Incorporating ESG issues into investments
Alongside traditional financial risk/reward analysis techniques, the group performs targeted screening to examine the sustainability policies, performance, practices and impacts of issuing companies, in order to avoid investing in companies that do not adhere to our principles.
We have drawn up criteria, systems and approaches to identify, evaluate and monitor investments that are most exposed to environmental, social and governance (ESG) risks.
Specifically, the Responsible Investment Guideline apply to all direct investments by Group insurance companies.
We consider financial instruments to be high ESG risk investments if they are issued by companies that:
- produce weapons that, when used normally, could violate fundamental humanitarian principles (cluster bombs, anti-personnel mines, nuclear weapons);
- are involved in serious or systematic violations of human rights;
- are involved in serious environmental damage;
- are implicated in serious instances of corruption.
The aim of the management process is to identify ESG risks arising from investments in companies involved in these activities, through ongoing monitoring of the investment universe and also by working with an external supplier.
According to their level of involvement and responsibilities, and based on an internal rating system, the issuing companies are placed on either the Restricted list or the High Risk list. The inclusion of a company on the Restricted list brings with it specific actions ranging from a ban on making new investments to the settlement of current holdings or the retention of same until their expiration with no possibility of renewal. As regards the High Risk list, actions range from the close monitoring of controversial aspects to direct dialogue with the company in question in order to encourage it to act responsibly.
Our Responsible Investment Committee comprises representatives of the main functions involved in investment management. It is responsible for making a balanced and neutral assessment of share-issuers that are deemed not to meet the Group’s criteria, and for assisting the Group Chief Investment Officer in decisions regarding possible exclusions from the Group’s investment universe.