ESG criteria in asset management

Investors, analysts and clients are increasingly taking an interest in how we incorporate social and environmental aspects into the management of our investments. In general terms, when it comes to the management of our investment portfolio we aim to generate a stable and commensurate market return in the interests of our clients and shareholders. We also take into account environmental, social and governance (ESG) criteria. Our sustainability strategy on the investment side is defined in writing in our “Responsible Investment Policy”, which we developed in 2011 and subsequently updated in 2016. Specifically, we are guided here by, inter alia, the ten principles of the United Nations Global Compact, i. e. we also take into account considerations relating to human rights, working conditions, the environment and anti-corruption. Furthermore, we avoid exposures to issuers who are involved in the development and proliferation of controversial weapons. Since 2012 our investments have undergone half-yearly negative screening by an external service provider to verify compliance with these ESG criteria. Securities of issuers defined as “non-adequate” are actively reduced while minimising the market impact. In addition, potential new investments are checked in advance to see whether the issuers violate the defined ESG criteria. Such exposure is rejected if this is found to be the case. The portfolio subjected to this screening encompasses major asset classes such as fixed-income securities (government debt securities and debt securities issued by semi-governmental entities, corporate bonds and covered bonds) and listed equities. Altogether, depending on strategically motivated allocation changes, virtually 90% of our investments (carrying value as at the balance sheet date of 31 December 2017: EUR 40.1 billion) are screened according to ESG criteria. The review of government issuers centres on the question of whether – and if so which – sanctions are currently imposed on them.

In the year under review we devoted special energy to the implementation of a “best-in-class” investment approach. A designated ESG officer on the investment team assures the development and application of ESG criteria and implementation of the policy. Key investment decisions are also discussed and approved by the Investment Committee. Two members of the Executive Board sit on the Investment Committee.