TBLI NORDIC 2015 - Florian Sommer - Union Investment Privatfonds GmbH
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Transcript of TBLI NORDIC 2015 - Florian Sommer - Union Investment Privatfonds GmbH
TBLI Conference Nordic
ESG integration across asset
classes
Florian Sommer
Copenhagen, 16th June 2015
● Founded in 1956
● Headquartered in Frankfurt, Germany
● Active, fundamental asset manager with
integrated portfolio management/ research
approach
● EUR 253bn AuM, thereof EUR 141bn for
institutional clients
● Among the top 15 managers in Europe*
● Focus on asset management, no change
in shareholder structure over the years
● More than 2,600 employees
Union Investment is one of the leading asset managers in Europe
* Investment & Pensions Europe (IPE Research, June 2014). Data as of May 2015
2
1995 2003 2008 2012
8,3 bn**
Sustainable Investment at Union Investment
As of March 2015
* Sustainable and Responsible Investment; ** 8,3 euro billions Assets under Management in sustainable investments.
● More than 20 years of experience
● Sustainable investment solutions for all
major asset classes
● A competence team of 21 SRI*
portfolio managers / analysts
3
2015
Strategies
of exclusion
Best-in-class-
strategies
Strategies for
individual topics
Competence team
for sustainability
Engagement
overlay
Sustainability
overlay
Steering committee members*
● Adam Kirkman, AMP Capital Investors
● Archie Beeching, PRI
● Bram Bos, Univest Company (Unilever Pension
Funds)
● Christoph Klein, Deutsche Asset & Wealth
Management
● Doris Kramer, KfW Bankengruppe
● Florian Sommer, Union Investment
● Harald Klug, PIMCO
● Jennifer Anderson, The Pensions Trust
● Lorna Youssouf, Royal London AM
● Michael Salvatico, MSCI
● Urs Bitterling, Allianz Insurance
● Tomi Nummela, PRI
The PRI Workstream Fixed Income
4
* Status May 2015
2011 2013 2012 2014
ESG provides additional risk insight
5
Analyse
Avoid Reduce Change
● Olympus
● TEPCO / Fukushima
● BP / Transocean
● LIBOR scandal
● Parmalat
● Enron
● Costs of CO2
regulation (e.g.
automotive sector,
utility sector)
● Costs of nuclear exit
● Ban on
incandescent light
bulbs
● Foxconn:
suicides of workers
● Freeport:
human rights
● Wilmar: tropical
deforestation
● Hershey:
child labour
Event risks Regulatory risks Reputational risks Litigation risks
● Asbestos lawsuits
(USD 70 bn), e.g.
Owens Corning,
Saint-Gobain
● Lawsuits against US
tobacco industry
(USD 206 bn)
● Investment banks
(over USD 306 bn)
EN
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Indexed performance
(5-year comparison)
Regulatory risks: German utilities suffer from the energy transition
6
0
20
40
60
80
100
120
Feb 10 Feb 12 Feb 14
Eon
RWE
MSCI Versorger Index
As at 19 February 2015
As at 20 February 2015
Source: Bloomberg
Indexed spread performance
(5-year comparison)
50
100
150
200
250
300
350
2010 2011 2012 2013 2014 2015
Eon
RWE
Versorger Index - Merrill Lynch
Downgrade S&P
Downgrade Moody's
0%
5%
10%
15%
20%
25%
30%
35%
40%
Low Liquidity Buffer
and High Litigation Risk
High Liquidity Buffer and
Low Litigation Risk
Liquidity Buffer
(in Percentage of Market Capitalization)
Litigation Risks: $306 bn resulting from Actions and Fines for the Biggest 16 Investment Banks since 2010*
7
Quelle: SG Cross Asset Research / Equity 2015; *CCP Research, Juni 2015.
Caixa Bank ING Bank
Danske Bank
KBC Bank
SEB
Swedbank BBVA
DNB
Nordea
BNPP
(Post fine)
HSBC
Lloyds
UBS
Credit
Suisse
Barclays
RBS
Low Medium High
Litigation Risk
Deutsche
Bank
Bank Actions Costs
Bank of America
US MBS/CDO Misselling $16,7 bn
JP Morgan US MBS/CDO Misselling $9,0 bn
BNP Paribas US Trade Sanctions $8,9 bn
CITI US MBS/CDO Misselling $7,0 bn
Credit Suisse US Tax Evasion $2,6 bn
Deutsche Bank LIBOR Manipulation $2,5 bn
HSBC Money Laundering $1,9 bn
Costs of Actions for Banks
Corruption levels after Corruption Perception index (CPI)
(87 countries and defaults since 1970)
Defaults occur more frequently in corrupt countries
8
Source: Union Investment, Transparency International 2014
15 16 16
19
21
0 1
4
13
20
very low low medium high veryhigh
Countries
Defaults
Levels of corruption during the escalation of the EU debt crisis
Source: Union Investment, Transparency International, Corruption Perceptions Index (CPI)
Corruption
level
(CPI 2011)
Corruption change in % (CPI 2008-2011)
low
high
worse better
9
Italy
Iceland
Austria
Spain
Netherlands
United Kingdom
Greece
Sweden
France
Portugal
Denmark
Czech Republic
Israel
Ireland
Mexico
Germany
Hungary
Slovakia
USA
Belgium
South Korea
Turkey
Poland
20
30
40
50
60
70
80
90
-30% -20% -10% 0% 10% 20% 30%
OECD average: 70
10
Nuclear Prgr.
Senkaku-Isles
Kaschmir
Military Coup
China-Protest
Ukraine-Crisis Gezi-Protest Euro-Crisis
Racial Tensions
Drug Wars
Economic Crisis
Public Unrest Debt Crisis Boko Haram Streiks Arab Spring
Middle East ISIS
ESG helps to assess political risks
ESG score
Measuring ESG as a standalone dimension
42,3
Portfolio Benchmark
Top 5 ESG Scores Portfolio
Essilor 78,7
Veolia 75,2
Verbund 75,2
Schneider Electric 69,7
Procter Gamble 68,8
Examples „Fail“ in Benchmark
Glencore Human rights violations
Textron Controversial weapons
Petrobas Corruption
Walmart ILO labor standards
Barrick Gold ILO labor standards
Exclusion filter
Environment
Governance
Social
Quelle: Union Investment
11
59,1
89,6%
10,4%
Pass
Fail
Disclaimer
13
● This advertising material is intended only for professional clients as described in section 31a, paragraph 2 of the German Securities Trading Act (WpHG). The present document has been prepared and issued by Union Investment Institutional GmbH. The document does not constitute a binding offer. Union Investment does not assume any obligation or liability for this document. The document is no substitute for the individual advice by Union Investment Institutional GmbH. Union Investment Institutional GmbH is not responsible for disadvantages that may arise directly or indirectly from the distribution of this document or its contents. For extensive product-specific information and details of the opportunities and risks presented by the respective fund, please refer to the latest sales prospectus, the Bank's terms and conditions or the annual and half-yearly reports that can be obtained free of charge from Union Investment Institutional GmbH, Weissfrauenstrasse 7, 60311 Frankfurt am Main, Germany, telephone +49 69 2567-7652. These documents constitute the sole legally binding basis for the purchase of fund units.
● Origins of Data: Despite our effort and care no liability or guarantee can be assumed for the timeliness, accuracy or completeness of the data provided. Where data has been obtained from external sources, this is explicitly stated. We consider data obtained from external or publicly available sources to be reliable. Data obtained from external sources or contained in our own calculations may be incorrect. We assume no liability for any errors that may occur when data is passed on, recorded or entered or when calculations are made using this data.
● Historical performance: Performance data shown is historical. Past performances can not be taken as a reliable guide for future investments. The BVI method (time-weighted return) is used for these calculations. Where the gross method has been used for such calculations (adjusted for management fees and depositary fees), this is explicitly stated. Data calculated and presented using either the BVI method or the gross method does not include any front-end fees or product-specific costs (fees, commissions and other charges).
● Compliance with Global Investment Performance Standards (GIPS®) and the BVI-Rules of Conduct: Union Investment claims of compliance with GIPS® has undergone the verification process and has been verified by an independent third-party „verifier“. The Composite-Performance calculation and presentation comply with the GIPS® guidelines. The composite allocation of individual funds, or all Composites complying with GIPS® are available upon request. Union Investment Institutional GmbH has committed to comply with BVI’s code of conduct. In consequence, Union Investment Institutional GmbH employs the code's standards for performance illustrations. Cases of deviation will be individually indicated.
● Future assessment: Any opinion expressed in this document (including estimates and forecasts) is solely for information purposes and does not constitute an individual offer or a guarantee for future performance. Any opinion contained herein was given at the date of publication and may be subject to change without notice.
● Use of Union Investment’s country ratings: The country ratings devised by Union Investment are merely the outcome of its assessment of the creditworthiness of sovereign issuers for internal purposes, and they are intended to be used purely as quality appraisals of a certain selection of sovereign issuers. The ratings represent Union Investment Institutional GmbH’s own assessment and do not constitute a recommendation to take a particular course of action.
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