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, ethical guidelines apply to all direct investments by Group insurance companies where the investment risk is borne by the companies themselves or shared with the investor. Accordingly, unit-linked and third-party asset portfolios are excluded.
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. Initially, through the dialogue we aim to discourage actions identified at high-risk companies and if the responses are inadequate, we exclude these companies from the investment portfolio.
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.