Information related to EU Sustainable Finance Disclosure Regulation (“SFDR”)

The EU Sustainable Finance Disclosure Regulation (“SFDR”) aims to increase transparency on how financial market participants integrate sustainability (or Environmental, Social and Governance, “ESG”) risks and opportunities into their investment decisions. The SFDR introduces a classification system with new disclosure requirements for certain financial products. NN Hellas is in scope of the SFDR.
The introduction of the SFDR helps to ensure that NN Hellas and similar financial institutions disclose their approach towards sustainability, and we support this goal. The result of the SFDR will be transparency via disclosures on our website and in certain product documents to enable customers, investors and other stakeholders to compare different products with respect to their ESG risks and sustainable investment objectives.

The expected timelines of the SFDR will run from 10 March 2021 until the end of 2022 (considering the links of the SFDR with other sustainable finance regulations) meaning that NN Hellas will continue to implement new (disclosure) requirements in the years to come. NN Hellas has updated relevant website disclosures and product documentation to ensure compliance with the legal requirements per 10 March 2021.The updates are based on the legal requirements as laid down in the SFDR high-level legislation (level 1). The information on this page cannot be seen as being related to the SFDR draft detailed legislation (level 2) and hence will not be used in product documentation, website disclosures prospectuses and other documentation. NN Hellas will monitor the developments regarding the SFDR draft level 2 legislation and will implement the SFDR level 2 legislation once this becomes applicable.  

This page includes all information on our approach to the SFDR and what we have done so far. It includes information on:
● Sustainability risk policies;
● Adverse sustainability impacts;
● How our remuneration policy integrates sustainability risks; and
● How our financial products under the SFDR are classified.

 

Sustainability risk policies
NN Hellas applies the Responsible Investment Framework policy of the NN Group (the “RI Framework policy”), that supports “the systematic incorporation of Environmental, Social, and Governance (“ESG”) factors into the investment process, managing both risks and opportunities.” This helps making better informed investment decisions and to optimize the risk/return profile of the investment portfolios, as well as to reflect NN’s values in the investment process and to better align our business with the broader objectives and expectations of society regarding sustainability.
The RI Framework policy applies to our Proprietary Assets and in some cases to Client Assets as defined in the RI Framework policy.
The NN Group has defined ESG risk as “the risk being (in)directly associated with violations of environmental and social standards and norms” and ESG Investment risk as “Risk that ESG factors with respect to investments and/or investment proposals are not sufficiently understood or recognised, leading to assets losing value or missed investment opportunities”.
In what follows, we describe how the RI Framework policy is applied to NN’s own asset managers, as well as external assets managers.
The RI Framework policy requires that we establish a process to systematically incorporate ESG factors into our investment decision-making process. In brief we do so by implementing a variety of Responsible Investment (“RI”) strategies:
● Applying NN’s norms-based RI criteria, excluding investments in some specific industries or companies;
● Integrating, where relevant, material ESG risks and opportunities into the research and analyses of investments;
● Exercising active ownership through voting and engagement;
● Exercising restrictions (as a measure of last resort).
The RI Framework policy sets out norms-based RI criteria through which investments in companies involved in certain activities are excluded. Such activities include, but are not limited to:
● Development, production, maintenance or trade of Controversial Weapons;
● The controversial supply of arms;
● Tobacco production;
● Mining of thermal coal;
● Corporates violating the standards of the United Nations Global Compact and OECD guidelines; and
● Countries subject to country-wide arms embargo sanctions.
NN Group asset managers that manage Client Assets pursuant to discretionary mandates, apply those elements of the RI Framework policy that are consistent with their fiduciary responsibilities and the mandate we have provided.
The NN Group asset managers apply the NN Restricted List, as described in the RI Framework policy.
NN Group’s asset managers, that manage UCITS, will apply those elements of the RI Framework policy that are consistent with their fiduciary responsibilities to the mutual fund and the investment guidelines of the mutual fund.
The NN Group asset managers will apply the NN Restricted List, as described in the RI Framework policy. If a mutual fund is obliged by their prospectus to replicate the composition of indices (i.e., passively managed products such as ETFs and index funds), we will ensure that the cumulative weighting in issuers for which legislation is in place prohibiting their financing, is not more than 5% of the related fund or index.
We did not consider the RI Framework policy when selecting UCITS managed by external asset managers to manage the Client Assets. UCITS managed by external asset managers cannot implement the NN RI Framework policy, because there are multiple investors that participate. Also, the NN Restricted List cannot be applied for the same reason.
For these funds, we will monitor the composition of such funds and we will ask those asset managers for responsible investment policies and restricted lists and will apply a risk-based approach if not available.
The information we have disclosed above is based upon the information that currently is available, also relying on information provided to us by third parties. Where third parties have not provided us with (adequate) information, we will continue our efforts to obtain this information. When more (adequate) information becomes available, we will amend our disclosures to reflect this.

 

Principal Adverse Impacts Statement
FMP Entity name: NN Hellas 
Legal Entity Identifier: 21380015K5GPXUGHWP21

Summary 
NN Hellas is a long-term institutional investor with a duty to act in the best interest of our policyholders, clients, shareholders and other stakeholders. To fulfil this duty, we acknowledge the importance of systematically incorporating Environmental, Social, and Governance (ESG) factors into our investment policies, decision-making and related processes. On the one hand, we strongly believe that this ensures better informed investment decisions and helps to optimise the risk-return profile of the investment portfolios. On the other hand, incorporation of ESG factors helps to reflect our organisation's values in the investment process and to better align our business with the broader objectives and expectations of society. Our assets are managed by asset managers chosen by us. We carefully select asset managers for managing these assets, to ensure that their investment philosophy and approach are aligned with our Responsible Investment policies. 

As part of our approach to responsible investing, we aim to mitigate the negative impacts of our investment decisions on sustainability factors. These negative impacts are also called adverse impacts, whereby the most significant adverse impacts are referred to as principal adverse impacts. These principal adverse impacts can occur in different areas, such as environmental, social and employee matters, human rights, corruption and bribery matters. We consider the adverse impacts of our financial products’ investment decisions through specific guidelines. The degree and the way the principal adverse impacts are considered in the investment process depends on various factors, such as on the type of fund or strategy, asset class, asset manager, and availability of reliable data. As a consequence, the exact application can differ between financial products, which will be documented when applicable in the financial product disclosures in line with the requirements and timelines of the European Union’s Sustainable Finance Disclosure Regulation (SFDR).

Where we have full discretion over the way our assets are managed, our asset managers are required to consider the principal adverse impacts in their investment due diligence and investment decision-making based on our specifications, and to report on this. Where we do not have full discretion, for example in pooled investment vehicles in which also other investors are investing in, we encourage our asset managers to have suitable methodologies, data and processes to consider the principal adverse impacts in their investment due diligence and investment decision-making. For pooled investment vehicles of external managers that promote environmental or social characteristics, or that have a sustainable investment objective,  we expect asset managers to report to us on their activities to address principal adverse impacts and the achieved results. In line with the SFDR requirements, we will increasingly monitor asset managers that we work with and their performance in this area and will actively engage with them to further improve their practices and results. In this statement we provide more information on our overall approach to identifying, prioritising and addressing principal adverse impacts of our investment decisions on various sustainability factors. This includes the expectations we have of our asset managers. This statement consists of the following four sections:
I.    Description of principal adverse sustainability impacts
II.    Description of policies to identify and prioritise principal adverse sustainability impacts
III.    Engagement policies 
IV.    References to international standards

I.    Description of principal adverse sustainability impacts
As part of NN Group, NN Hellas has a long history of responsible investing. The NN Group Responsible Investing Framework Policy (link here) reflects our overall approach to responsible investing. NN Hellas considers the principal adverse impacts of its investments on sustainability factors. The present statement is the principal adverse sustainability impacts statement of NN Hellas.
NN Hellas uses a combination of methods to mitigate principal adverse impacts. The key ones are  exercise of voting rights, engagement with investee companies, and exclusions. Which (combination of) methods we apply depends on the nature of the topic, as well as on the specific context of the investment that is causing the adverse impact. Also, given that external asset managers manage most of our assets, we select where possible and feasible asset managers that apply these methods. 
Excluding companies from our investable universe means that we or our asset managers can no longer influence them to mitigate their adverse impacts. For this reason, where possible, we prefer an engagement-led divestment approach, only excluding companies when engagement is either not deemed feasible or is unlikely to change a company’s conduct or involvement in specific business activities. The exact way principal adverse impacts are considered depends on various factors, such as on the type of fund or strategy, asset class, asset manager, and availability of reliable data.
More information can be found on the NN Group Responsible Investment Framework policy (link here)

II.    Description of policies to identify and prioritise principal adverse impact sustainability factors (NN Group – Responsible investment policy framework (nn-group.com)
To demonstrate and disclose our vision and approach on responsible investment, NN Group has a Responsible Investment Framework policy. With seven key principles (link here), we have highlighted the measures we take to responsibly invest our assets. Our approach is a reflection of our investment beliefs, our organisation’s values, relevant laws, and internationally recognised norms and standards, based on which minimum requirements have been developed that have to be adhered to in the investment process. We structurally assess our investment universe based on our norms-based RI criteria and we expect from our asset managers to have the same or similar processes in place. NN Group expects the companies it invests in to act in accordance with international standards, such as the United Nations Global Compact, UN Guiding Principles on Business and Human Rights and OECD Guidelines for Multinational Enterprises. When we assess companies to severely and systematically violate these standards, we encourage our asset managers, where possible and feasible, to start an engagement process. We put companies on our exclusion list when engagement is not or no longer considered feasible to change the conduct or involvement in specific business activities of those companies. Such a decision will not be taken lightly and only where we believe that exclusion is a balanced and proportionate response. 

We put companies on our exclusion list when they demonstrably have activities in the trade of arms to central governments or non-state actors that are sanctioned by a UN or EU arms embargo. This is also the case for companies that develop, produce, maintain or trade ‘controversial weapons’. Weapons that we define as controversial include anti-personnel landmines, cluster munitions, biological weapons, chemical weapons, depleted uranium ammunitions, white phosphorus weapons, and nuclear weapons. We also put companies on our exclusion list that are involved in the production of tobacco, oil sands, or thermal coal mining. Finally, sovereign issuers against which arms embargoes have been issued by the UN Security Council are also on our exclusion list. On a case-by-case basis, NN may decide to also exclude sovereign issuers on other grounds. The NN Exclusion list is publicly available on the RI policies page of NN Group’s website. Where our assets are invested in mandates for which NN Hellas can decide for all aspects how its assets are invested (i.e. fully discretionary), we are able to completely apply the exclusion list. When our assets are invested in funds for which NN Hellas does not have full discretion over the way they are managed, for example in pooled investment vehicles in which other investors also participate, we cannot enforce our exclusion list one-on-one. 

Also where investments are not in violation of our exclusion criteria, these investments can still create adverse impacts, which may be addressed via exercising voting rights or via engagement, which is further elaborated upon in section III. One principal adverse impact is not prioritised over the other, but we and our asset managers do prioritise the resources that are allocated to addressing the principal adverse impacts, based on various factors, such as availability of data, type of investment instruments, impact on society or the environment, and the expected likelihood of successfully mitigating these impacts. As different asset managers have different approaches to addressing principal adverse impacts, there is a variety of ways in which principal adverse impacts are addressed throughout our assets and financial products. 
 
III.    Engagement policies  
We believe engagement and voting are effective ways for investors to hold company management accountable and to create beneficial change. We therefore expect the asset managers we choose to address where possible and feasible, principal adverse impacts via structural voting and engagement activities, underpinned by high quality research and data. Where needed we actively engage with our asset managers to further improve their practices, results, and disclosures in this area.
We have a fiduciary duty for assets invested on behalf of our clients and for our own assets. We encourage the asset managers chosen by us to actively engage with the investee companies. Where our assets are managed on a discretionary basis (i.e. where we have full discretion over the way the assets are managed), the NN Group engagement policy needs to be adhered to (link here). 
Next to engaging with companies that severely and systematically violate international standards (as described in section II), we encourage our asset managers to engage on ESG themes that we believe have a material impact on society, and where it is expected that engagement efforts can achieve beneficial change. Furthermore, we expect our asset managers to periodically report on their engagement activities and results and we will engage with them where this is not structurally the case.

IV.    References to international standards
Our investment approach incorporates internationally recognised standards, including the UN Global Compact, the UN Guiding Principles on Business and Human Rights (UNGPs) and the OECD Guidelines for Multinational Enterprises. Based on these standards, our Responsible Investment Framework policy includes minimum requirements that have to be adhered to in the investment process. We actively track indications of violations of NN’s norms-based responsible investing criteria. Such indications include research from NN’s external ESG research or engagement provider(s), inputs from own (investment) staff, our asset managers, or information from NGOs or media sources. Where we do not have full discretion over the way our assets are managed, we encourage our asset managers to consider these. 
We believe that part of being a responsible investor is to actively contribute and collaborate with other players in the investment value chain to further develop the field. We therefore endorse or sign relevant standards and statements and are active members and signatories of various networks and responsible investment initiatives, and actively encourage our external asset managers to do the same. In addition, we consider a range responsible business conduct codes and internationally recognized standards for due diligence and reporting. 
Below we have listed examples of memberships and responsible business conduct codes and initiatives that we have endorsed or are signatory to. Please refer to this link for the full list.

-    The UN Global Compact principles
-    Paris Agreement Pledge for Action
-    FSB Task Force on Climate-related Financial Disclosures (TCFD)
-    Financial sector commitment to Dutch Klimaatakkoord
-    Partnership for Carbon Accounting Financials (PCAF)
-    Institutional Investor Group on Climate Change (IIGCC)
-    GRESB
-    ICSR covenant for the Dutch insurance sector
-    Paris Aligned Investment Initiative Net Zero Asset Owner Commitment

 

Remunaration policy

In NN Hellas we apply the Remuneration Policy which is drawn up in accordance with the NN Group Remuneration Framework Policy (the “Framework”). The Framework is aligned with NN Group business strategy, objectives, values and risk appetite and supports the creation of long-term value for all our stakeholders. Following the Framework, performance management is based on a number of financial and non-financial performance objectives. These objectives focus on robust and effective risk management, as well as balanced risk taking. This covers all types of risks, including ESG related risks. We refer to the NN Group Website: https://www.nn-group.com/sustainability/responsible-investment/sustainable-finance-regulation.htm for more information.

 

Classification of financial products under the SFDR
In line with the SFDR we include information in our product disclosures about how we integrate sustainability risks into investment decisions, and how we “classify” each product as outlined in the SFDR. The product classifications help our customers and other stakeholders identify whether a product is:
• Promoting environmental or social characteristics;
• Has a sustainable investment objective; or
• Is a mainstream product doing neither of the above.
These disclosures are included either in our pre-contractual product disclosures or on this website.

 

 

 

 

 

 

Uploaded on 10/03/2021

Last modification on 29/04/2022

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