Sustainable investment means considering all those factors which have a material impact on investment analysis and decision-making. These include environmental, social and corporate governance (ESG) factors (the three dimensions of sustainability).
What are ESG criteria?
ESG: the three dimensions of sustainability
• Environmental sustainability criteria are used to assess how an issuer manages the risks and opportunities deriving for example from climate change and the use of environmental resources.
• Social sustainability factors show how relations are managed with individuals with whom the issuer interacts and the resulting impacts. They therefore include respect for human rights, working conditions, health and safety.
• An issuer’s corporate governance sustainability translates into an assessment of its board for example in terms of its structure and diversity and the definition of its objectives, which include shareholder rights and the prevention of corruption.
Why consider sustainability criteria when you build an investment portfolio?
The goal of a sustainable investment is to combine the search for economic returns with the desire to generate a positive impact on the environment and society.
We believe that incorporating environmental, social and governance criteria into investment assessments for client portfolios can help to mitigate the risks associated with the investment, because it allows us to identify critical issues related to ESG factors, such as reputational risks, which could have a negative effect on returns. Incorporating sustainability criteria in the construction of the portfolio also helps to raise awareness among issuers on their impact in terms of sustainability and on the inclusion of sustainable development goals in carrying out their business and in defining the corporate mission.
Pramerica SGR’s journey into the field of sustainable investments began over fifteen years ago with the launch of its ethical strategies (equity, fixed income and balanced funds), which exclude issuers involved in controversial activities from the sphere of possible investments (e.g. pornography, gambling, tobacco, alcoholic beverages, armaments and nuclear energy).
We continued our journey with the management and distribution of Pramerica Sicav Social 4 Future and Pramerica Sicav Social 4 Planet sub-funds, two investment solutions with a best-in-class approach specialising in the development of the circular economy and in megatrends with the greatest impact on the future of our planet (i.e. scarcity of resources, climate change, population trends and the development of emerging markets).
Our attention to sustainability also consists of funding projects of great social value through donations to non-profit organizations both of part of the company revenues and of part of the management fees collected from some of the socially responsible strategies we manage and distribute.
In 2018 we launched a sustainability project which involves all Pramerica’s corporate functions with the aim of increasing the sustainability of our life and investment choices, because we believe that everyone must do their part to to build a more sustainable world.
We believe that for us sustainable finance is a commitment that affects every aspect of our activity. It is not just a question of making investments with attention paid to environmental, social and “good governance” criteria (ESG), but an across-the-board approach that affects the whole of our company.
We offer sustainability to our investors and we intend to make this part of our own personal lives and our corporate culture must therefore necessarily contain a process of positive development in which individual persons are the protagonists of virtuous change.
Our commitment to sustainable investment also translates into our observance of the United Nations Principles for Responsible Investment, which constitute the foundations of sustainable investment worldwide and we commit to the following:
1 - We will incorporate environmental, social and corporate governance (ESG) issues into investment analysis and decision-making processes.
2 - We will be active owners and incorporate ESG issues into our ownership policies and practices.
3 - We will seek appropriate disclosure on ESG issues by the entities in which we invest.
4 -We will promote acceptance and implementation of the Principles within the investment industry.
5 - We will work together to enhance our effectiveness in implementing the Principles.
6 -We will each report on our activities and progress towards implementing the Principles.