Adaptivity is key
In addition to social and ethical principles, ACTIAM assesses companies on the basis of financial and material principles. Companies need to have adequate adaptive capacity to make the transition towards a sustainable business model. ACTIAM already applies these principles in all of its actively managed funds and mandates, and is now implementing this for its index funds. On the basis of seven fundamental material principles , ACTIAM provides insight in how companies are preparing for the transition to a sustainable society and whether or not they are operating within the limits of our planet; these include water neutral portfolios by 2030 and no deforestation or loss of biodiversity.
In addition, ACTIAM assesses whether or not these companies are able to tackle and prevent societal controversy (i.a. on the basis of the UN Global Compact and OECD guidelines). ACTIAM reports on financial as well as social returns, including CO2 and water footprint of the selected companies.
Excluding oil and gas companies
Dennis van der Putten, Director Sustainability & Corporate Strategy at ACTIAM: “By including ESG as risk indicators, we are able to optimize the risk/reward profile. We focus on what is financial material. Which companies face significant financial risks by developments such as climate change, water usage, human capital and scarcity of resources? We do not wish to invest in companies that do not sufficiently mitigate these risks.
We employ a future-oriented approach and make use of combined sources of data, as well as qualitative analysis. On our unique ESG dashboard, we provide insight into exclusions, climate and water risks as well as efforts in the areas of engagement and voting. As a result of our newly refined policies, the percentage of excluded companies has increased from 5% to 20%. For example, the exclusion included a large number of companies in the oil and gas industry.”