SFDR aims to increase transparency on how financial market participants integrate sustainability into their investment decisions, recommendations and investment advice. It introduces a classification system with new disclosure requirements for investment products.
The aim of SFDR is to promote transparency by ensuring that entities such as Altis disclose their approach to sustainability. Altis supports this goal and will include disclosures on its website. The implementation of SFDR and other related sustainable finance regulations is expected to run from 10 March 2021 until at least the end of 2022, meaning that Altis will continue to implement and provide more transparency in the years to come.
This page includes all information on our approach to SFDR and what we have done so far. It includes information on::
Altis Investment Management (‘Altis’) is considered a financial adviser in accordance with the Sustainability Finance Disclose Regulation (EU/2019/2088) (‘SFDR’). Financial Advisers are required to publish information on their website about their policies regarding the integration of sustainability risk in their investment decision making process.1 According to the SFDR, sustainability risk means an environmental, social or governance event or condition that, if it occurs, could cause an actual or a potential material negative impact on the value of the investment.
Altis specialises in the selection and monitoring of asset managers and their investment strategies, we do not manage investment vehicles of our own. We offer advice in a broad range of asset categories and advise on solutions to help our clients achieve their financial and sustainability objectives. We have made research into sustainability aspects as an important component of our analysis and advice.
Responsible investing (‘RI’) lies at the heart of NN Investment Partners’ investment beliefs. As a 100% daughter company of NN Investment Partners (‘NN IP’), the asset manager within NN Group (‘NN’), Altis subscribes to this and adheres to the policies of NN IP and NN , as published on their respective websites:
Altis is convinced that responsible investing enhances risk-adjusted returns and believes that companies with sustainable business practices and high standards of corporate governance will become the success stories of the future. We believe there is a strong link between the longer-term positive impact of Environmental, Social, and Governance (ESG) integration and improved risk-adjusted returns. In addition to having a positive effect on the well-being of society and the environment, consistent ESG integration enables us to identify the associated risks and opportunities and to unlock potential value.
In 2020, we further enhanced our ESG analysis of asset management companies , their investment strategies and their portfolios. We acknowledge that in some asset classes it is a challenge to do this in a consistent, systematic, and auditable manner as data availability is sometimes an issue.
The Altis responsible investment policy can be found here:
Altis Investment Management (‘Altis’) is considered a financial advisor in accordance with the Sustainability Finance Disclose Regulation (EU/2019/2088) (‘SFDR’). Financial Advisers are required to publish information on their website as to whether they applied in their investment advice the principal adverse impacts on sustainability factors.1 According to the SFDR, sustainability factors relate to environmental, social and employee matters, respect for human rights, anti-corruption and anti-bribery matters.
Altis considers these principal adverse impacts on sustainability factors by applying the RI Framework policy of NN Group (‘RI Framework policy’). The RI Framework policy supports “the systematic incorporation of sustainability factors into our research process, managing both risks and opportunities.”
Further to the strategies described regarding the integration of sustainability risk: this implies integration of material sustainability risks and opportunities into the research and analyses of investments, as well as consistent demonstration and documentation of sustainability factors integration for each individual investment analysis. NN Group norms-based RI criteria, relevant laws, NN Group’s values and internationally recognised standards such as the United Nations Global Compact and the OECD Guidelines for Multinational Enterprises serve as guidelines hereto. At the moment, the alignment with the 1.5℃ target of the Paris Agreement for Client Assets has not yet been included in a formal policy. However, NN Group has taken the first steps thereto with respect to its Proprietary Assets.
We recognise that full consideration of principle adverse impact is a step-by-step process where we keep making improvements. We intend to provide more detail on the implication of principal adverse impacts when the SFDR level 2 requirements enter into force. In what follows, we describe how the RI Framework policy is currently applied to external asset managers, when managing either segregated mandates or mutual funds for our clients.
Next to building on the risk framework as set out in NN IP’s RI policy, Altis pays attention to particular sustainability risks at three levels while analysing the suitability of investment products for our clients: the asset management company, the investment strategy and the portfolio.
Asset management company
Using a proprietary questionnaire Altis makes an assessment of ESG policies and ESG integration at firm level. Topics such as corporate governance, business ethics, integrity of the compensation policy, diversity, and environmental policy are included.
The outcome of this questionnaire is reflected on a manager scorecard, which is provided to our clients.
A second proprietary questionnaire helps to form an opinion about ESG policies and integration at strategy level. Included are topics such as exclusion, voting, engagement, integration of ESG factors into the investment process and particular ESG-related reporting. We are particularly interested to learn how the asset manager Integrates, where relevant, material ESG risks and opportunities into the research and analyses of investments. We also look for a consistent demonstration and documentation of ESG factors integration for individual investment analyses.
The outcome of this questionnaire is reflected on a strategy scorecard, which is provided to our clients.
In addition to the described assessments of investment firm and investment strategy, Altis measures the ESG-impact of a portfolio versus a benchmark. With input from external data providers, we measure the portfolio’s carbon footprint and use of natural resources. We identify the most risky securities from an ESG perspective and are equipped to screen for violations of, among others, United Nations Global Compact.
The results of this portfolio analysis are published in the so-called ESG Risk Monitor.
Although NN IP expects external managers to implement the key principles of this policy for the assets that they manage and to monitor the implementation, exceptions may arise. Mutual funds managed by external asset managers may not fully implement the NN RI Framework policy, because there are multiple investors that participate. Also, for the same reason, the NN Restricted List may not be applied in an identical way. For these funds, we will monitor the composition of such funds and we will ask those asset managers for responsible investment policies and restricted lists and will apply a risk-based approach.
The information we have provided above is based upon the information that currently is available, also relying on information provided to us by third parties. Where third parties have not provided us with (adequate) information, we will continue our efforts to obtain this information. When in the future more (adequate) information becomes available, we will amend our disclosures to reflect this.
Our remuneration policy sets clear financial and non-financial performance objectives that are aligned with NN IP’s overall strategy. We assess objectives to ensure that remuneration is properly linked to individual, team and company performance. Our portfolio managers’ appraisal is based on the objective to create long-term alignment with our clients’ interests. The remuneration policy also supports a focus on careful management of risks, such as risks related to ESG and sustainability as well as financial, operational and reputational risks. This focus helps ensure that staff are not encouraged via remuneration to take excessive risks, and that they consider material risks for NN IP and its clients. To further align employees’ interests with those of our clients, the variable remuneration pay allows us to award compensation in the form of shares in NN IP-managed funds.
Article 6.2 (a) SFDR
Altis applies the RI Framework policy to its investment advice activities. In line with this policy, Altis aims, wherever legally possible, to exclude from its advice, managers or mutual funds that invest in companies involved in activities as defined in the RI Framework policy, including but not limited to, the development, production, maintenance or trade of controversial weapons.
With respect to investments:
Article 6.2 (b) SFDR
Sustainability risks can either represent a risk of its own or have an impact on other client portfolio risks and might contribute significantly to the overall risk, such as market risks, liquidity risks, credit risks or operational risks. The assessment of sustainability risks, which are defined in Article 2 (22) of SFDR as an environmental, social or governance event or condition that, if it occurs, could cause an actual or a potential material negative impact on the value of the investment, is integrated into the Altis investment advice/manager selection process via the assessment of the manager/strategy ESG scorecards.
The (risk) assessment process is performed as part of the manager analysis, and takes all relevant risks into account, including sustainability risks. This assessment includes, but is not limited to, assessing the manager’s sustainability risk profile by making use of data from external providers, of which some are specialized in ESG-related data and associated risk-ratings. For managers where there is an indication of conduct or activities not in line with the formulated norms-based responsible investment criteria, a decision is made by Altis and the client whether to engage with the manager or exclude the manager from the advice to/portfolio of the client. Altis has made sustainability risks and reporting a point of regular discussion with clients.
Practicing active sustainability scrutiny is part of the investment advice of Altis and has a significant role in contributing to minimizing and mitigating sustainability risks for the client, as well as enhancing the long term economic and societal value of the manager over time.
1 - Article 3 SFDR.
2 - Article 4 SFDR.