Responsible investment process

 

Investing responsibly means thinking outside the box and not just pursuing purely financial interests, but instead focusing on social and ecological perspectives. This is not so much about ideologies, but about preserving natural resources for future generations. In this context, non-sustainable development becomes a risk for a company.

 

 

SUSTAINABILITY AS AN INTEGRATIVE CONCEPT
The interplay of all three elements is a prerequisite for the responsible management of sustainable investments.

 

 

1. Avoiding exclusion criteria and demonstrating responsibility
Avoiding controversial business areas and practices is based on the ethical premise of avoiding participation in bad things and is the first step towards sustainable investment. The focus is on influencing opinion and ethical positioning, as well as avoiding reputational risks. 

 

2. Supporting and promoting sustainability: best in class
The next level of development focuses more on integrating ESG research into enterprise analysis and thus into the selection of securities. This approach can also be applied accordingly for countries (regional entities) as well as for issuers of debt securities. It adopts the ethical position of cooperating with good. The focus in this regard is on integrating ESG research into the investment process and on improving the risk profile, which thus improves the portfolio’s risk-return profile.

 

3. Guiding and developing effect through dialogue and engagement: engagement
The third level is the newest and most progressive element of a holistic ESG approach. It complements the first two levels described above by supporting change in the sense of having a socio-economic impact by influencing the behaviour of companies, organisations, and consumers, for example by making companies more aware of the importance of sustainability and motivating them to act more responsibly. These impacts can fall completely outside the sphere of return or risk targets for a portfolio, but they should not violate these. The vision of the often-postulated double dividend can only really be pursued in a credible manner through engagement. 

Representatives of Raiffeisen Capital Management conduct the shareholder engagement dialogue with a company either as an individual investor or together with other like-minded responsible investors, which is referred to as collaborative engagement. The SRI team is in contact with an average of 200 companies and issuers every year.

 

 

ESG ASPECTS
The incorporation of sustainability information allows risks to be better assessed in the three categories of environmental, social, and corporate governance concerns.

ESG Dimension Umwelt

Environmental concerns
(e.g. volume of CO2 emissions, consumption of resources)

 

ESG Dimension Soziales

Social concerns
(e.g. working conditions, supply chain)

 

Corporate Governance

Corporate governance concerns
(e.g. independence of supervisory bodies, remuneration)

 

 

Nachhaltigkeitsfonds Ausschlusskriterien EXCLUSION CRITERIA
If a company violates one of the criteria, such as the production of nuclear power or the violation of human rights, it is excluded from the investment universe. In addition, there are separate exclusion criteria for countries in their role as issuers of government bonds, such as particularly high defence budgets. These exclusion criteria can help to avoid risks that are associated with a major financial impact.

 

Raiffeisen Capital Management has undertaken a voluntary commitment to avoid investment in agricultural commodities, livestock, and controversial weapons. In 2017, companies primarily involved in the production or use of coal were also added to the exclusion list
 

Sustainability is often considered to be a measure of quality for companies and issuers. Because a good score in the stakeholder analysis, which assesses how the company treats its employees, customers, suppliers, the environment, etc., often goes hand in hand with a good credit rating and healthy company growth. One reason for this is certainly that good long-term performance is only possible with a commitment to sustainable business, because this allows future developments to be anticipated and drives action that is compatible with these developments.

 

 

This is a marketing material of Raiffeisen Kapitalanlage-GmbH. As of Mai 2020.

 

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