BeFrank’s investment solutions have a different framework for integrating sustainability risks in the decision-making process. ESG risk is defined here as: the risk of (in)direct involvement in the violation of environmental and social standards and norms, and ESG investment risk as: the risk that ESG factors related to investments and/or investment proposals are not sufficiently understood or recognised, causing the value of investments to fall or investment opportunities to be missed. Below, we list each investment solution for you:
The actively managed lifecycle
In the Active Lifecycle, NN’s Responsible Investment Policy Framework is applied by the asset manager. This supports the systematic integration of ESG factors into the investment process. As a result, both risks and opportunities are managed. This allows for better-informed investment decisions and improves the risk-return profile of investment portfolios.
The managers of the investment funds apply those elements of the Responsible Investment Policy Framework that are consistent with their fiduciary duties and the investment guidelines for the fund.
The managers apply the restriction list as described in the Responsible Investment Policy Framework. If an investment fund is required by its prospectus to follow the composition of indices (i.e. passively managed products such as ETFs and index funds), the cumulative weight of issuers that are not allowed to be funded under applicable law will not exceed 5% of the relevant fund or index.
The passively managed lifecycle
In the Passive Lifecycle, ESG funds from external asset managers are used for the most part. Within this cycle, the asset manager carries out ESG screening on the following components:
– UN Global Compact controversies in the areas of environment, human rights, labour, governance, and customer relations
– Production and distribution of tobacco and associated products
– Production and use of thermal coal
The asset manager uses voting rights and engagement (getting companies to improve their behaviour) to further mitigate sustainability risks.
The Sustainable Lifecycle
In the Sustainable Lifecycle, impact funds from an external asset manager are used for the most part. These are funds that only include investments that make a positive contribution to the environment, sustainable economy, and health. The investment process is as follows:
– Selection on positive impact and thematic fit
– Strict and very extensive screening on a large number of themes; human rights, environment, weapons, agriculture, biodiversity, unsustainable products, etc.
The asset manager makes intensive use of voting rights and engagement (getting companies to improve their behaviour) to further mitigate sustainability risks.
The range of investment possibilities within the Do It Yourself investment service includes a diversity of investment funds. No general policy for the integration of sustainability risks applies here. Within the range, funds ranging from minimal to far-reaching policies for mitigating sustainability risks are available.
In the passively managed lifecycle, the Sustainable Lifecycle and DIY Investing the investment funds are managed by external asset managers. BeFrank is not able to impose the RI Framework police upon these asset managers (i.e. not related to the NN Group). Thus, we cannot require that the RI Framework policy exclusions be applied to those funds. As described, the funds in the passively managed lifecycle and the Sustainable Lifecycle do have a responsible investing policy. For information on the external asset managers’ approach to the integration of ESG risks in investment decision making, we refer to the specific fund information and/or website of the asset manager.