Initiatives and membership of organisations

As one of Germany’s largest asset managers, we are aware of our responsibility and have accepted the challenge of helping to actively shape a future-proof environment for investments.

We promote the acceptance and implementation of sustainability principles within the investment industry. That is why Union Investment is an active member of various associations and initiatives involved in sustainability matters.

Membership of organisations

Union Investment belongs to various organisations as a way of supporting sustainable investments:

Pensions for Purpose

Pensions for Purpose is a joint initiative of impact managers, pension funds, social enterprises and other companies involved or interested in impact investments. The aim of this platform is to promote understanding of impact investing by publishing and sharing news, blogs, case studies, academic research and thought leadership papers. In addition, Pensions for Purpose acts as a first point of contact for journalists seeking information on sustainable investments.

Institutional Investors Group on Climate Change (IIGCC)

The Institutional Investors Group on Climate Change (IIGCC) is the European membership body for investor collaboration on climate change. IIGCC works with business, policy makers and fellow investors to help define the investment practices, policies and corporate behaviours required to address climate change. IIGCC works closely with other investor groups and play a leading role in global investor initiatives on climate change.

Sustainable Investment Forum

The Sustainable Investment Forum (FNG) has been the association for sustainable investment in Germany, Austria, Liechtenstein and Switzerland since 2001. Its objective is to provide the general public and decision-makers from the worlds of politics, business and academia with up-to-date and comprehensive information, thereby raising the profile of sustainable investment in the financial sector and among the public. This should also create stronger ties between the relevant players and highlight the positive influence that sustainable investment can exert on society and the environment. In addition, FNG aims to help shape political, legal and economic conditions.

Union Investment has been an active member of the Sustainable Investment Forum since 2010.

EUROSIF

The European Sustainable Investment Forum (EUROSIF) is the umbrella organisation of the eight local European sustainable investment associations. In this role, EUROSIF has developed a transparency code that defines what constitutes a socially responsible investment. Only companies that meet the code’s requirements and are listed as a transparent company can go on to apply for other sustainability seals of approval at local level.

UN Global Compact

The mission of the UN Global Compact is to pave the way for a sustainable and inclusive global economy that delivers lasting benefits to people, communities and markets. The UN Global Compact helps companies to do business responsibly by aligning their strategies and operations with ten principles on human rights, labour standards, the environment and anti-corruption and taking strategic action to achieve broader goals of society, such as the UN sustainable development goals, with an emphasis on collaboration and Innovation.

PRI – Principles for Responsible Investment

The Principles for Responsible Investment were developed by international institutional investors as part of a process coordinated by the UN Environment Programme Finance Initiative (UNEP FI) and the UN Global Compact. These six Principles provide guidance for investors so that they understand the influence of responsible investments and adhere to it in their decision making. Supporters of the initiative commit to complying with the six Principles. The Principles are seen as a ‘corset’ that ensures the supporters apply the ten principles of the UN Global Compact in their individual investment strategies. Union Investment signed up to these Principles in 2010.

  1. We will incorporate 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.
  1. * ESG stands for ‘environmental, social and corporate governance’.

Green Bond Principles

The Green Bond Principles are a voluntary set of process guidelines rooted in transparency and disclosure and are designed to promote the integrity of the fast-growing green bond market.
When they were published in 2015, 130 institutions that operate in the green bond market undertook to adhere to these principles.

Schmalenbachgesellschaft e.V.

The Schmalenbach Society was formed in 1978 and owes its origins to one of Germany’s foremost business economists, Professor Eugen Schmalenbach. His primary aim was to develop ‘application-driven business economics’, an objective that he sought to achieve by combining economic theory and practice. All of the Schmalenbach Society’s activities today continue to be underpinned by the principle of promoting dialogue between research, teaching and practice in the field of business economics: practitioners receive factual information about the latest academic findings, while economists are prompted to scientifically investigate current problems experienced in practice.

LuxFLAG

Founded in July 2006, LuxFLAG is an independent, not-for-profit labelling agency that works on an international basis to support the raising of capital for sustainable development projects. In order to promote interest in sustainable investment, LuxFLAG awards a recognisable label to suitable funds. This seal of quality gives investors assurance that the labelled fund does actually invest in sustainable assets.

Initiatives supported by Union Investment

PRI Montréal Pledge

By signing the Montreal Carbon Pledge, investors undertake to measure and publish the carbon footprint of their investment portfolio each year.
The pledge was launched on 25 September 2014 in Montreal and is supported by the Principles for Responsible Investment (PRI) organisation and the United Nations Environment Programme Finance Initiative (UNEP FI).

Union Investment analyses the CO2 intensity of different equity funds in SIRIS, the company’s proprietary ESG analysis platform, which accesses data from the Trucost data platform and other sources. Scope 1 and 2 CO2 intensity is measured in tonnes of CO2 equivalents per one million US dollars of revenue on a weighted basis. The carbon footprint of the entire share portfolio held by Union Investment on 31 December 2018 was 205.4 t CO2 / US$ million of revenue. The reporting date for the funds presented below is 8 February 2019. Union Investment will continue to call on companies with high emissions to reduce their greenhouse gases as part of its engagement activities.

Global Investor Statement on Climate Change

By signing the 2011 Global Investor Statement on Climate Change, Union Investment (along with 378 other investors worldwide) is supporting the call for standardised, long-term guidelines regarding climate change and clean energy (‘investment-grade policies’). These guidelines are needed to make the private sector more energy-efficient. Individual governments must set the necessary parameters, implement guidelines and monitor compliance with them. The signatories undertake to work with policy-makers, identify and evaluate investment opportunities for reducing CO2, develop the capacity to identify climate change risks resulting from their own investments and integrate these in their investment decisions, work with the companies in which they invest to prevent climate change, and document and publish the changes made in relation to renewable energies, energy efficiency and climate change. In this context, Union Investment has set itself the objective of regularly questioning companies about CO2 reductions.

PRI Steering Group Fixed Income

The PRI Fixed Income Steering Group is the committee at the PRI responsible for developing the PRI Fixed Income Investor Guide. This guide aims to support the implementation of four of the six general PRI principles that apply directly to the fixed income asset class. It also strives to highlight the advantages of adhering to these principles for investments in this asset class.
Union Investment sponsored the guide and played an active role in its development.

Fixed Income Guide

Task Force on Climate-Related Financial Disclosures (TCFD)

The Task Force on Climate-Related Financial Disclosures (TCFD) was founded by the Financial Stability Board (FSB) to develop a voluntary and consistent system for reporting climate-related financial risks. Standardised reporting enables companies to provide information to investors, lenders, insurers and other stakeholders that is relevant to their decision making. By providing access to comparable and reliable data, the TCFD aims to improve the evaluation, pricing and management of climate-related financial risks.

Climate Bonds Initiative (CBI)

The not-for-profit Climate Bonds Initiative (CBI) is the only organisation in the world working to expand the market for sustainable bonds. It aims to develop a large and liquid market for green bonds and climate bonds that will help drive down the cost of capital for climate projects in developed and emerging markets. The Climate Bonds Initiative promotes investment assets that are necessary for a transition to a low-emission, resource-efficient and climate-resilient economy.

As well as carrying out research and reporting on developments, the organisation develops climate bond policy proposals for government, finance and industry. Its Climate Bonds Certification serves as a representative indicator for sustainable investments and recognises individual funds or investment companies for their contribution to climate protection. Union Investment has been a partner of this initiative since the beginning of 2016.

German Sustainability Code (DNK)

“The introduction of CSR reporting obligations sends an important signal. It shows that publishing sustainability-related information is no longer just an optional extra, but part of the duties that define professional corporate governance and communication. The DNK sums up key sustainability aspects in a concise and well-structured manner. This makes it easier for investors to take account of these aspects when managing the risks of their investments.”

Alexander Schindler

Member of the Board of Managing Directors

Union Investment

 

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Frankfurt Declaration

Frankfurt Declaration

Frankfurter Erklärung

The need for global sustainable development gives rise to a huge responsibility for the financial industry as a whole. Frankfurt as a financial industry hub and Union Investment as a player in this industry accept this responsibility and commit to a common agenda – the Frankfurt Declaration.

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Investor Expectations on Corporate Climate Lobbying

Investors engage with companies in the US, Canada and Australia whose climate impact is not compatible with the shareholders’ interest in maximising the long-term value of the company. This includes cases where a company publicly supports a more environmentally friendly policy but is being opposed by trade associations of which it is a member.
Investor expectations on corporate climate lobbying

Aiming for A

The Church of England has founded a sustainability initiative through its church-owned asset manager. The aim of the initiative is to motivate companies that are particularly carbon-intensive and from critical industries like mining or oil extraction to achieve an ‘A’ rating in the A-E performance band assessed by CDP (Carbon Disclosure Project). The companies will thus be made accountable and encouraged to develop clearly defined strategies for combating climate change. The Church of England invited a large number of investors to participate in the initiative, to ensure its successful implementation. The end result was that more than 50 institutional investors – including pension funds, churches, fund management companies and other asset owners – joined forces to form a coalition. Union Investment has also joined this coalition.

Climate Change Investor Letter to G7/G20

389 institutional investors with combined assets under management in excess of US$ 22 trillion called on the Heads of State or Government of the G20 nations to meet their obligations under the Paris Agreement at the G20 summit in Hamburg on 7–8 July 2017.

Emphasizing the urgency of the measures and restating a message that had previously been directed at the G7 group, investors demanded that the G20 Heads of State or Government:

  • Confirm their commitment and support for the implementation of the Paris climate accord and maintain their individual targets defined at national level.
  • Prepare targeted, long-term climate action and energy plans which ensure that the average global temperature increase will remain well below 2°C and ideally around 1.5°C.
  • Promote investment in innovations that drive the transition to lower carbon emissions.
  • Implement a framework for climate impact-focused financial reporting, including support for the Financial Stability Board’s Task Force on Climate-related Financial Disclosures (TCFD).

UN Guiding Principles Reporting Framework Investor Statement

The coalition of investors that support the UN Guiding Principles Reporting Framework now has 87 members, with total assets under management of US$ 5.3 trillion. The UN Guiding Principles focus on how companies can exercise their corporate responsibility to protect human rights. It is important to highlight that this responsibility goes beyond mere compliance with local, national and international laws and regulations. The emphasis is on the risks in relation to human rights and the impact on human rights of a company’s own operations, not on activities that the company pursues to advocate or support human rights.

Corporate Human Rights Benchmark (CHRB)

The Corporate Human Rights Benchmark (CHRB) comprises 98 of the biggest global companies in high-risk industries including the agricultural sector, the clothing industry and raw material extraction. The companies listed in the benchmark are assessed and ranked based on a set of human rights indicators. Union Investment has been supporting this benchmark since it was launched in 2017.

Transition Pathway Initiative (TPI)

The Transition Pathway Initiative (TPI) is a collaborative project of the Church of England and the Environment Agency Pension Fund (EAPF).  It was launched in January 2017. The TPI has set itself the task of analysing the transition to a low-carbon economy, as envisaged in the Paris Agreement, and to examine its impact on companies in carbon-intensive industries. As a supporter of this initiative, Union Investment will address these analyses and their findings in its engagement dialogues with companies.

Workforce Disclosure Initiative (WDI)

Union Investment is a founding signatory of the Workforce Disclosure Initiative (WDI), which aims to improve reporting and transparency in relation to working standards in global supply chains. The WDI is now supported by more than 79 signatories from around the world who manage a combined volume of assets of around €8 Trillion.

International working groups in which Union Investment is represented

German Corporate Governance Code

A committee of 14 prominent figures from business and public life, including Jens Wilhelm, a member of the Board of Managing Directors of Union Investment, prepared the German Corporate Governance Code and continues to review and adjust it as necessary.

Bondholder Engagement Working Group

The aim of this working group is to gather and share knowledge and experience of how to make it easier for bondholders to identify ESG-related investment risks and address them in the engagement dialogue.
 

Social Bonds Working Group

The aim of this working group is to promote the growth of the social bonds market by further enhancing its guiding principles and to develop a common framework for the intended uses of social bonds.
 

Collaborative engagement – joining forces with other investors to exert pressure at a global level

Carbon Disclosure Project (CDP)

CDP is an independent and international non-profit organisation that was founded in London in 2000. It maintains the world’s largest database of company-related climate information in partnership with the United Nations Environment Programme (UNEP) and 767 institutional investors. Capital market players use this information to evaluate companies’ CO2 emissions, climate risks and CO2 reduction targets. The World Wide Fund For Nature (WWF) has been the CDP’s strategic partner in Germany for many years. The CDP’s overarching goal is to make CO2 emissions transparent and tangible, so that they can be reduced on a long-term and sustainable basis.

Climate Action 100+

Climate Action 100+ is a five-year initiative led by investors that aims to engage systemically important carbon emitters and other companies across the global economy that have significant opportunities to drive the clean energy transition and help achieve the goals of the Paris Agreement. The participating investors are calling on companies to curb emissions, raise the status of climate change as a governance issue, and improve reporting on climate-related financial risks.

Labour standards in the supply chain

In cooperation with the UN-PRI investor group that comprises 52 investors with total assets under management of US$ 3.9 trillion, Union Investment engages in improving workers’ rights in the supply chain of food producers. Their efforts are primarily focused on key issues such as child labour, forced labour, and the health and wages of workers.

Internet security

The PRI committee and its signatories have started a global cooperation project on cyber-security. The initiative is focused on the consumer, health and financial sectors and aims to promote the disclosure of more information on companies in the cyber industry for the benefit of investors and also to improve the understanding of relevant risks in this area.

Human rights in the oil and mining sectors

Together with more than 30 asset managers, Union Investment has actively participated in a collaborative engagement to promote the observance of human rights in the oil and mining sectors. Controversial issues in these sectors mainly relate to human rights violations in the companies’ own operations, or in partner companies in connection with mining and extraction activities – both are linked to reputational risks for investors. The main groups affected are indigenous people or the local population in the mining or project area, as a result of resettlements, pollution, or the use of force by government soldiers or private security firms.

Human Rights and the extractive Industry

Non-disclosure engagement

Union Investment has supported the work and objectives of the Carbon Disclosure Project (CDP) since 2001. To enable climate-related risks and the carbon footprint of individual companies to be assessed and compared, for example by investors, the relevant data and information must be regularly collected from these companies, documented and published. To achieve consistency and comparability, a single, coherent ‘language’ is required in the form of an internationally recognised standard such as that of the CDP. In our discussions with companies, we encourage them to take part in the annual CDP data collection exercise. Regular corporate participants, whose willingness to cooperate and commitment to transparency have already been demonstrated, are subsequently invited to constantly improve their carbon footprint using the relevant key performance indicators.

Labour Rights Phase 2

In 2014, Union Investment joined a working group for improving working conditions in agriculture and the food industry. The working group was formed specifically for this endeavour under the auspices of the Principles for Responsible Investment (PRI) Clearinghouse. In conjunction with 35 other international asset management companies, with combined assets under management of approximately €1.6 trillion, selected companies were approached as part of the engagement process. The background to this is that deficiencies in reporting, insufficient transparency and a lack of accountability for labour and social standards in the supply chain can result in a high sustainability risk, which goes hand in hand with a high reputational risk – both for the companies themselves and for SRI investors. The working group aimed to counteract this and improve working conditions among suppliers by writing to international food companies with below-average levels of sustainability and inviting them to take part in discussions.
The aim was for the companies to speak with the investors and become motivated to improve the sustainability of their suppliers. A further objective was to develop a shared understanding of the risks and opportunities relating to labour standards in the supply chain and the impact on long-term performance for investors.

Global Investor Statement on Climate Change

By signing the 2011 Global Investor Statement on Climate Change, Union Investment (along with 378 other investors worldwide) is supporting the call for standardised, long-term guidelines regarding climate change and clean energy (‘investment-grade policies’). These guidelines are needed to make the private sector more energy-efficient. Individual governments must set the necessary parameters, implement guidelines and monitor compliance with them. The signatories undertake to work with policy-makers, identify and evaluate investment opportunities for reducing CO2, develop the capacity to identify climate change risks resulting from their own investments and integrate these in their investment decisions, work with the companies in which they invest to prevent climate change, and document and publish the changes made in relation to renewable energies, energy efficiency and climate change. In this context, Union Investment has set itself the objective of regularly questioning companies about CO2 reductions.