Our first and foremost engagement is to embrace research and education on sustainable finance, in pursuit of continuous improvement in understanding the full-range of opportunities available to our clients, our investment strategies, our instruments selection and more broadly our business models in this field. Over the past years, BIL has been very active in promoting awareness, acceptance and implementation of the ESG principles within its community of investment professionals. At a later stage, BIL’s greater ambition is to publicize our engagement priorities and corporate stewardship beliefs. This will include the publication of an annual review detailing our voting activity and engagement.
The appropriate approach is not the same for all investors. There is no one-size-fits-all set of beliefs. Specific forms of ESG investing can be requested for particular preferences, beliefs and circumstances. As with any form of investing, investors must establish their own personal goals and weigh the potential benefits of the various approaches against any risks and costs in order to give themselves the best chance of achieving their desired outcome.
BIL approaches the principal adverse impacts of investee companies on sustainability through the integration of ESG scoring when forming investment cases and following up of investment decisions. ESG integration is explicitly part of our investment decision-making processes and controls.
Description of the policies used to assess principal adverse sustainability impacts
The BIL sustainable and responsible framework is built on BIL values (create, care and collaborate). It seeks to ensure that the investment products and services we provide to our customers do not result in an unacceptable, adverse impact on people or the environment, while helping them understand and manage their environmental and social impact.
Our remuneration charter’s consistency with the integration of sustainability risks has recently been reinforced to ensure that our employees are sensitized and encouraged to uphold BIL’s sustainability initiatives, in particular by linking the remuneration framework of relevant staff to appropriate ESG criteria and metrics
Our advisory and discretionary teams integrate environmental and social due diligence as part of existing due diligence processes. The due diligence process is central to our sustainability risk assessment, allowing us to implement our principles, with a consistent integration of ESG considerations in the risk/reward analysis of investment case. This means that the higher the sustainability risk of an investment, the higher the expected performance should be.
Each portfolio manager/investment advisor is given access to an ESG database in order to screen the sensitivity of potential investments for their impact on the environment, on social strengths and weaknesses and on governance standards. In turn, each individual is responsible for adjusting to respect key ESG parameters and to effectively integrate key ESG considerations. The database also helps them to screen the universe in order to abstain from investments for which there is no likely avenue for remediation, redress or improvement in larger and multiple activities and norms, thereby adding another layer on top of the existing BIL exclusion list.
The identification of principal adverse sustainability impacts is embedded in the ESG scoring methodology.
For all funds and mandates with an ESG approach (Article 9 or Article 8 of SFDR), BIL defines ESG characteristics which must be followed.
Description of actions taken to address principal adverse sustainability impacts
Risks related to sustainability factors cannot be treated in isolation to other risks as they can have a financial impact. The integration of ESG risks and mitigation actions into investment products and services has been implemented, via the integration of our sustainable investment policy into our policies and processes.
The prioritization of principal adverse impacts indicators is at the cornerstone of the materiality framework embedded in the ESG scoring methodology.
Actions taken to address principal adverse sustainability impacts are specific to each and every investment product and service BIL delivers to clients.
While we also frequently reach out to ESG experts for advice on issues that concern us, we ensure that, globally, our relationship and investment professionals are trained regarding our sustainability investment framework and their own responsibilities, to ensure consistent implementation, so that policies, procedures and standards are appropriately implemented.
Additionally, to strengthen our approach, we have set up an Sustainability Community of experts to provide permanent points of contact. Their responsibilities include raising awareness, organizing trainings, facilitating sustainability assessments and maintaining contact with all concerned stakeholders.
We are aware that some of the goals we have set ourselves are necessarily aspirational.
As of today, BIL does not engage with investee companies on sustainability-related matters.
Adherence to international standards
Corporate social responsibility is at the core of BIL’s identity. BIL is currently adhering to a number of responsible business conduct codes and standards, for instance; the International Capital Market Association Charter, the workplace and sexual harassment charter, the Inspiring More Sustainability Luxembourg and its diversity charter. Our sustainability roadmap includes the ambition to diagnostic and adhere to a selected number of international collaborative statements, dialogues and networks that focus on advancing the practice of responsible investment and sustainable development.