Delen as a responsible investor

Delen Private Bank specialises in discretionary wealth management, which means that the bank invests assets in the name and on behalf of its clients. Its investment decisions have a substantial impact on society.

At Delen Private Bank, Delen Private Bank Luxembourg and Delen Suisse, clients' assets are invested in investment funds when filling portfolios. All these investment funds consistently apply the responsible investment policy.

Through its responsible investment policy, Delen Private Bank contributes to a wide variety of Sustainable Development Goals or SDGs, the most important being responsible consumption and production (SDG 12) and climate action (SDG 13).

38 billion euros of assets managed responsibly

The bank invests over 38 billion euros of its clients' wealth responsibly, through the investment funds managed by fund manager Cadelam. 

According to the recent European Sustainable Finance Disclosure Regulation (SFDR) legislation, all our funds are given an Article 8 rating. This implies that these funds promote sustainability features, without their contribution to sustainability being an explicit objective of the funds.

Europe has significant ambitions in terms of ESG (environmental, social and governance), calling on financial institutions, among others, to fulfil their responsibilities. For instance, they should identify, measure and monitor the 'principal adverse impact' – or sustainability risks – of their investment decisions and advice in the three ESG domains.

Through the three pillars of integration (of non-financial criteria), dialogue (with companies to support their sustainable transition) and exclusion (of companies with excessive sustainability risk), Delen Private Bank meets the European regulation to mitigate sustainability risks. We go over the three pillars here below.

Integration of non-financial criteria

For all investments in our in-house funds, ESG parameters are considered alongside companies' financial performance. Considerations relating to environment, society and good governance are thereby integrated into every investment decision.

After all, a company's financial health is only sustainable in the longer term if it also scores well on non-financial parameters. The independent data provider Sustainalytics has built its reputation as a world leader in sustainability research over the past 25 years. Sustainalytics analyses and rates companies on ESG risks. The spectrum ranges from 100 to 0. The lower the score, the fewer ESG risks the company faces.

Because Cadelam considers ESG factors in its investment decision, the average ESG risk score of our in-house funds is lower than that of the benchmark index.

Let us consider climate as an example, more specifically carbon intensity (carbon emissions in relation to turnover). This score is substantially lower than that of the benchmark index for the companies in our portfolios. 

Based on the ESG risk score, the bank can take two paths with companies in which it invests or is considering investing: either it enters into dialogue with the company aimed at an ongoing improvement in sustainability (the second pillar, engagement), or it excludes the company from all portfolios (the third pillar, exclusion).

Dialogue with companies to help support their sustainable transition

Engagement refers to the continuous and constructive dialogue between the investor and its holdings. As a shareholder, the investor (in our case Cadelam) is not only entitled to a share of the profits, but acquires a say in the policy of the company it invests in through the voting rights of its shares.

Through constructive discussions and specific agreements, Delen Private Bank and Cadelam encourage companies to work on their transition to a more ecological, socially just and better-governed world.

Delen entered into dialogue with 345 companies, accounting for 70% of the companies in its portfolio.

Exclusion of companies with excessive sustainability risks

Selling or excluding companies from portfolios is the drastic last resort in responsible asset management. When dialogue or voting as part of engagement does not yield sufficient results, or when a company's sustainability profile is found to be evolving negatively, divestment becomes imperative.

Over the past two years, we internalised part of the analysis process, replacing external parties' exclusion lists. With the help of research firm Sustainalytics, the analysis was made notably more tangible.

Fund manager Cadelam excludes five types of companies: companies focusing on non-conventional weapons or tobacco, companies that pose a severe ESG risk or climate related sustainability risk and companies that consistently violate the UN Global Compact Principles.