Alejandro Bujanos of Afore SURA highlights how the company has positioned ESG front and centre as it continues to seek the very best outcomes for its clients
Sustainability has always been the core of Afore SURA’s business. It begins by aligning managing pension funds with our mission statement: “To help our clients build a better retirement, starting today”.
As one of Mexico biggest asset owners, and with a long-term average investment horizon for our portfolios, we recognise that helping the companies within our portfolios, and the rest of our stakeholder’s transition achieve a better world, is both part of our fiduciary duties and a key element of delivering better pensions. And as we say at Afore SURA: “A better pension for our clients depends on three pillars: returns, risk management, and the chance to live in a better world.”
By explicitly including ESG factors in our investment process, we make sure a broader range of risk and opportunities are considered by our team of investment professionals, allowing them to better allocate the resources within our portfolios to maximise our clients’ future pensions. We do this under a framework of double materiality, where we consider not just how changes in the world will affect our investments, but also, the changes in the world caused by our investments.
Our stewardship policy arises from the understanding that we need to be responsible investors, and that not voting, not engaging with our companies, not asking for improvements, and being a passive investor is not a neutral position. It is in fact aligning with the status quo. That is why during the past year we have developed, approved, and published our first stewardship policy detailing what customers should expect from us when we represent them with the companies within our portfolios.
One key objective of our stewardship efforts has been to improve the corporate governance of companies. We believe a solid governance structure that has aligned interests with their shareholders and with international best practices is a necessity to promote real change in a company’s sustainability plans.
Joining the fight against climate change
Another key tool for our stewardship success is our participation in collaborative engagements. We have joined Climate Action 100+ and we co-lead one of the collaboration engagements within the initiative. We have found this tool to be extremely useful, not just for investors, but for companies who get a consolidated ask, helping them engage with multiple investors as one.
A lot of these efforts are data intensive, and we have been promoting standardisation and disclosure of ESG material issues from investors on multiple fronts. We’ve done it as part of our role as co-chairs of the Mexican Council for Sustainable Finance (CMFS) where we have encouraged companies to adhere to Task Force on Climate-related Financial Disclosures (TCFD) reporting. As members of The Association of Mexican Pension Fund Administrators (AFORE) ESG committee, we developed an ESG questionnaire to be used by companies as a transition tool before adhering to international reporting standards.
We are convinced that a successful incorporation of sustainability investing in the core of the investment process must be accompanied by a clear definition of priorities: promoting solid governance, encouraging disclosure, ESG integration, developing stewardship as a key tool for change, and of course climate change.
There is no doubt that climate change is one of the biggest risks to the future of our society. We believe the world needs to transition to a low carbon economy aligned to global temperature increases of no more than 1.5 °C. This probably represents the biggest shift in technology and capital allocation of the last 50-plus years, which translates into both a unique investment opportunity and an unavoidable responsibility for us as long-term asset owners. Given this conviction, we have developed personalised engagement plans for companies responsible for over 90% of the GHG emissions of our measurable portfolio, and we are choosing new investment vehicles that will generate a positive sensitivity of our portfolio to climate change.
Our goal is not just to be the best stewards of capital for our clients. We want to do it while being responsible investors for the rest of our stakeholders. We want to be at the front line of sustainability investing, helping not just our customers, but also our country and our region to transition to a better form of investment professionals.
Finally, consistent with our philosophy, we have improved our internal sustainably governance structure and we have improved our sustainable investment team. We have also taken up seats at international initiative governance structures, like the PRI’s Asset Owners Technical Advisory Committee, and we’re aligning our own firm’s reports to international sustainability standards while planning to set science-based climate change targets soon.
In the long-term, we believe our stakeholders will value our sustainability strategy, our efforts to finance energy transition in the companies in our portfolio, and our continued effort to align companies with the best governance practices. We are sure that it is at the core of helping our clients have a better retirement, starting today.
About the Author
Alejandro Bujanos, CFA is Head of Sustainable Investing at Afore Sura.