The new Works Council and its committees took office on 1 March 2015, after elections were held early in the year. Over the past few years, we have found that an effective employee representation body is vital to the success of the organization. The Works Council has tried where possible in recent years to carefully weigh varying interests with a view to working towards a future-proof insurance business. This has not always been easy. The debate between the Works Council and the Executive about changing the pay-and-benefits package comes to mind as being particularly contentious. The Works Council also played a key role in the creation of the current Redundancy Plan and its extension to 1 January 2016.
The Works Council looks back on turbulent times in which it took leave of colleagues - also within the employee representation body. The members know, however, that this is the new reality and that these very circumstances demand active and committed employee representation.
Vision of employee representation
The insurance market and the labour market alike are undergoing drastic changes. Business models are being viewed with different eyes. Labour capacity is coming under pressure or is interpreted differently. Considerations stemming from the new reality often result in planned decisions that are submitted to the Works Council or its committees. This requires the members of the Works Council and its committees to have the appropriate knowledge and skills to review these issues and to serve as a true sparring partner to the Executive. What is more, an effective structure should be in place to allow the employee representation body to review the multitude of issues (a proper balance between deliverables and efforts). The members of this body also need to be able to have a vision for the future a.s.r. and its employees in order to be able to review the issues before them.
Is the current employee representation model still appropriate for the organization? Are the Works Council and its committees capable of reaching the employees they represent and securing their commitment to change? These are questions that prompt us to look more critically than before at how our employee representation body actually works.
Outlook
The new term of office of the Works Council and its committees took effect on 1 March 2015. This is the perfect time to put the vision of employee representation described above into practice. Obviously, matters will depend, in part, on what a.s.r.’s future will shape up to be.
2014 annual report Corporate social responsibility
3.1.3 a.s.r. as an investor
As an institutional investor, one way in which a.s.r. demonstrates its social responsibility is in its use of ethical and sustainability criteria as part of its investment policy.
a.s.r. formalized its Socially Responsible Investment (SRI) policy in 2007. Since then the policy has evolved over time to capture the progress of the market and changes in society. The a.s.r. SRI policy describes the ethical and sustainability criteria that are applied to all a.s.r. investments, covering internal investments in government bonds and corporates (through equities and corporate bonds), as well as externally managed portfolios. The full a.s.r. SRI policy has been posted on www.asrnl.com. The a.s.r. SRI policy has been integrated into the investment practice by way of:
3.1.3.1 Exclusion criteria for countries and companies 3.1.3.2 ESG integration for best-in-class investments 3.1.3.3 Engagement
3.1.3.4 Impact investments 3.1.3.5 Voting
3.1.3.6 National and international covenants
3.1.3.1 Exclusion criteria for countries and companies
a.s.r. pursues a strict exclusion policy based on controversial activities that is applied to the entire internally managed portfolio, both for countries and companies. Among other players, this policy covers producers of controversial or offensive weapons, nuclear energy, gambling and tobacco. a.s.r. also requires businesses to comply with international conventions on human rights and labour rights, and applies criteria relating to gender equality, freedom of union, exclusion of child labour, indigenous people’s rights, etc.
By the end of 2014, 122 of the screened companies had been excluded due to their involvement in human rights violations (22), labour rights violations (8), armament (58), tobacco (14), gambling (19) and nuclear activities (6).
With regard to investments in sovereign debt, a.s.r. has excluded 74 countries that are poor performers in the annual report of Freedom in the World or have a low score on the Corruption Perceptions Index.
Screening process
Vigeo (www.vigeo.com/csr-rating-agency), an external and independent screening agency accredited by Arista, screens companies for their SRI policy. The Arista Standard sets guidelines and rules to assess evidence of transparency, quality, accountability and verifiability of the processes involved in Responsible Investing research. In addition, Forum Ethibel (http://forumethibel.org/content/home. html) offers independent and external certification including an audit of SRI principles in a.s.r.’s investment portfolio and the engagement process on a semi-annual basis.
3.1.3.2 ESG Integration for best-in-class investments
Best-in-class investing is part of the a.s.r. selection process of companies based on best practices and best products according to environmental, social and governance (ESG) criteria. We favour companies that excel in the area of ESG policy and implementation. They are classified as pioneering, best-in- class and sustainable companies using a relative, sector-based ranking for six domains of analysis: Human Resources, Environment, Market Ethics, Good Governance, Social Impact, and Human Rights. Because of ESG integration a.s.r. invests more in companies that perform better on the ESG criteria within their respective sectors. This is why the a.s.r. investment portfolio has a more sustainable profile than the relevant investment benchmark. A detailed description of these criteria has been posted on the a.s.r. corporate website (www.asrnl.com).
2014 annual report Corporate social responsibility
3.1.3.3 Engagement
a.s.r. believes in engagement through constructive dialogue with the companies a.s.r. (potentially) invests in with the aim of increasing both shareholder value and social benefit in the long term. As (potential) owners, we want the companies we invest in to address ESG risks as well as opportunities. For a.s.r., there are three types of engagement:
• Engagement for the purposes of monitoring. In 2014, we engaged in dialogue with around 20 companies, i.e. mostly our largest holdings. These companies represent nearly 35% of the internally managed equities portfolio. During each company meeting, a.s.r. puts the corporate social responsibility policy of these businesses on the executive agenda and addresses potentially controversial activities. a.s.r. was also invited by a number of companies it invests in to elaborate on our views and requirements in the area of sustainability.
• Engagement for the purposes of influencing. A dialogue with a company identified in our ESG analysis as being involved in controversial activities is meant to enhance their sustainable behaviour. If this dialogue is not brought to a positive conclusion, it will result in the exclusion of the company from the investment portfolio. Our engagement for the purposes of influencing in 2014 resulted in the continuation of our relationship with ENI, with which we are in the process of discussing their activities to resolve, compensate and prevent environmental and human rights breaches in Nigeria and Kazakhstan, and in the exclusion of McDonald’s from our investment portfolio due to their lack of responsiveness to our request to address their labour rights conflicts with the US unions.
• Public engagement. In 2014, a.s.r. participated in various industry initiatives to promote
sustainability and sustainable investments, e.g. in a Research Project led by the Dutch Association of Investors for Sustainable Development (Dutch acronym: VBDO) involving efficient investor engagement and a round table designed to brainstorm on how to improve the sustainability performance of the insurance sector.
3.1.3.4 Impact investments
In the investment process, a.s.r. devotes special attention to impact investing. Impact investments are investments in companies, organizations and/or funds with the intention to generate a beneficial impact on society and the environment at an acceptable financial return. Through these investments, a.s.r. makes a sustainable contribution to society, for instance by processing or recycling waste, using renewable energy (solar and wind), reducing its environmental impact or energy consumption, and that – just as a.s.r. does – make a contribution to the circular economy. Examples of these investments include the Robeco Clean Tech Fund, the Glenmont Clean Energy Fund or the Life Science Partners funds. A total of € 35 million has now been invested in non-listed impact investments, representing nearly 2% of the total equity portfolio.
Further initiatives were taken in 2014, including the creation of a platform for financial support for Dutch start-ups that match our impact investing criteria (www.doorgaan.nl).
3.1.3.5 Voting policy
The right to vote is an essential part of a well-functioning corporate governance system. We exercised this right whenever relevant. a.s.r.’s voting policy (www.asrnl.com) has been developed in accordance with the Dutch Corporate Governance Code and a.s.r.’s SRI policy. This policy is applied to all internally managed and exchange-traded equities. In 2014, we voted at nearly 83% of shareholder meetings held by our equity investments.
The voting accountability report provides a semi-annual review of how a.s.r. exercised its voting rights at shareholder meetings. The full report for 2014 is also available from www.asrnl.com.
3.1.3.6 National and international covenants
a.s.r. has undertaken a public commitment to act as a responsible insurer and investor. In evidence of this, it has signed the following national and international standards and covenants:
• United Nations Principles for Responsible Investment (UNPRI), signed in 2011. The report on our activities and progress towards implementing the UNPRI is public. It is available on the a.s.r. corporate website and the UNPRI website (http://www.unpri.org/viewer/?file=wp-content/uploads/ Merged_Public_Transparency_Report_ASR-Nederland-N.V._2014.pdf).
2014 annual report Corporate social responsibility
• The UN Global Compact (UNGC), signed in 2011. By signing these principles, a.s.r. has undertaken to embrace, support and implement within its sphere of influence a number of principles relating to human rights, labour standards, the environment and the fight against corruption. The report is available on the a.s.r. corporate website and on the UNGC website (www.unglobalcompact.org/ participant/15923-ASR-Nederland-N-V-)
• a.s.r. also abides by the Sustainable Investment Code of the Dutch Association of Insurers, which came into effect on 1 January 2012. The Code stipulates that the investment policies of members of the Association are required to take into account the ESG aspects of the entities in which they invest.
• a.s.r. signed the United Nations Principles for Sustainable Insurance (UNPSI) in 2013, the goal being to promote sustainable insurance products by reducing risk, developing innovative solutions, improving business performance, and contributing to environmental, social and economic sustainability. The report is available on the a.s.r. corporate website and the UNPSI website (http://www.unepfi.org/psi/wp-content/uploads/2014/09/ASR_Disclosure_1.pdf)
• In 2014, a.s.r. signed the Anti-Corruption Call for Action initiated by the United Nations Global Compact, in which the financial community asks governments to strength their anti-corruption policies, laws and enforcement mechanisms to create a level playing field and incentivize good behaviour.
External recognition
The SRI policy was further enhanced in 2014; the most recent version of the Socially Responsible Investment policy can be found on the website: www.asrnl.com.
For the fourth consecutive year, a.s.r. was ranked third in the annual survey conducted by the Dutch Association of Investors for Sustainable Development (VDBO) among 30 insurers in the Netherlands. This assessment includes policy, implementation, transparency of investments and governance (management and supervision of the investments).
In September 2014, the Fair Insurance Guide (FIG) published the third report on the sustainability of the Dutch insurance sector. The FIG is an initiative of Friends of the Earth Netherlands (Milieudefensie), the Dutch Society for the Protection of Animals (Dierenbescherming), PAX, Oxfam Novib,
Amnesty International and the FNV trade union. The guide benchmarks the sustainability aspects of the ten largest life insurance companies in the Netherlands. In the latest two guides
(www.eerlijkeverzekeringswijzer.nl), a.s.r. received the highest total score among all surveyed insurers and was praised for its policy on weapons, human rights and labour rights. The aim of FIG is to encourage insurers to make their investment policy more sustainable and to optimize sustainability policy implementation. This has resulted in a number of useful suggestions that a.s.r. followed up in 2014.
ISAE 3402 type II assurance certification
Under Section 4.16 of the Dutch Financial Supervision Act, financial institutions are required to demonstrate that they are in control of their outsourced processes. This implies that a financial institution will always ask its suppliers to submit a Service Organization Control (SOC) report before they can provide services to this institution. ISAE3402 is the international standard for SOC reports. The ISAE3402 report serves to demonstrate that the financial institution is in control of any processes it has outsourced.
To demonstrate that a.s.r. is in control of the processes, Financial Markets and Rural Real Estate (a division of a.s.r. real estate investment management) are ISAE 3402-certified. An independent auditor performed an audit of the processes of these departments and issued an ISAE 3402 type II assurance certificate. This quality mark is a key indicator that a.s.r. has full and adequate insight into investment processes, including their execution and controls. The Financial Markets department has been awarded ISAE 3402 type II certification every year since 2010. The ASR Dutch Prime Retail Fund (DPRF) has been awarded the ISAE 3000 Type II assurance certificate.
2014 annual report Corporate social responsibility