Right to health a factor in investment decisions

“We rate the performance of companies in our investment universe every quarter in terms of the environment, society and governance. And how companies address human  rights is an integral part of that,” Triesschijn explains. “We are able to engage with companies in a meaningful way because we have a relatively large investment portfolio of EUR 185 billion. And by joining forces with other investment services providers, which we do with Robeco, we can increase our leverage even further. We look at the extent to which businesses comply with universal human rights treaties and enter into dialogue with those that seriously violate these rights. Engaging with companies is an important instrument in our efforts to bring about change.”

Dealing with violations

In 2015, ABN AMRO found that an international pharmaceutical company had committed human rights abuses. Together with the Dutch asset management company Robeco, the bank then entered into dialogue with the company, which had been fined for bribing doctors in an effort to push medicine sales. “The activities the company was convicted of took place mainly in China,” Triesschijn explains, “but the issue also suggested that the organisation was grappling with a culture problem. The company’s management was asked how they were planning to prevent human rights violations in the future.” During the engagement process, it became clear that the organisation had taken far-reaching measures. They have changed their management structure and employees are now paid based on product knowledge and communication skills. “Robeco and ABN AMRO have encouraged the company’s management to introduce similar measures in other countries.”

Not always successful

Vincent Triesschijn explains that engagement is a long-term commitment – often lasting three to five years – and that it is not always successful. “We sometimes come up against cultural differences. For Asian companies, for example, openness to outsiders is not always a given. Having said that, Western businesses do not always accept an invitation to enter into dialogue either.” A large international healthcare company is a case in point. “A number of lawsuits have been filed against this company – for example about a product alleged to cause cancer and about poor provision of information on the medicines they manufacture. The violations seem to indicate that the company faces structural problems. It says it is prepared to enter into dialogue, but talks with their senior management have so far been kept at bay.” If we feel that engagement has not produced adequate results, we have the possibility to withdraw our clients’ investments or advise our clients to pull out their investments. 

Triesschijn believes in the value and the potential impact of engagement. “It’s one of the many ways in which we manage the assets entrusted to us in a sustainable way and contribute to positive change. ”

Excluding tobacco manufacturers

Each year about 20,000 people in the Netherlands die from smoking and several thousand others from exposure to passive smoking. The costs to society of smoking are high. “That’s why we believe sustainable investment funds should exclude tobacco manufacturers,” Triesschijn explains. ABN AMRO recently requested Europe’s largest asset managers, Amundi Asset Management, to do just that. “During these talks, Amundi said it often gets requests of this kind. Dutch investors in particular feel that investing in the manufacture of tobacco is not in line with sustainable investment strategies. After consultations with various parties, Amundi formally excluded tobacco manufacturers from the sustainable investment fund that ABN AMRO has since offered its clients.”

Dr Rachel Melsom MBBS - Director UK & Europe, Tobacco Free Portfolios

"When it comes to respecting human rights, the tobacco industry is a special case. NGOs have documented the extensive abuses that take place in the supply chain. Almost no cigarette can be guaranteed to be free from child labour. Even more fundamentally, according to the Danish Institute for Human Rights, the industry violates the right to health of each and every one of its customers. This means that banks financing tobacco manufacturers are directly linked to these abuses, without any credible outcome from engagement. ABN AMRO’s decision to stop financing tobacco manufacturers is therefore a logical decision for a bank that aims to implement the UN Guiding Principles on Business and Human Rights."

Click here for an overview of Sustainability news articles for the December 2017 Newsletter.