The first pillar of the EUROFIMA’s ESG Investments Framework is “Norm-based screening”. In its essence being a negative screening approach which is based on the UN Global Compact compliance. The first pillar helps to identify the issuers to be excluded from the investment universe due to conditional exclusion not meeting the minimum business practice standards.
For “norm-based screening”, the approach followed is to monitor the business compliance of our investees to the Ten Principles of the UN Global Compact, which, in turn, are derived from the Universal Declaration of Human Rights, the International Labour Organization’s Declaration on Fundamental Principles and Rights at Work, the Rio Declaration on Environment and Development, and the United Nations Convention Against Corruption.
Compliance to the United Nations Global Compact is seen as a positive indication of a stakeholder being ready to embrace ESG policies and practices in their daily business activities. Failure to comply provides a ground for the Treasury & Asset Management unit to exclude the issuer/borrower from the eligible investee/counterparty list. This holds not only for investing but also for doing any business with counterparties.
EUROFIMA confirms that all positions held are with the issuers compliant with the Principles of the UN Global Compact. In case of a change to “non-compliant” positions must be liquidated and business relationships stopped.