Kempen Capital Management is an asset manager that believes in stewardship and investment focusing on the long-term for the benefit of all stakeholders. Value creation is at the heart of the services we provide to our clients. We believe that being an engaged shareholder on environmental, social and governance (ESG) issues and retaining a long-term focus, is critical to helping our clients to preserve and create sustainable wealth that has positive real world impact and economic returns.

Kempen wide approach to responsible investment

We are committed to create sustainable alpha. The four pillars of our ESG-policy are:

• ESG integration: Ensuring sustainability risks and opportunities are adequately considered in our investment analysis and processes.

• Exclusion & avoidance: Not investing in companies involved in controversial activities or conduct.

• Active ownership: Being responsible stewards of our clients’ capital and using our influence through engagement and voting to improve corporate behaviour on specific ESG issues and achieve positive change

• Positive impact: Investing with an objective to achieve positive real world outcomes and impact, such as contributing to the UN Sustainable Development Goals.

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To put our mission and vision into practice we engage with our investee companies on a wide array of strategic, financial, and ESG topics. As an active owner we use our influence to improve our investee companies’ ESG performance. This helps us address some of the most pressing and important sustainability issues facing business and the world. Our focus themes for engagement are: human rights, labour rights, climate change and governance.

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Through collaboration with other investors and industry think tanks we contribute to the development of principles and standards of corporate responsibility both at sector levels, as well as investee company level.

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Our full voting records are available here.

Climate change

As a long-term investor, we believe climate change represents a systemic risk facing the economy, society and environment. We want to consider the risks and opportunities this presents to our investments in the coming decades. We have therefore set a long-term commitment (2050), a mid-term ambition (2030) and short-term objectives (2025).

• 2050 commitment: Net-zero investor.  Â
• 2030 ambition: To align with a Paris Agreement pathway (listed and non-listed investments) and Dutch Klimaatakkoord.  Â
• 2025 objectives: To align with a pathway towards achieving the Paris Agreement (listed investments) and Dutch Klimaatakkoord goals.^[1]

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The Kempen climate change policy can be found here (under climate change policy).

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_{[1]We use carbon intensity as a metric to come to the pathway of net-zero emissions. As we care about the direction of travel and reduction of carbon emissions in the economy, it might be that the actual reducing trend may deviate from the suggested average trend line. The pathway is derived from the pathway of the EU Benchmarks.}

Our fund approach to responsible investment

Kempen’s ESG policy is fully implemented in our fund’s investment process across the three relevant pillars of: Exclusion, Integration and Active ownership.

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1. Exclusion

In line with the general Kempen policy, the fund excludes all companies on the KCM exclusion- or avoidance list. Companies on these lists are either involved in the production of controversial weapons, derive a significant portion of their revenues from the production or distribution of tobacco, or have been involved in serious controversies. In addition, we exclude pure coal players and pure players involved in tar sands, as these activities have an adverse impact on climate change.

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2. ESG integration

The Kempen Global Listed Infrastructure Fund has purposefully designed its investment process to systematically embed ESG risks and opportunities since inception.

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The investment philosophy of the fund is to generate long-term alpha using three simple pillars – Optimizing the Risk/Return equation, Management Quality, and ESG performance. As part of the ESG pillar, our fund is positioned to benefit from developments arising from action on climate change, including the ambitions laid out in COP24 in late 2018 (pressing towards 1.5^OC), and from support for several of the 17 UN Sustainable Development Goals set out in 2015.

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Some high-level examples of how the portfolio integrates ESG considerations include:Â

• Environmental - Our low carbon investments in the Energy, Utilities and Transportation sectors are consistent with Article 8 of COP21, which encourages stakeholders to participate in the energy transition and Article 2 of COP21, which encourage low carbon investments. We reward companies that integrate climate risks and opportunities into their organisation, and are able to move towards a low-carbon economy.

• Social – Our portfolio’s investments in Utilities (renewables capacity), Power transmission (addressing energy poverty), and Transportation (Road & Rail infrastructure) are all consistent with UN Sustainable Development Goal 7 relating to Clean Energy, and Goal 9 relating to the build out of resilient Infrastructure.

• Governance - Finally, Governance structures, alignment, and governance history, contribute directly into our framework for assessing management quality. This is integrated into every single investment we have, across all sectors.

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Our team brings with it extensive experience in successfully engaging with companies on ESG issues, connections with broad ESG networks that include a number of NGOs (Green Peace, Human Rights Watch, Amnesty International), and recognition from opinion leaders on sustainability issues such as 45th Vice President of the United States, Al Gore.

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3. Active ownership

With regard to climate change, we engage generally and take a sector-specific approach for the most carbon-intensive companies and sectors (e.g. oil and gas, utilities), as these count for the largest part of the global carbon emissions.

For more information about the mid and long term risks associated with the investments:

• Prospectus
• Outlook 2020
• Asset Allocatie Outlook

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