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.

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OUR FUND APPROACH TO RESPONSIBLE INVESTMENT

Our ESG policy is fully implemented in our fund’s investment process with the most relevant pillars for private equity investments being exclusion, ESG integration and Active ownership.

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1. Exclusion

The Private Markets team screens our portfolio continuously with respect to ESG issues. As we hold a fairly concentrated portfolio of non-listed (private) companies and partnerships, this screening process cannot be conducted automatically via the MSCI ESG database as with some other funds. This analysis is therefore qualitative in nature and based on our in-depth knowledge of the partners and companies, and is enabled partly thanks to our detailed upfront due diligence process and ongoing monitoring that incorporates ESG issues.

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Controversial companies, such as arms manufacturers, are completely excluded. We simply do not invest in such companies.

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2. ESG integration

The Private Markets team conducts in-depth research - or due diligence - before including a new investment in the Private Markets fund. ESG factors and socially-responsible business practices are a standard part of this due diligence process. ESG factors are awarded a score in the due diligence report on each planned investment and any investments that do not score highly enough are not included in the portfolio;

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Once we have completed the due diligence process and made the investment, we conduct continuous monitoring and assess and analyse trends relating to ESG in detail. These issues are discussed regularly in the Private Markets team and with Kempen’s ESG team.

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3. Active ownershipÂ

Any important issues raise during our monitoring are placed on the agenda and discussed with our investment partners during on-site visits. Here we focus strongly on what the partner and company are actually doing, and we encourage our partners and the underlying companies to report publicly on ESG issues and share the results.

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One tangible example of ESG implementation within Private Markets is our activity around land and forestry investments.

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Global deforestation is thought to make a similar contribution to global carbon emissions to that generated by the use of cars and lorries. Thus Kempen only selects specialist forestry partners that hold sustainability certification for all their forests. Over 400 million hectares of forest worldwide is certified by FSC, PEFC (including each of their allied labels, such as SFI, AFS, Cerflor and others) or both. Certification is currently mainly applied in developed countries and we strongly encourage our partners to gain FSC certification in less developed countries.

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Risks

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

• Prospectus
• Outlook 2020
• Asset Allocatie Outlook

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