ESG integration in our investments portfolio
Our investment portfolio
As a large insurance company, NN maintains a globally diverse investment portfolio. We do this in order to be able to meet the obligations to our customers and for equity (capital). NN Group's portfolio that we invest for our own account and risk spans various asset classes, sectors and countries. As we are well aware of the impact our investment decisions may have, investing our own assets in a responsible way is very important to us. Whether we are researching and analysing companies and countries, voting as shareholders or selecting asset managers, we integrate environmental, social and governance (ESG) factors into our processes as much as we can.
ESG integration in fixed income and listed equity
Goldman Sachs Asset Management (GSAM) has managed our listed equity portfolio and the large majority of our fixed income assets since April 2022. Our asset manager has relevant experience identifying ESG-related opportunities and/or risks on which portfolio managers base their investment decisions.
ESG integration is an integral part of GSAM’s investment processes. All analysts have access to ESG data from several data/research providers, which includes information on how each company scores on different ESG factors compared to its sector average, and if there are any relevant structural issues or controversies to consider. The analysts incorporate this data into their investment cases, thereby looking at the materiality for each company that is reviewed for investment. This process is applied to equities and corporate bonds. A similar procedure is in place for government bonds; however, instead of using ESG data on a company level, ESG data at a country level are used.
For more information on GSAM's approach to ESG integration, please refer to the Responsible Investment Policy published on the GSAM website.
Criteria for classifying Green, social and sustainability bonds
NN invests in green, social and sustainability bonds through external asset managers. By investing in green, social and sustainability bonds, we contribute to the broader sustainability transition and aim to make our contribution to the UN Sustainable Development Goals. As different green, social and sustainability bonds achieve different degrees of positive environmental and social impact we ask our external managers to follow the NN Green, Social and Sustainability Bond Standard. This standard sets minimum requirements that NN investments classified as green, social and sustainability bonds need to meet. The standard follows internationally adopted frameworks, draws on current market practices and needs to be applied together with the NN Responsible Investment Framework Policy.
For more information on our responsible investment policies and activities, refer to pages 47–54 of the 2022 Annual Report.
Sustainability of real estate
We strive to integrate ESG factors across all asset classes. In line with our ambition, NN Group formalised a sustainability approach for its own real estate portfolio. Specific responsible investment (RI) guidelines were developed, which set out the expectations of our (external) real estate managers. These guidelines can be downloaded here.
Since 2014, NN Group has been a member of the Global Real Estate Sustainability Benchmark (GRESB). We use the annual Real Estate Assessment to evaluate and engage with our real estate investments with the aim to improve the sustainability performance of our portfolio. For information on how we perform in GRESB, refer to disclosures in the NN Group Annual Report.
ESG integration in private equity
NN Group has responsible investment (RI) guidelines for private equity in place. We invest in funds that are managed by external private equity managers. The guideline defines our approach to integrate ESG factors in the selection and appointment of new private equity managers. Where it concerns existing investments in funds, we seek to actively engage with the managers to raise awareness on the importance of ESG factors during the evaluation and ongoing management of its private equity portfolio companies. To monitor the funds in which we invest, we developed an ESG dashboard. This dashboard is part of our internal performance reports and tracks the progress of the private equity funds and managers towards meeting our expectations.