2021 was a year of milestones for NN Investment Partners (NN IP), making progress in further integrating ESG criteria into investments and setting interim emission-reduction targets for our portfolios with the goal of reaching net zero by 2050. Progress on climate change while supporting positive action on a range of social issues were decisive priorities, highlighted by NN IP’s reduction of about 4.6 million tonnes of CO2 and support for 85% of shareholder resolutions on social issues. Today, 91% of NN IP’s assets under management are ESG integrated, demonstrating a 17% increase since 2020. There is still work to be done but NN IP continues taking action to tackle some the world’s pressing challenges.
Adrie Heinsbroek, Chief Sustainability Officer shares: “We are well aware of challenges confronting the world, from global warming to social inequality. We feel a deep sense of responsibility to our many stakeholders that extends far beyond short-term financial gains. We owe it to our stakeholders to take action and offer investment solutions to shape a sustainable future. In 2021, we have been able to make a lasting difference in a far broader context by putting the capital we manage to work.”
We set a high bar for ourselves when it comes to integrating environmental, social and governance criteria into our investment decisions. We consistently look at all three factors – E, S and G – and we’re transparent about the benefits and the challenges of this uncompromising approach. Three pressing ESG themes have emerged in the wake of the pandemic. With the natural world at a tipping point, it has become clear that progress on climate change needs to be faster and more decisive. The challenges of sustaining biodiversity also came to the fore this year with the UN’s first Convention on Biodiversity (COP-15). At the same time, the necessity of addressing the inequalities revealed by the pandemic has brought a greater focus on a range of social issues. These areas have become more important for policymakers and, as the Responsible Investing Report shows, investors are becoming increasingly aware of how to tackle these challenges.
NN IP is dedicated to helping mitigate the impact of climate change and limit global warming to 1.5 °C in line with the goals of the Paris Agreement. In 2021, we made significant progress towards achieving our environmental ambitions across our responsible investment portfolios and we cut 44% of carbon emissions related to our investments compared with benchmarks, a reduction of about 4.6 tonnes of CO2.
In 2021, we toughened our restriction criteria for companies involved in extracting oil sands and mining thermal coal. This decision was part of our commitment to reduce the carbon footprint of our investments in line with the global drive to net zero.
Heinsbroek continues: “Many of the oil companies now set net zero plans, including proposals to offset emissions by investing in renewable energies, planting trees or using carbon-capture technologies. This is a good start, but we need to ensure it is happening in practice. In 2021, we began challenging these plans, asking if the land needed for climate solutions had been acquired, and if the emission-reduction technologies had been proven at scale. We also scrutinised the alignment of climate targets with compensation.”
The pandemic has put the spotlight on social challenges from economic inequality to affordable healthcare, and the social component of the ESG agenda is catching up with its peers. In 2021, the Covid-19 crisis further exacerbated inequality on a global level, placing the poorest members of society at the greatest risk. Upholding decent labour practices and standards that go beyond legal frameworks contributes to both society and business. By pushing companies to respect workers’ rights, NN IP has sought to contribute to a more inclusive economic transition. In 2021, 112 shareholder proposals on social issues were voted on, opposing management in 98 cases ranging from equitable vaccine access to worker health and safety.
Valentijn van Nieuwenhuijzen, Chief Investment Officer: “We actively support proposals submitted by shareholders that address social and governance issues that can affect a company’s ability to create value in the long term. Voting for such resolutions is an important part of our stewardship efforts.”
Biodiversity loss is intertwined with climate change and is becoming an increasingly urgent issue for the planet. The United Nations reports that human activity has altered almost 75% of the earth’s surface, squeezing wildlife and nature into an ever-smaller corner of the planet¹. One million animal and plant species are threatened with extinction, while deforestation and desertification affect the lives of millions of people. In 2021 NN IP signed a financial-sector commitment to eliminate commodity-driven deforestation, joined the global effort to raise investor awareness of commodity-driven deforestation, and joined the Partnership for Biodiversity Accounting Financials, an initiative enabling financial firms to disclose the biodiversity impact of loans and investments.
Heinsbroek concludes: “The consistent integration of environmental, social and governance (ESG) factors in NN IP’s investment strategies enables us to unlock potential financial value by identifying risks and opportunities in a rapidly changing market. For our clients, this means their money is directed to companies and projects that are poised to thrive in the shift to a greener, more inclusive economy.”
Read the full Responsible Investing Report by clicking here.