Kempen published Annual Stewardship and Sustainable Investment Report 2020
Kempen Capital Management (Kempen), the €86.2 billion asset and fiduciary manager, today publishes its fully digital annual ESG report 2020, detailing the significant progress made towards embedding Sustainable Investing across its investment strategies.
The report provides an overview of Kempen’s voting and engagement activities throughout the last year, further roll out of its proprietary ESG methodology for scoring external managers and detail on the carbon footprint of its funds.
Lars Dijkstra, Chief Investment Officer said: “In spite of the profound challenges of the past year, or partly perhaps because of them, 2020 was a momentous year for sustainable investment. The amount of sustainability-related funds, data and legislation on the market all grew significantly, and sectors from transport to technology may never be the same again. In 2020, Kempen showed global leadership with our new Climate Policy, through which we have become one of the first asset managers to commit to becoming a net zero investor by 2050. Our policy also sets short-term and mid-term objectives to align all of our listed investments with Paris Agreement pathways by 2025 and all our non-listed investments by 2030.”
Voting and engagement
In 2020 out of 419 AGM meetings across the year, Kempen voted against at least one agenda item, or withheld / abstained on at least one point in 64% of meetings. Furthermore, Kempen voted in favour of 71 out of the 145 shareholder proposals tabled at the general meetings.
Kempen divides dialogues with companies into ‘engagements for change’ and ‘engagements for awareness’.
In 2020, Kempen engaged directly with 116 companies on environmental, social and governance themes. Of these, 82 engagements were for change carried out by our portfolio managers and the Sustainability & Impact team. We also engaged with an additional 206 companies in collaboration with peers, including Covid-19-related interventions on issues such as labour rights, worker safety and access to healthcare.
The direct engagements for change were focused mainly on environmental (45%) and governance issues (37%). Kempen also engaged with 41 companies for awareness on general ESG issues, for the most part on governance and often around their AGM agenda items.
Narina Mnatsakanian, Executive Director Impact & Sustainable Investment said: “We are determined to leverage our influence on sustainability across the value chain, working with clients, managers and companies to help them achieve both financial returns and sustainable impacts. 2020 was an important year for Kempen, as we were proactive on the implementation of the EU Sustainable Finance Regulation and initiated the roll-out of SDG data for our funds.”
Over the course of last year, Kempen’s asset management portfolios became less carbon intensive. As the coverage of the carbon footprint analysis of our assets grew to € 34.2 billion (2019: € 27.3 billion), the total financed carbon emissions stayed at the same level (2020 and 2019: 3.4 million tonnes of CO2e). This change was reflected across both internally-managed Kempen funds and external funds.
Most of Kempen’s internally-managed funds are less carbon intensive than their benchmark, indicating that the companies within these portfolios have a relatively lower carbon intensity compared with their industry peers.
Further roll out of proprietary ESG Methodology
In 2020, Kempen continued the roll-out of its proprietary Sustainability Spectrum framework, which scores external managers across public and private markets, while defining client sustainability preferences around ESG. The framework helps investors define whether a financial product or service aims to ‘avoid harm’ or whether it is more ambitious in its sustainability goals and aims to ‘benefit stakeholders’ or ‘do good’.
By the end of 2020, 83 listed funds had been scored on the updated framework, representing around 24% of total AuM, and 56 funds in private and alternative asset classes.
While a high proportion of listed funds scored as ‘basic’, these are mostly legacy passive funds where Kempen has an advisory mandate. Where possible, Kempen has advised its clients to move capital to more sustainable funds that at least avoid harm. Most of Kempen’s institutional clients’ capital is already invested in ‘avoid harm’ and ‘do better’ funds. In 2021, Kempen aims to extend the coverage of the ESG scoring and further align it with a broad range of different asset classes.
Sustainable Finance Disclosure Regulation
Since March 10, 2021, the EU SFDR Level 1 regulation has come into force. It provides better transparency about how market participants manage sustainability risk and adverse sustainability impacts and further sustainability related disclosures to end clients of financial institutions. Kempen classified 17% of the its funds as an article 9; 62% of the funds as article 8 and 21% is article 6/7.
Kempen Capital Management is a specialist asset manager with a focused approach and a clear investment philosophy. We believe in long-term stewardship for our clients and other stakeholders. Kempen provides sustainable returns through activities in the field of fiduciary management, manager selection, portfolio construction and monitoring, and a select number of actively managed investment strategies. On 31 December 2020, Kempen Capital Management had a total of € 86.2 billion in client assets under management.
Kempen Capital Management, part of Van Lanschot Kempen Wealth Management NV, is a specialist and independent wealth manager. Kempen Capital Management NV is licensed as a manager of various UCITS and AIFs and authorized to provide investment services and as such is subject to supervision by the Netherlands Authority for the Financial Markets. Kempen Capital Management (UK) Ltd is licensed as a manager and subject to supervision by the Financial Conduct Authority.
For more information, please visit: kempen.com