Terms and condition
Private-union in association with BVI Engagement Policy
Union Investment’s engagement process comprises voting at annual general meetings (UnionVote) and maintaining a constructive dialogue with companies (UnionVoice). Our Proxy Voting Policy constitutes the framework for our voting activities, whereas this policy serves as a guideline for our direct dialogue with companies as part of our engagement activities. This policy applies to interactions with both stockissuing and bond-issuing companies. The Engagement Policy supplements the Proxy Voting Policy.
1. Philosophy Union Investment sees its role as an active and sustainabilityoriented investor. We consider it our duty to represent the interests of our investors in our interactions with the companies in which we invest. Exerting our influence to avoid risks and promote sustainability is one of the ways in which we fulfil this duty. We firmly believe that sustainability can have a substantial impact on a company’s performance in the long term. Businesses with inadequate sustainability standards are significantly more susceptible to reputational risks, regulatory risks, event risks and litigation risks. ESG-related (environmental, social and governance) aspects can have a material effect on the operations of a business, its brand/enterprise value and its continued existence. The overriding objective of this Engagement Policy is to promote sustainability and, as a result, improve shareholder value for the long term.
2. Principles and values Our values and fundamental principles that form the framework for our engagement activities are based on the code of conduct of the Federal Association of German Fund Management Companies (BVI), on the German Corporate Governance Code, and on internationally accepted norms such as the Principles for Responsible Investment, the UN Global Compact and the goals of the United Nations. Examples • Environmental standards: Carbon Disclosure Project (CDP), ISO • Labour standards: International Labour Standards (ILO) • Human rights: UN Guiding Principles on Business and Human Rights • Governance structures: German Corporate Governance Code, OECD governance codes
3. Topics The ESG topics for our engagement projects are derived from incidents of misconduct on the part of a company (i.e. a violation of one of the aforementioned principles), from analyses and their findings as well as from the dialogue with our sustainability team and our sector analysts. Information provided by our stakeholders and customers can also be taken into account in the selection of topics. When deciding which topics and investee companies to prioritise, we consider a range of factors such as the relevant holdings in our funds, negative lists, company contacts and the general extent of our influence.
4. Objectives and indicators The overriding objective of our engagement activities is to promote more sustainable practices and to improve shareholder value as a result. A key element in our analyses is to establish where a company stands in terms of compliance with ESG criteria and how its risk management is set up. We then focus on specific topic areas, analyse them and discuss them with the company. The goal is to challenge existing criteria and to improve them for the future. The criteria we use are summed up in the acronym ‘GOOD AT’, which stands for: G for governance The company should develop clear policies on sustainabilityrelated topics such as human rights, environmental impact and the prevention of corruption. It must demonstrate a clear commitment to implementing a sustainable business strategy.
O for organisation The company’s organisation should be structured in a way that facilitates an efficient and systematic implementation of sustain – ability-oriented policies. A clear allocation of responsibilities and systems that incentivise compliance with ESG criteria at board level are of particular importance. O for openness The company should be willing to discuss ESG-related opportunities and risks with relevant stakeholders. D for due diligence The company has an obligation to exercise due diligence by reviewing and monitoring the effectiveness of the implemented mechanisms, systems and processes both internally and along its supply chain. A for action The company should take appropriate measures and action to eliminate any identified ESG-related shortcomings. Our particular focus is on best practice and on how companies react to serious allegations. T for transparency The findings from due diligence processes, the outcomes of any measures that were implemented and relevant policies should be communicated openly.
5. Process Private-union’s engagement process consists of three key stages: pre-engagement, the actual engagement, and post-engagement. The entire process relies on our internal systems (SIRIS and PROVOX) for the analysis, implementation, monitoring and documentation of our engagement activities.
5.1 Pre-engagement The pre-engagement stage and associated research lay the groundwork and detect any problem areas for Union Investment’s engagement activities. Together with our sectoral analysts, Union Investment’s sustainability team discusses all relevant problems and weaknesses of the companies in question. In addition, external data providers such as MSCI ESG Research, Vigeo imug/EIRIS, RepRisk, and Trucost are brought in to assist.
An important basis for Private-union’s engagement process is its sustainability research, which is managed with the aid of SIRIS: SIRIS is a special IT platform that was developed for Union Investment in order to efficiently implement our proprietary approach to sustainability research and broaden our range of socially responsible investment (SRI) services, including engagement.