Laaken integrates so-called Environmental, Social and Governance (ESG) sustainability criteria in its investment policy to conform to the standards and values of today and tomorrow’s society, to mitigate negative impacts and reputational risks and to avoid association with certain industries or governance practices.
Laaken is a signatory of the United Nations’ Principles for Responsible Investment (PRI). The PRI cooperates with the OECD, G20 Green Finance Study Group, COP21 – the UN’s Caring for Climate Business Forum and supports the Financial Stability Board’s Task force on Climate Related Financial disclosures.
Laaken reports annually to PRI on:
For the exclusion of harmful sectors and investments, Laaken adheres to the guidelines of the Norges Bank, which publishes an ‘observation and exclusion list of companies’. Norges Bank is the investment manager of the Norwegian Sovereign Wealth Fund, the largest country reserve fund in the world.
These guidelines for exclusions can either be product or conduct-based. Product based examples include producers of nuclear weapons or cluster munitions, the entire tobacco industry, major producers and consumers of coal, and companies that sell military equipment to countries with serious human rights issues.
Conduct-based examples include companies associated with human rights violations, serious environmental damage, fraud or corruption.
Exclusions apply not only to the company concerned, but also to entities with controlling interests in that company.
Laaken believes that sustainability may have material impact on the long-term performance of a company. For the integration of sustainability into our investment policy, Laaken takes ESG risks and scores into account for each constituent in the portfolio. Our ESG scores are based on one or more ESG ratings from renowned rating agencies and made available by our data information system. The score indicates which companies are at the forefront of ESG performance and can vary between 0 and 100. For state and supranational bonds, Laaken inquires the so-called SDG index, which assesses for each U.N. nation to what extent sustainability goals are achieved.