tbli nordic 2015 - florian sommer - union investment privatfonds gmbh

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1. TBLI Conference Nordic ESG integration across asset classes Florian Sommer Copenhagen, 16th June 2015 2. Founded in 1956 Headquartered in Frankfurt, Germany Active, fundamental asset manager with integrated portfolio management/ research approach EUR 253bn AuM, thereof EUR 141bn for institutional clients Among the top 15 managers in Europe* Focus on asset management, no change in shareholder structure over the years More than 2,600 employees Union Investment is one of the leading asset managers in Europe * Investment & Pensions Europe (IPE Research, June 2014). Data as of May 2015 2 3. 1995 2003 2008 2012 8,3 bn** Sustainable Investment at Union Investment As of March 2015 * Sustainable and Responsible Investment; ** 8,3 euro billions Assets under Management in sustainable investments. More than 20 years of experience Sustainable investment solutions for all major asset classes A competence team of 21 SRI* portfolio managers / analysts 3 2015 Strategies of exclusion Best-in-class- strategies Strategies for individual topics Competence team for sustainability Engagement overlay Sustainability overlay 4. Steering committee members* Adam Kirkman, AMP Capital Investors Archie Beeching, PRI Bram Bos, Univest Company (Unilever Pension Funds) Christoph Klein, Deutsche Asset & Wealth Management Doris Kramer, KfW Bankengruppe Florian Sommer, Union Investment Harald Klug, PIMCO Jennifer Anderson, The Pensions Trust Lorna Youssouf, Royal London AM Michael Salvatico, MSCI Urs Bitterling, Allianz Insurance Tomi Nummela, PRI The PRI Workstream Fixed Income 4 * Status May 2015 2011 20132012 2014 5. ESG provides additional risk insight 5 Analyse Avoid Reduce Change Olympus TEPCO / Fukushima BP / Transocean LIBOR scandal Parmalat Enron Costs of CO2 regulation (e.g. automotive sector, utility sector) Costs of nuclear exit Ban on incandescent light bulbs Foxconn: suicides of workers Freeport: human rights Wilmar: tropical deforestation Hershey: child labour Event risks Regulatory risksReputational risks Litigation risks Asbestos lawsuits (USD 70 bn), e.g. Owens Corning, Saint-Gobain Lawsuits against US tobacco industry (USD 206 bn) Investment banks (over USD 306 bn) 6. Indexed performance (5-year comparison) Regulatory risks: German utilities suffer from the energy transition 6 0 20 40 60 80 100 120 Feb 10 Feb 12 Feb 14 Eon RWE MSCI Versorger Index As at 19 February 2015 As at 20 February 2015 Source: Bloomberg Indexed spread performance (5-year comparison) 50 100 150 200 250 300 350 2010 2011 2012 2013 2014 2015 Eon RWE Versorger Index - Merrill Lynch Downgrade S&P Downgrade Moody's 7. 0% 5% 10% 15% 20% 25% 30% 35% 40% Low Liquidity Buffer and High Litigation Risk High Liquidity Buffer and Low Litigation Risk Liquidity Buffer (in Percentage of Market Capitalization) Litigation Risks: $306 bn resulting from Actions and Fines for the Biggest 16 Investment Banks since 2010* 7 Quelle: SG Cross Asset Research / Equity 2015; *CCP Research, Juni 2015. Caixa Bank ING Bank Danske Bank KBC Bank SEB Swedbank BBVA DNB Nordea BNPP (Post fine) HSBC Lloyds UBS Credit Suisse Barclays RBS Low Medium High Litigation Risk Deutsche Bank Bank Actions Costs Bank of America US MBS/CDO Misselling $16,7 bn JP Morgan US MBS/CDO Misselling $9,0 bn BNP Paribas US Trade Sanctions $8,9 bn CITI US MBS/CDO Misselling $7,0 bn Credit Suisse US Tax Evasion $2,6 bn Deutsche Bank LIBOR Manipulation $2,5 bn HSBC Money Laundering $1,9 bn Costs of Actions for Banks 8. Corruption levels after Corruption Perception index (CPI) (87 countries and defaults since 1970) Defaults occur more frequently in corrupt countries 8 Source: Union Investment, Transparency International 2014 15 16 16 19 21 0 1 4 13 20 very low low medium high very high Countries Defaults 9. Levels of corruption during the escalation of the EU debt crisis Source: Union Investment, Transparency International, Corruption Perceptions Index (CPI) Corruption level (CPI 2011) Corruption change in % (CPI 2008-2011) low high worse better 9 Italy Iceland Austria Spain Netherlands United Kingdom Greece Sweden France Portugal Denmark Czech Republic Israel Ireland Mexico Germany Hungary Slovakia USA Belgium South Korea Turkey Poland 20 30 40 50 60 70 80 90 -30% -20% -10% 0% 10% 20% 30% OECD average: 70 10. 10 Nuclear Prgr. Senkaku-Isles Kaschmir Military Coup China-Protest Ukraine-CrisisGezi-ProtestEuro-Crisis Racial Tensions Drug Wars Economic Crisis Public Unrest Debt Crisis Boko Haram Streiks Arab Spring Middle EastISIS ESG helps to assess political risks 11. ESG score Measuring ESG as a standalone dimension 42,3 Portfolio Benchmark Top 5 ESG Scores Portfolio Essilor 78,7 Veolia 75,2 Verbund 75,2 Schneider Electric 69,7 Procter Gamble 68,8 Examples Fail in Benchmark Glencore Human rights violations Textron Controversial weapons Petrobas Corruption Walmart ILO labor standards Barrick Gold ILO labor standards Exclusion filter Environment Governance Social Quelle: Union Investment 11 59,1 89,6% 10,4% Pass Fail 12. Many thanks for your attention! 13. Disclaimer 13 This advertising material is intended only for professional clients as described in section 31a, paragraph 2 of the German Securities Trading Act (WpHG). The present document has been prepared and issued by Union Investment Institutional GmbH. The document does not constitute a binding offer. Union Investment does not assume any obligation or liability for this document. The document is no substitute for the individual advice by Union Investment Institutional GmbH. Union Investment Institutional GmbH is not responsible for disadvantages that may arise directly or indirectly from the distribution of this document or its contents. For extensive product-specific information and details of the opportunities and risks presented by the respective fund, please refer to the latest sales prospectus, the Bank's terms and conditions or the annual and half-yearly reports that can be obtained free of charge from Union Investment Institutional GmbH, Weissfrauenstrasse 7, 60311 Frankfurt am Main, Germany, telephone +49 69 2567-7652. These documents constitute the sole legally binding basis for the purchase of fund units. Origins of Data: Despite our effort and care no liability or guarantee can be assumed for the timeliness, accuracy or completeness of the data provided. Where data has been obtained from external sources, this is explicitly stated. We consider data obtained from external or publicly available sources to be reliable. Data obtained from external sources or contained in our own calculations may be incorrect. We assume no liability for any errors that may occur when data is passed on, recorded or entered or when calculations are made using this data. Historical performance: Performance data shown is historical. Past performances can not be taken as a reliable guide for future investments. The BVI method (time- weighted return) is used for these calculations. Where the gross method has been used for such calculations (adjusted for management fees and depositary fees), this is explicitly stated. Data calculated and presented using either the BVI method or the gross method does not include any front-end fees or product-specific costs (fees, commissions and other charges). Compliance with Global Investment Performance Standards (GIPS) and the BVI-Rules of Conduct: Union Investment claims of compliance with GIPS has undergone the verification process and has been verified by an independent third- party verifier. The Composite-Performance calculation and presentation comply with the GIPS guidelines. The composite allocation of individual funds, or all Composites complying with GIPS are available upon request. Union Investment Institutional GmbH has committed to comply with BVIs code of conduct. In consequence, Union Investment Institutional GmbH employs the code's standards for performance illustrations. Cases of deviation will be individually indicated. Future assessment: Any opinion expressed in this document (including estimates and forecasts) is solely for information purposes and does not constitute an individual offer or a guarantee for future performance. Any opinion contained herein was given at the date of publication and may be subject to change without notice. Use of Union Investments country ratings: The country ratings devised by Union Investment are merely the outcome of its assessment of the creditworthiness of sovereign issuers for internal purposes, and they are intended to be used purely as quality appraisals of a certain selection of sovereign issuers. The ratings represent Union Investment Institutional GmbHs own assessment and do not constitute a recommendation to take a particular course of action.