment and Impact Investment. We invest responsibly for all investment strategies. The Sustainable strategy naturally goes a step further. The Global Compact is an important guideline Responsible investment The basis for Responsible investment is financial data. But in addition, we also take account of data concerning the level of sustainability of a company. We use three sources for this analysis: the ING policy for sustainable business practice, the United Nations Global Compact principles and the ING Investment Office s own sustainable benchmark: the Non-financial indicator (Nfi). An overview of ING s responsible investment policy can be found in the following table: Source: ING Investment Office 2017 Responsible investment - May

3 ING policy ING has a comprehensive sector policy with regard to environmental risks and social risks. This policy helps ING to engage with its customers and to better evaluate financing proposals. The policy is based on ING s values: prudence, transparency and responsibility, with the aim of respecting the rights of people and the environment. This policy particularly focuses on companies in sectors with higher risks. We want to limit and manage these risks. If necessary, we restrict our services. Companies that are excluded by this policy are also not included in the Investment Office s investment strategy. An example of this is the exclusion of manufacturers of controversial weapons. Thus for example, ING does not finance cluster munition manufacturers; the Investment Office also does not invest in these. More information about the ING policy can be found on the ING site. Global Compact helps companies to become more sustainable Companies that do not comply with the Global Compact are excluded from our investment strategies Global Compact The United Nations, together with a number of multinationals, has established the Global Compact platform. The principles should help companies to give sustainability a place in their company policy and business processes. The basis of the framework consists of ten principles, based on various international agreements. The principles are divided into four topics: 1. human rights, 2. employment, 3. the environment and 4. anti-corruption. The full list with the ten principles can be found on the United Nations website. The principles should encourage companies to act sustainably. Many major investors also use the principles for an initial test of companies sustainability performance. The ING Investment Office also assesses companies for compliance with the Global Compact. If companies seriously violate these principles, we exclude them from all investment strategies. What if the company already been included in one of our investment strategies? Then we reduce the interest in the company, with a time horizon of half a year applying for this. Only in exceptional cases do we decide to (continue to) invest in a company that has seriously violated the Global Compact principles. We do this if exclusion from an investment strategy, or the sale of the interest, has a major adverse effect on the investment risk of the strategy in question. And thus harms your interests, as a customer. In the three years that we have pursued this policy, this has not happened once. Focus on companies with social values The Global Compact aims to strengthen the social added value of companies. The products of a number of sub-sectors clash with this aim. This applies to three categories: Companies active in the production or sale of landmines and cluster bombs Companies active in chemical, biological or nuclear weapons (since October 2017) Companies active in the production of tobacco (since October 2017) The Investment Office no longer invests in tobacco The Investment Office has already excluded companies from the first two categories from our investment strategies, i.e. through the ING sector policy for environmental risks and social risks. Companies that are active in the production of tobacco were already avoided within Sustainable investment, but are now also excluded from the Investment Office s other investment strategies. It should not be forgotten however that it is not always possible to completely avoid investing in companies in these sectors, or in companies with very controversial behaviour, since we also make use of investment and index funds. The various fund houses have their own ways of investing responsibly. Index funds in the strategies follow specific indices. Depending upon the index, such controversial companies can thus sometimes appear in index funds and thus in our strategies. Responsible investment - May

4 The Nfi provides investors with rapid insight into the risks The Non-financial indicator The ING Investment Office has developed its own method to assess a company s non-financial data. This Non-financial indicator (Nfi) provides an objective and clear overview of a company s sustainability policy. We then look at a company s relative position in its sector, i.e. a best-in-class approach. The Nfi assessment gives us insight into many aspects of the company s sustainability policy, but also makes specific results of this policy more explicit (for example, the level of absenteeism, or the percentage of renewable energy used). A company with a high Nfi score is transparent about its activities, performance and company policy. With the policy and its results, the company itself can also take measures to further increase sustainability and improve the quality of its business by, for example, combating rising absenteeism figures, employee dissatisfaction, waste of materials or decreasing customer satisfaction. Furthermore, more sustainable companies will have a better starting position to discover and utilise opportunities: after all, knowledge is power. Companies that score above average receive an Nfi with the value = (best 50%), + (best 30%) or ++ (best 10%). Companies that score below the average will receive an Nfi. The Nfi thus provides investors with rapid insight into the relative risk of a company in a sector in the field of sustainability. Conclusion ING believes that investors have a social responsibility. It is not only the return on their money, but also about what their money does. The ING Investment Office attaches great importance to this social responsibility and adjusts its investment policy accordingly: this is our Responsible investment policy. In order to safeguard our conscious investment policy, ING also endorses the principles for responsible investment, an initiative of the United Nations (the Principles for Responsible Investment). With all our investment strategies, we take account wherever possible of the social impact of the companies in which we invest. This is not at the expense of the return we strive for: the starting point is a return that is at least comparable with the benchmark. However, we do not want to invest in companies with controversial behaviour or controversial products and we take a company s sustainability policy into account. If you want to increase your social impact even further by means of your investments, you can choose to invest not only in a responsible but also in a sustainable manner. With ING, you have the choice. Want to know more? See ing.nl/duurzaam beleggen Responsible investment - May

5 Disclaimer This investment recommendation was prepared and issued (in Dutch) by Peter Tros and Jochen Harkema, analists at ING Investment Office, part of ING Bank N.V., for the first time on 11 April 2018, a.m. For the preparation of this investment recommendation, use was made of the following substantive sources of information: S&P Capital IQ, Bloomberg, CreditSights, Oddo Securities, Standard & Poor s, Thomson Reuters Datastream, Moody s, Fitch, UBS Neo, Reuters Metastock and/or Sustainalytics. This investment recommendation was based on the following accounting principles, methods and assumptions: price/earnings ratio, price/book value ratio and/or net asset value (NAV). No protected models were used for this investment recommendation. A description of the ING policy regarding information barriers and conflicts of interest can be found here. Unless otherwise stated, ING Bank N.V. will not update the investment recommendation. Developments that have occurred after the preparation of this investment recommendation may affect the accuracy of the assumptions on which this investment recommendation is based. Investment recommendations are generally revised two to four times a year. This investment recommendation does not constitute individual investment advice, but only a general recommendation on which investors can also base their investment decisions and does not constitute an invitation to enter into any contract or commitment whatsoever. This investment recommendation is based on assumptions and does not represent any guarantee for a particular development or result. No rights can be derived from this investment recommendation. Decisions based on this investment recommendation are for your own account and risk. Neither ING Bank N.V., nor ING Groep N.V. nor any other legal entity belonging to the ING Group, accepts liability for any damage to any extent whatsoever, arising from the use of the above investment recommendation or the information contained therein. Investing entails risks. You could lose all or part of your initial investment. The value of your investment may fluctuate. Past performance is no guarantee of future results. ING Bank N.V. is not registered as a broker dealer and investment advisor as referred to in the US Securities Exchange Act of 1934, respectively, the US Investment Advisers Act of 1940, as amended from time to time, nor within the meaning of other applicable legislation and regulations of the individual states of the United States of America (hereinafter jointly referred to as: US investment law ). This investment recommendation is not addressed to and not intended for US Persons within the meaning of US investment law. Copies of this may not be sent or brought to the United States of America or provided to US Persons. ING Bank N.V. has its registered office in Amsterdam, Commercial Register no , and is supervised by the Netherlands Authority for the Financial Markets (Stichting Autoriteit Financiële Markten) ( AFM ). ING Bank N.V. is part of ING Groep N.V. All rights reserved. This investment recommendation may not be reproduced, copied, published, stored, modified or used in any form, online or offline, without the prior written consent of ING Bank N.V ING Bank N.V., Amsterdam. Responsible investment - May