ACTIAM is a leading Dutch asset manager specialising in responsible investments. It introduced its responsible investment policy back in 1990 and started to engage with companies to achieve sustainable behavioural change five years later. The firm is specialised in the field of responsible investment and continually work to build on this. ACTIAM combines expertise of investment with a clear vision of environmental, social and governance (ESG) aspects. This view is the starting point for the firm’s corporate and investment policy.
Climate, water and land
ACTIAM foresees a number of major challenges. Global population growth and greater prosperity are likely to cause problems, such as climate change, food and water shortages, and puts constraints on social relations. Such disruptions can have a big impact on companies and economies.
In view of these developments and their potential impact on investments, ACTIAM has chosen three themes to focus on for its ESG approach: climate, water and land. Analysing the opportunities and risks of the global challenges can help to achieve improved long-term financial returns. At the same time, doing this actively contributes to achieving a better world in 2030, the year of the UN’s Sustainable Development Goals (SDGs), and beyond.
ACTIAM’s philosophy is distinctive by its focus on the impact on the real economy, with a goal of using investments and rights as a shareholder to stimulate companies to work in a more responsible way. As an investor, the company has several tools available to achieve this, including voting on shareholder meetings, integrating ESG information into investment decisions, engagement and divestment.
The Paris Agreement
On 12 December 2015, the participating countries at the UN Climate Change Conference in Paris agreed to set a goal to limit global warming to less than two degrees Celsius. ACTIAM has committed to support the implementation of the Paris Agreement. The company is setting reduction targets for the carbon footprint of investments and is applying all the tools to achieve this goal. ACTIAM challenges the companies it invests in to integrate the risks and opportunities of climate change into their business practices and to be transparent about this to investors and other stakeholders.
The Paris Agreement holds ambitious goals that can only be achieved by a combination of energy efficiency, a transition to low-carbon sources of energy, a reduction of non-fossil fuel greenhouse gas emissions and establishing carbon sinks and carbon storage. Companies can contribute by setting ambitious and measurable emissions reduction targets and by investing in (advanced) technologies. Being prepared for this transition means being prepared for the future.
To assess whether companies are future proof, ACTIAM uses a proprietary model to calculate a sustainability score for companies and countries, which is integrated in its investment process. This score is made up of various indicators and shows the sustainability of a company or country – e.g. its policy, behavior and product. This also takes into account the carbon-intense sectors and the climate change policy and behaviour of companies.
ACTIAM’s opinion is that companies who are taking the initiative towards a more sustainable environment should be rewarded. Companies that contribute to mitigate the climate problem are therefore granted a higher sustainability score. Examples of activities that are rewarded are renewable energy production, or technologies that lead to energy savings, such as the application of smart ICT.
ACTIAM is one of the most active investors in green bonds in the Netherlands. A substantial part of its bond portfolio is allocated to this asset class. Green bonds are different from regular bonds, because the funds are directed towards environmentally friendly activities. ACTIAM conducts extensive research to make sure that the proposed activities are indeed sustainable and contribute to the energy transition.
Achieving behavioural change
ACTIAM enters into dialogue with companies that face climate-related risks. We are living in an era of rapid change, and ACTIAM want to make sure companies adjust in time, so they can benefit from the transitions – or at the minimum mitigate the impacts of it. Many companies will have to seek new business strategies, which require a long-term vision and approach. They also use rights as a shareholder to strengthen engagements. This means the company can decide to abstain or vote against management resolutions at shareholder meetings, or file and support shareholder resolutions.
Consequences for slow response
Companies that, after repeated requests, do not transition towards a more sustainable business strategy can be excluded from investments. Exclusion is a last resort – after all, ACTIAM would rather see a change in behaviour of that company and which helps to achieve impact in the real economy. ACTIAM is transparent about the companies it has excluded from investment and continually monitors whether companies that have been excluded show progress.
Transparency is key
ACTIAM was one of the first Dutch asset managers to give insight into the carbon footprint of all its investment funds. In addition, it achieved a 2.25% reduction in carbon emissions across the board from 2015 to mid-2017, which means they have set a new step towards achieving the goal of reducing the carbon footprint of its investments to 25% by 2025.
Capturing the total carbon emissions for each individual portfolio shows where investments are having a positive impact on the carbon footprint and where it still can achieve environmental gains. ACTIAM will continue to publish the carbon footprint of investments, the progress towards reduction goals, and will continue to work on innovations that can help in attaining investment returns while achieving ESG ambitions.
In 2017, ACTIAM achieved high scores in all areas of responsible investment in the annual survey of the UN-supported Principles for Responsible Investment. The scores place the firm among the top 15% of asset managers worldwide. ACTIAM is also the first ever winner of the ‘International Award on Investor Climate-Related Disclosures’, awarded by the French Ministry of Environment, Energy and the Sea.