Intensifying dialogue with companies the bank’s clients invest in

More and more of ABN AMRO’s clients are choosing to invest their assets sustainably. The sustainable investments made by the bank as at the end of November 2020 totalled EUR 24.8 billion, and ABN AMRO aims to increase that amount to EUR 30 billion by 2022. “We’re seeing a big difference compared to five years ago,” says Vincent Triesschijn, who oversees sustainable investment products and services at the bank. “Sustainable investment used to be a niche for a small group of clients, but now it’s become mainstream. Overall, clients are more involved and discerning. They want to make sure the companies they’re investing in really are sustainable.”

UN Global Compact

A sound environmental, social and governance (ESG) policy has been a top priority at ABN AMRO for quite some time. The bank follows its own sustainability guidelines and endorses the ten principles outlined in the UN Global Compact involving issues such as human rights, the environment and working conditions. But now, unlike in the past, the bank has opted for a more proactive approach, says Karin Bouwmeester, head of ESG engagement and reporting.

“We used to try to establish a dialogue with companies, a process known as ‘engagement’, whenever a serious violation of the UN Global Compact principles occurred. Obviously, we still do that, but it’s a reactive approach to a negative cause. That, together with the fact that it actually results in a loss of influence, is why exclusion is not our preferred approach. By collaborating with our engagement partner Federated Hermes, we now proactively try to establish a dialogue on the basis of certain themes which will help prevent potential violations and inspire companies in a positive way.”

Twelve themes

As one of the bank’s engagement partners, EOS at Federated Hermes talks to listed companies about ESG issues, focusing on twelve themes ranging from the environment and circular enterprise to risk management and working conditions. And because EOS at Federated Hermes speaks for so many stakeholders, the idea is that these talks have more clout than if each stakeholder were to operate individually. After all, these stakeholders collectively have a larger share in companies, and thus more influence on them.

“Mindful of our purpose of ‘banking for better, for generations to come’, we have to ensure that active ownership is a meaningful concept,” says Vincent. “On behalf of our clients, who are shareholders, we have a seat at the discussion table with these companies thanks to our engagement partners. That automatically gives us a certain influence and responsibility, both of which are helping us make changes for the better.”

It’s not all about talking, though. The engagement strategy is a step-by-step process – if a given company chooses to cooperate, that is. Karin explains, “Depending on the chosen theme, Federated Hermes looks for companies which need to take steps in a given area and reaches out to them. Sometimes, a company may have no wish to discuss the matter. And in extreme cases, such companies may well be added to our exclusion list. More often than not, though, they’re open to dialogue. That’s when we try to arrive at concrete goals together.”

Transparency

The engagers at Federated Hermes set specific objectives for companies and systematically encourage and measure their progress.. An extensive reporting suite which includes regular case studies is then made available so that ABN AMRO clients receive greater clarity about the progress companies are making.

“There will always be leaders and followers,” Vincent concludes. “Engagement is a great way to help companies learn about ESG and develop their policies. But if you carry out engagement only when violations are committed, you’ve actually already missed the boat. We also hope a proactive, transparent approach will help foster mutual inspiration and healthy competition among companies, and create a spin-off effect where everyone wins – not just the business sector, but also employees, society as a whole and future generations.”