Proprietary assets
ING holds billions in proprietary assets. Proprietary assets include assets that belong to ING Insurance and Bank Companies. NG Investment Management (ING IM) is the business unit that manages most of these proprietary assets. The main component of ING’s proprietary assets is derived from premiums paid by consumers for ING’s life insurance products. We believe these assets should be managed and invested responsibly and with respect for stakeholders worldwide. We want to be able to meet our obligations to ING’s policyholders in the short and long term. At the same time, we avoid investing proprietary assets in companies engaged in activities that are incompatible with our Business Principles and other ING policies, such as our Defence Policy.
Selection criteria
To assess the sustainable performance of companies, ING uses a twofold method:
- Sustainable business strategy and implementation determine the positive test. ING gathers information on their performance on the levels, people, planet and society. The Non-Financial Indicator (NFI) is used to asses per industry sector which companies positively distinguish themselves from their direct competitors in terms of their sustainable performance. Over 70 parameters (data entry points) are used to calculate the NFI. Key is the ranking position and comparison of the company in relation to its competitors in the relevant sector. If a company receives a negative NFI-score (i.e. below sector average), the company will not qualify as an investment (best-in-class assessment).
- The negative test revolves around the operational management of a company. Companies are assessed on the basis of a number of exclusion criteria. For example, companies that use child labour, are active in the production of arms or are guilty of corruption practices are excluded.
Investment Strategy
Investment portfolios are mostly defined by asset allocation for risk profile purposes. In addition to that, ING in the Netherlands offers retail customers the possibility to invest according to five different approaches. One of these five approaches is ‘Socially Responsible Investing’, which builds portfolios by taking ‘People, Planet and Society’ issues into account. Customers can choose either a portfolio with selected investment funds, both from ING and from other providers (‘open architecture’). Alternately, they can select a portfolio with individual companies. Both portfolios meet the ING criteria on sustainability.
Sustainable Investment Funds
ING provides retail clients in the Netherlands information on the sustainable characteristics of (thematic) investment funds offered by a wide range of providers, not just funds managed by ING. ING selects funds that positively distinguish themselves by certain sustainability topics and/or themes.
SRI Department
The SRI department of ING in the Netherlands has a number of dedicated consultants and analysts that provide sustainable investment information. Sustainable ssets under management held by the SRI department grew 10% to EUR 2,524 million in 2009.
ING’s SRI investment specialists of both Retail and Investment Management meet regularly to review actual topics.
Sustainable Funds
Sustainable Growth Equity Fund
ING’s SRI team of ING Investment Management, based in The Hague, manages the Sustainable Growth Equity Fund which combines risks and opportunities linked to ESG (environmental, social and governance) factors with financial analysis of a company. In this way the fund takes into account factors which are often out of scope of traditional financial analysis, but can have a significant impact on long-term performance. When selecting equity for the Sustainable Growth Equity Fund, the ING SRI team uses both relative (best-in-class) and absolute (exclusionary) selection criteria. The first step in determining the fund portfolio is to apply the best-in-class approach, whereby the relative position of companies is determined by ESG scores. Only the top 50% of each sector pass this relative test. Subsequently, the ING SRI team assesses the remaining companies on the basis of a number of exclusionary criteria. For example, companies involved in the production of nuclear energy, arms, tobacco, and gambling are excluded, as are companies that act in breach of international labour and human rights conventions.
Sustainable Fixed Income
The ING Sustainable Fixed Income strategy combines socially responsible investment with a diversified worldwide euro bond portfolio. In order to put together the portfolio of the fund, the applied criteria are fully in line with those of ING’s Sustainable Growth Equity Fund. The Sustainable Fixed Income portfolio consists of euro-denominated bonds issued by governments and companies that have sound financial prospects and meet a range of environmental, social and transparency criteria.
Managing Third-party assets
ING manages third-party assets for investors, who choose to invest their money through ING at their own discretion. Among ING’s third-party assets are the assets that belong to individual and institutional investors, as well as assets of mutual funds managed by ING. ING IM is the business unit that manages most of these third-party assets. ING held billions in third-party assets at end 2009. Different ING SRI policies could be applied to a client’s portfolio if required. Clients who wish to exclude defence industry or other controversial activities from their portfolio are offered sustainable investment funds and portfolio screening.
UN Principles for Responsible Investment
Since 1 September 2008, ING IM has been a signatory of the UN Principles for Responsible Investment (UNPRI). Launched in 2006 by the UN Secretary General, the UNPRI are a set of global best practices for responsible investing. The UNPRI is in partnership with the UN Global Compact and the Finance Initiative of the UN Environmental Programme, both of which ING is a member. The UNPRI are designed to help investors consider the environmental, social and governance issues in investment decision-making and ownership practices. The UNPRI are voluntary and aspirational. They function as a direction to head in, and ING’s ambition is to demonstrate continual improvement.
The decision to join the UNPRI is in line with ING’s increased strategic focus on sustainability issues. Where consistent with its fiduciary responsibilities, ING IM will seek to work with the UNPRI framework, integrating environmental, social and governance criteria in its investment management activities. A global ING Investment Management Committee (the UNPRI Committee), which includes members from Europe, US, Asia, and Australia, has been set up to monitor and align regional UNPRI initiatives, encourage best practice sharing and support consistent internal and external communication regarding UNPRI initiatives. Each year, this committee will also participate in the UNPRI Reporting and Assessment survey, which will help evaluate our progress.
The UNPRI Committee has set various ambitions. One of them is to provide training to mainstream ING IM teams on ESG (environmental, social and governance) criteria. This ESG information is shared globally as part of the mainstream investment analysis and decisionmaking process.