German VBL revises its internal asset allocation guidelines | New

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Versorgungsanstalt des Bundes und der Länder (VBL), Germany’s supplementary pension agency for public sector employees, is reviewing its internal asset allocation guidelines, according to a government response to a parliamentary inquiry by the party of the Greens.

VBL is also reassessing and developing its approach to sustainability in its asset allocation, the government added.

The pension provider will integrate sustainability risks into its asset management and risk management process when identifying and analyzing investment risks, their causes and their interactions.

Sustainability risks are among the contributing factors to other types of risk, such as credit risk and market risk, VBV added.

In addition, as part of its asset/liability management, VBV will carry out at least once a year an analysis of the development of its investments, its obligations and its capacity to bear risks in order to design risk control, for example in the form of strategic asset allocations. in accordance with long-term obligations.

The analysis will also lay the groundwork for developing tactical allocations, VBV said, adding as an example the option to reduce investments as the market risk of an asset class increases, if regulatory measures such as rising CO2 tax, or if companies are not operating sustainably or using the funds to transition to sustainable business models.

VBL excludes investments in stocks and bonds linked to serious and systematic violations of human rights or fundamental standards of the International Labor Organization (ILO).

Allocations to stocks and bonds related to the manufacture of or trade in cluster munitions and anti-personnel mines, and biological and chemical weapons are excluded in accordance with the United Nations weapons ban.

The VBL also plans to exclude companies active in the energy and raw materials sectors with a predominantly coal-based business model, as well as countries whose MSCI The ESG rating indicates serious human rights violations, he said.

According to the government’s response, VBL is currently investing a total of €368 million in companies that are on the Global Coal Exit List, a database of companies in the thermal coal value chain.

VBL has engaged with investee companies by exercising voting rights at general meetings or by leading discussions with supervisory boards, company board members and investor relations or development representatives sustainable business on critical issues related to sustainable development.

VBL’s assets under management were €25.7 billion in 2019 with 4.08 million members, according to the latest publicly available financial statements.

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