1. Sustainability – General disclosures
Disclosure on the sustainability policy
Aegon Hungary Assets Management (hereinafter: Fund Manager) meets its obligation set out in Article 3, section (1) of Regulation 2019/2088 of the European Parliament and Council (EU) on sustainability-related disclosures in the financial services sector, by creating internal rules, which have been issued under the title of Sustainability and Due Diligence Policy.
The Policy includes the basic principles of a responsible and sustainable investment activity, applied by the Fund Manager to operate its asset management. The Preamble of the Policy declares the Fund Manager’s commitment to a responsible and sustainable approach to investment.
The Fund Manager is an important investor of numerous sectors and companies therefore it has serious responsibility as an equity investor. The Fund Manager is committed to making prudent and responsible investments for the benefit of its customers with the appropriate identification and management of risks. The global Aegon Group is a signatory of the UN Principles for Responsible Investment (UN PRI).
The Fund Manager as a shareholder strives to make contributions to wellbeing and sustainable development – acting for the benefit of the investment funds and asset portfolios managed by it – while performing its shareholder’s duty. It believes that the integration of Environmental, Social and Governance (ESG) conditions into the decision-making process on shareholdings and investments will have a long-term positive impact on returns. It demands that all of its employees, and in particular those concerned with the investment activity shall support this approach.
The Fund Manager, in the course of its responsible investment activity, applies the following strategies with consideration to the special features of the individual portfolios:
- Exclusion criteria: The Fund Manager abstains from investing into companies with core activities regarded as adverse by international norms (e.g.: companies trading arms)
- Integration of ESG criteria: The Fund Manager also takes Environmental, Social and Governance – ESG) factors into consideration when making investment decisions. It relies on data provided by external ESG data suppliers in the assessment of sustainability risks, which data are processed by it also with the application of internal analyses.
- Active ownership – commitment and voting: The Fund Manager typically maintains a dialogue with the companies in which it invests. It gathers information about the companies in which it wishes to invest in the form of conference calls or sometimes on-site visits. Furthermore, it attends annual general meetings, where it exercises its voting right in line with the instructions in its Engagement Policy. In this process, it also gathers information on the sustainability commitment of the companies concerned, and may also enforce its sustainability commitment during voting if justified by the case.
The Fund Manager operates and develops decision-making processes which also aim at the integration of sustainability risks in addition to other relevant investment risks. The exact manner of taking sustainability risks into consideration depends on the nature of the portfolio concerned. If the investment policy of the portfolio expressly includes aims to promote environmental or social characteristics or their coordination, or the investment policy aims at a sustainable investment, the Fund Manager’s asset management practice expressly favours, to varying extent, the instruments where exposure to sustainability risks is typically lower.
The Fund Manager systematically considers the principal adverse sustainability impacts of its investment decisions – as defined in Regulation 2019/2088 of the European Parliament and the Council (EU) on sustainability-related disclosures in the financial services sector. The Fund Manager assesses and measures sustainability risks through these principal adverse impacts on the issuers of investment instruments.
Disclosure on the due diligence policy
Aegon Hungary Assets Management (hereinafter: Fund Manager) informs its investors and customers that in its investment decisions concerning the offered financial products, it systematically considers the principal adverse impacts on sustainability factors as defined by the Disclosure Regulation 2019/2088 of the European Parliament and the Council (EU) on sustainability-related disclosures in the financial services sector.
The Fund Manager meets its obligation to develop a due diligence policy by issuing internal rules under the title of Sustainability and Due Diligence Policy.
This Policy includes the description of the principal adverse sustainability impacts, and the Fund Manager’s practice to identify and prioritize adverse impacts and indicators. The Fund Manager creates and develops its related practice so that it can give consideration to the already available and probably expanding sustainability data. At the same time, it is the issuers’ related effective disclosure practices that will basically define the sphere of the relevant data available for the Fund Manager as asset manager. The sphere of such information will reach the depth aimed at by the regulators following the full implementation of the European Union’s sustainability legislation, and its compliance by market players.
The Fund Manager’s due diligence practice aims at creating a picture of the sustainability characteristics of the instruments in a proportionate but most efficient way possible so that the Fund Manager can inform its customers and investors on the sustainability profile of its offered financial products in line with legal provisions, and adjust the sustainability profile of the portfolios adequately if this aim has also been formulated by the investment policy.
Pursuant to the expectation expressed in Article 4, section (4) of the Disclosure Regulation, the Fund Manager informs its customers and investors that the global AEGON Group has submitted itself to the UN Principles for Responsible Investment (UN PRI), and has integrated the criteria of responsible investment in the Group’s code of conduct.
The global AEGON Group signed the Paris Agreement on climate change in 2015, pursuant to which it has to take steps to support the implementation of the Paris Agreement and to speed up the transformative changes necessary to meet the climate challenge.
AEGON is a member of the CDP, which encourages companies to be more open among others to greenhouse gas emissions.
Extract from the Fund Managers’ engagement policy
The Fund Manager, engaged as shareholder, acts to enforce the interests of its customers and/or investors when acting to the benefit of the investment funds and asset portfolios managed by it. The general aim of the Fund Manager, engaged as shareholder, is that the companies with portfolio investments shall operate in line with Fund Manager’s investment purposes. In this process, it also gathers information on the sustainability commitment of the companies concerned, and may also enforce its sustainability commitment during voting if justified by the case.
In general, the Fund Manager represents a supportive shareholder attitude vis-a-vis the management of the companies concerned with the Fund Manager’s investments. If the total voting right of the portfolios represented by the Fund Manager overruns 5%, and has an advocacy capability with regard to general meeting resolutions, it may even attack any given proposal if according to its judgement, this step is in the interest of its customers and/or investors.
The Fund Manager gives information annually on the implementation of its current Engagement Policy with the content specified in the applicable law. The Fund Manager gives written information annually to its institutional investors which it executed a portfolio management contract with about how its investment strategy and its implementation meet the requirements of the contract, and how they contribute to the medium- and long-term performance of the institutional investors’ instruments.
In line with applicable legal provisions, the Fund Manager discloses its Engagement Policy and information on its implementation on its website (www.aegonalapkezelo.hu).
Extract from the Fund Managers’ renumeration policy
At Aegon Fund Management, the work of our colleagues creates value for our clients, which is why we have developed working conditions and an incentive system that allows employees who do excellent work to be retained in the long term and also attracts new talent. This requires a competitive remuneration system in addition to work-friendly conditions and ongoing training.
Our remuneration philosophy is based on monitoring the labor market and developing appropriate references. Part of our philosophy is to ensure that employees who meet expectations are adequately remunerated. To this end, in addition to a fixed income, we use variable pay in certain jobs, primarily in the area of asset management and sales.
At the same time, our remuneration policy only supports healthy risk-taking, thus preventing our colleagues from taking excessive risks that go beyond the mandate. The considered risks also include the sustainability risks, this way supporting the holding’s vision that responsible investment practice may create value on the long run. To this end, we make risk indicators part of the interest system, among others, we also use longer-term performance data in the evaluation, and in the case of colleagues with a decisive role in risk-taking (so-called identified), we pay 50% of the variable remuneration, with a three-year deferral. Who. This allows the reward to be reduced or withdrawn in the event of excessive risk-taking after the end of the assessment period. Over the three years, the accrued portion will be invested in key investment funds managed by Aegon Fund Manager, strengthening the interest in the good performance of the funds.
A designated group of employees may also receive an annual variable salary (bonus) depending on performance. Employees involved in the bonus: members of the Board of Directors, fund managers and analysts, senior colleagues in the sales area, and the head of the finance and settlement area. The Fund Manager intends to reward excellent performance for the employees involved in this area on personalized terms. Based on the classification of employees working in the above areas, the maximum bonus that can be paid can reach 100 percent of annual income in the case of excellent performance. Maximum performance is achieved when all set goals are exceeded. The setting of personalized goals is the responsibility of the line manager, while its approval is the responsibility of the Chairman and Chief Executive Officer, excluding the job descriptions of the members of the Board of Directors and the identified employees. In their case, the objectives are set under the supervision of Risk Management, while their approval is the responsibility of the Chairman of the Supervisory Board. The fulfillment of the objectives will be assessed, monitored and approved in accordance with the above.
In determining the amounts that can be paid out as a bonus, in addition to achieving the individual goals, the size of the bonus frame calculated and approved by the remuneration committee of the Aegon Asset Management Group appears as an additional consideration.