Principles for Responsible investment

Graeme Griffiths, Director of Global Networks & Outreach Don Gerritsen, Head of Benelux

- RESPONSIBLE INVESTMENT - Agenda

1 The PRI: an introduction

2 Becoming a PRI signatory

3 Discussion: central banks and responsible investment

2 What is responsible investment? Incorporates ‘value’ and ‘values-based’ investing

Responsible investment is an approach to investing that aims to incorporate environmental, social and governance (ESG) factors into investment decisions, to better manage risk and generate sustainable, long- term returns.

3 Approaches to responsible investment ESG incorporation and active ownership

ESG Incorporation

ESG Integration ESG Screening Active Ownership

The process of integrating ESG The process of excluding or seeking Interactions between the investor issues and information into exposure to securities based on and current or potential investees: investment analysis: investor values or other criteria:

Environmental – e.g. chemical Voting pollution, water management, greenhouse gas emissions, Exclusionary (negative) (e.g. AGM, EGM or special meeting) renewable energy etc.

Social – e.g. labour standards, Shareholder engagement freedom of association, Best in class (positive) (e.g. Shareholder resolutions, calling controversial business practices, an EGM, complaint to regulator) talent management etc.

Governance – e.g. corporate Other engagement Norms-based governance issues, bribery, (Other engagements on ESG issues: corruption, lobbying activity etc. proactive, reactive and ongoing)

4 The PRI Investor-led, supported by the United Nations

The PRI works with its international network of 2 signatories to put the six Principles for Responsible Investment into practice. Its goals are to understand the investment implications of environmental, social and governance issues and to support signatories in integrating these issues into investment and ownership decisions. 2000+

The six Principles were developed by investors and are supported by the UN. They have more than 2,000 signatories from over 50 countries representing over US$80 trillion of assets. 80+

5 One mission – Six principles The mission

"We believe that an economically efficient, sustainable global financial system is a necessity for long-term value creation. Such a system will reward long-term, responsible investment and benefit the environment and society as a whole.

The PRI will work to achieve this sustainable global financial system by encouraging adoption of the Principles and collaboration on their implementation; by fostering good governance, integrity and accountability; and by addressing obstacles to a sustainable financial system that lie within market practices, structures and regulation."

6 PRI signatory growth Over 2000 signatories to date

Assets under management (US$ trillion) Nº Signatories Three types of 90 2500 signatories:

80

2000 70 Service Asset 60 Providers Owners 14% 1500 20% 50

40 1000 30 Investment Managers 20 66% 500

10

0 0

Apr-06 Apr-07 Apr-08 Apr-09 Apr-10 Apr-11 Apr-12 Apr-13 Apr-14 Apr-15 Apr-16 Apr-17 Apr-18

Assets under management (US$ trillion) AO AUM ($ US t rillion) Number of AOs Number of Signatories

7 More than 2,000 investors worldwide Have adopted the Principles for Responsible Investment

Benelux: Nordic: 145 (+15) 174 (+15) UK & Ireland: 331 (+69) CEE & CIS: Canada: France: 11 (+1) 180 (+14) 110 (+12) DACH: China: South Europe: 159 (+15) 15 (+9) 86 (+14) Japan: US: 63 (+6) 378 (+44)

Middle East: Rest 9 (+2) Latin America of Asia: (ex. Brazil): 65 (+19) 14 (+4) Brazil: Africa: 50 (+2) 72 (+8) Australia & NZ: 155 (+15)

*As of 29 June 2018

** Net new signatories over 12 months

DACH: Germany, Austria, Switzerland

8 Global Asset Owners Signatories Top 50 by AUM

Signature Signature Account Name HQ Country Account Name HQ Country Date Date AG2R La Mondiale France 03/04/2018 Lloyds Banking Group UK 21/09/2012 Alecta Pensionsforsakring Sweden 31/03/2016 MACIF France 24/11/2016 SE Germany 13/10/2011 MS&AD Group Holdings, Inc. Japan 01/06/2015 ATP Denmark 11/01/2017 Germany 27/04/2006 AustralianSuper Australia 31/05/2007 New York State Local Retirement System United States 27/04/2006 Group France 29/11/2012 Insurance Company Japan 16/03/2017 Bayerische Versorgungskammer Germany 14/04/2011 Nordea Life & Pensions Sweden 01/10/2014 BNP Paribas Cardif France 26/07/2016 Norwegian Government Pension Fund Global Norway 02/07/2006 Caisse de dépôt et placement du Québec Canada 27/04/2006 South Africa 13/06/2012 CalPERS United States 27/04/2006 Ontario Teachers' Pension Plan Canada 08/09/2011 CalSTRS United States 25/02/2008 Pensioenfonds Metaal en Techniek Netherlands 26/11/2007 Canada Pension Plan Investment Board Canada 27/04/2006 Pension Fund Association Japan 13/05/2016 Caisse des dépôts et consignations France 27/04/2006 Public Sector Pension Investment Board Canada 19/08/2014 CNP Assurances France 23/09/2011 Sanlam Limited South Africa 10/05/2012 Crédit Agricole Assurances France 08/03/2010 Stichting Pensioenfonds ABP Netherlands 27/04/2006 Development Bank of Japan Japan 12/12/2016 Stichting Pensioenfonds Zorg en Welzijn Netherlands 27/04/2006 Generali Group Italy 15/06/2011 Sun Life Assurance Company of Canada Canada 18/12/2014 Government Employees Pension Fund of AG Switzerland 29/06/2018 South Africa South Africa 27/04/2006 Ltd Switzerland 18/06/2007 GPIF Japan 25/09/2015 The Dai-ichi Life Insurance Company, Limited Japan 06/11/2015 GRUPO FINANCIERO BANORTE Mexico 31/03/2017 & Nichido Fire Insurance International Finance Corporation (IFC) United States 15/02/2011 Co,.Ltd. Japan 26/07/2012 Japan Post Insurance Co., Ltd. Japan 27/10/2017 KLP Norway 25/09/2007 Universities Superannuation Scheme - USS UK 27/04/2006 University of California United States 04/09/2014 Korea National Pension Service (NPS) Korea, Republic of 25/06/2009 VidaCaixa Spain 16/10/2009 Landesbank Baden-Württemberg (LBBW) Germany 23/10/2009 Switzerland 06/07/2012

9 PRI teams 120 people to support you

Measure and YOUR Integrate the Join forces Challenge Keep up with communicate Principles into with your Educate staff AIM barriers to insights, progress on ESG issues your peers to evidence and against your engage ESG investment integration best practice own targets process investees and your peers

PRI TEAMS Investment ESG Engage- Academic Reporting & Practices ments Policy Research Assessment PRI Academy

10  Becoming a signatory: advantages Advantages for asset owners

Show public commitment on responsible investment

Guides: strategy, policy, manager selection, etc.

Tools: data portal, collaboration platform, etc.

Collaboration platform: company engagement

PRI Academy: online responsible investment training

Events & networking: PRI in Person, local events

Policy & macro trends: fiduciary duty, sustainable financial system, etc.

11 PRI asset owner guides Examples of PRI asset owner guides

INVESTMENT STRATEGY INVESTMENT POLICY MANAGER SELECTION

ASSET OWNER STRATEGY GUIDE: INVESTMENT POLICY: PROCESS & ASSET OWNER MANAGER HOW TO CRAFT AN INVESTMENT PRACTICE – A GUIDE FOR ASSET SELECTION GUIDE STRATEGY OWNERS

12 Becoming a signatory: requirements What is required to be a signatory

1. Reporting & assessment § Organisational overview, strategy & governance § Asset classes (if applicable) § Manager selection, appointment & monitoring (if applicable)

2. Accountability measures § Investment policy that covers >50% of AUM § Internal/external staff responsible for implementing RI policy § Senior-level commitment and accountability mechanisms for RI implementation

3. Signatory fee § Depending on the asset owner’s assets under management § Between GBP460 and GBP8440 per year

13 Thank you

Graeme Griffiths [email protected]

Don Gerritsen [email protected]

- RESPONSIBLE INVESTMENT -