Download ABP will explicitly integrate extrafinancial information in its regular

ABP and responsible investment
Rob Lake
Head of Sustainability
Vereniging van Pensioenrecht, 4 March 2008
ABP - background
• Pension fund for employees of public service and
education sector in the Netherlands
• €218 billion assets under mangement – 80% internally
managed
• 2.6 million members – 1 in 4 households in NL
Strategic commitment
• Strategic Investment Plan 2007 – 2009:
‘ABP will explicitly integrate extrafinancial
information in its regular investment process … to
contribute to the realisation of the envisaged riskreturn profile.’
• EU law on requires us to base investment decisions
on partcipants’ financial interests
Why has ABP taken this step?
• Long-term perspective requires broader and deeper
analysis
• Environmental and social trends affect business and
investment
• Demonstrate investor responsibility
ESG in a €10 billion stockpicking fund
• Place ESG analysis alongside ‘conventional’ analysis
• External research providers, sell-side, in-house
• Dialogue with PMs to identify priorities and discuss
interpretation
• No obligation on PM to pick ‘best in class’
• Can choose not to invest – or to invest more or less
than we would otherwise do
A starting point for discussion
Banco de Sabadell S.A.
Erste Bank der Oest. Spark.
Banca Popolare Italiana
Julius Baer Holding AG
Enagas S.A.
Honda Motor Co. Ltd.
Banco Espirito Santo S/A
CapitalSource Inc.
Intesa Sanpaolo S.p.A.
Societe Generale (France)
AXA S.A.
ABN AMRO Holding N.V.
Hellenic Exchanges S.A.
Tenaga Nasional Bhd
Prudential PLC
Nobel Biocare Holding AG
Natixis
Synthes Inc.
Banca Monte dei Paschi di Siena
Mediobanca Banca di Cred. Fin.
Itron Inc.
Elisa Oyj
Panalpina Welttransport
KBC Group N.V.
St. Jude Medical Inc.
Nifco Inc.
Novartis AG
3,98 3,98
3,32 3,07
2,53 2,53
1,96 1,96
1,65 1,65
1,42 1,42
1,43 1,37
1,33 1,33
2,16 1,23
2,29 1,21
2,39 1,17
2,24 1,08
1,01 1,00
0,99 0,99
1,49 0,93
1,06 0,92
0,88 0,88
0,93 0,82
S.p.A.
0,94 0,82
1,00 0,81
0,77 0,77
0,83 0,75
0,72 0,72
1,03 0,63
0,62 0,62
0,59 0,59
2,85 0,54
BB
AA
BB
CCC
AA
AA
AAA
AA
BBB
BBB
A
CCC
B
AA
CCC
AAA
CCC
AAA
BB
CCC
A
A
AAA
A
BBB
A
A
CCC
CCC
AA
B
AAA
BB
BB
BBB
CCC
AA
AA
AAA
AA
A
BB
A
CCC
B
AA
B
AAA
-
4,8
6,7
4,8
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,4
7,3
3,7
8,7
5,8
5,8
2,1
3
6,7
2,3
5,7
5,3
5,3
6,2
3,4
3,7
0,9
5,3
6,6
7,6
6,8
6,7
3,3
6,7
1,7
8,1
3,2
1,5
8,1
6,1
8,8
7
6
1,3
2
6
1,6
6,3
6,6
9,4
-
6,6
3,6
7
7,1
4,4 B+
B++
4,3 4,7 A
0,4 B
6,9 A++
7,3 A+
8,1 A++
8,2 B+
2,6 A
5,4 B+
5,8 A+
2,5 B
6,3 B
7,2 A+
2,6 8 A++
GMI
Number of Flags
Global Overall Rating
Environment
Human Capital
-
4,2
Stakeholder capital
WestLB
Strategic Governance
IVA
EcoValue
Combo IVA
Active Weight
Portfolio Weight
Company Name
Innovest
WestLB
Portfolio
5.0
6.0
3.0
6.0
5.5
5.5
4.5
7.5
6.0
6.5
7.0
7.5
2.0
0
0
1
0
0
1
1
1
0
0
0
0
0
8.5
6.5
0
0
4.0
4.5
3.0
7.5
6.0
2
0
1
0
0
7.0
6.5
1
0
7.5
0
International standards
• Expect companies to follow United Nations Global Compact, the
OECD Guidelines for Multinational Enterprises, the OECD
Principles of Corporate Governance and the International
Corporate Governance Network Statement on Global Corporate
Governance Principles
• Engage with companies whose practices fall short of these
standards
• Withdraw our investment from companies that persistently fail to
improve their practices
• Developing work programmes on GC/OECD compliance, climate
change and labour standards
Invest in sustainability solutions
• Carbon funds – €500 million
* projected CO2 reduction of 75-80 m tonnes 20082013
• Clean technology private equity - €250 million
• Renewable energy infrastructure – €100 million
• Sustainable forestry in Mozambique - €60 million
• Microcredit - $20 million
Alternative Investments
• Developing systematic processes for Alternatives
• Infrastructure – sought information from manager on
Equator Principles
• Forestry – prefer FSC certification wherever possible
• Carbon funds – caution on CERs from palm oil
Corporate governance and voting
• Exercise voting rights wherever possible
• Recall all lent stock for all Dutch companies, all
significant holdings, and special situations
• More active engagement under development
• Dutch and international partnerships
Engage with policy-makers
• In our interest to promote sustainable business and
good corporate governance in the market as a whole
• Bali communiqué on climate change
• Dialogue with regulators on corporate governance
codes
Exclusion
• Values and opinions in society – and among ABP
participants – differ widely: e.g. on arms, tobacco
• ABP needs clear, non-arbitrary reference points for
decision-making
• Policy is based on Dutch and international law
• Exclusion of companies that make antipersonnel
landmines, cluster bombs or chemical/biological
weapons
Partnerships
• Carbon Disclosure Project – signatory and member,
and supporting Dutch extension
• UN Principles for Responsible Investment
• Institutional Investors’ Group on Climate Change
• Enhanced Analytics Initiative
• Eumedion
• International Corporate Governance Network
Transparency and accountability
• Publish full list of listed equity holdings; include bonds
from May 2008
• Will publish first Responsible Investment Report in
May 2008
• ABP will publish first CSR Report in May 2008 (GRI
Guidelines)
Overview
• Integration of ESG into all investment processes
• Expect compliance with international environmental
and social standards (UN, OECD)
• Active and responsible corporate governance
• Invest in sustainability solutions
• Engage with policy-makers
• Exclusion based on Dutch and international law
• Transparency and accountability