Ethical Guidelines for Investments

In view of the fact that investment is part of the core business and therefore needs to be reflected as a matter of priority in the Group ethical commitment, for a number of years now, we have decided to adopt investment policies designed to influence the conduct of the issuing companies in which we invest. In other words, we are aware that, as an institutional investor, we can perform an active role in the areas of environmental protection, respect for human rights and social issues in a broad sense, and we intend to do this by applying criteria that take account of these issues in investment decisions.

Moreover, by adding environmental, social and corporate governance (ESG) aspects to the usual economic and financial assessments, we believe we can enhance investment security while at the same time protecting ourselves from any damage – to reputation or the relationship of trust built over the years with our stakeholders – that could arise from involvement, through investments, in activities that are contrary to the Group principles. Thus, without sacrificing profitability, we want to give an ethical dimension to our investment policies, placing ourselves among investors who adopt responsible behaviours in the financial markets.

The first initiative undertaken in this regard dates back to 2006, when the Group decided to adopt the ethical guidelines of the Norwegian Government Pension Fund - Global and, in particular, to exclude from its investment universe any companies excluded from the Fund’s investment universe.
In 2010, the Group decided to stop precisely replicating the application of the criteria (and exclusions) of the Fund, defining its own Ethical Guidelines for Investments to fully express its position with regard to the fundamental requirements that should characterise investments and to perform compliance assessments of investments in companies that are not monitored by the Norwegian Fund, as it does not invest in them.

To date, the Ethical Guidelines of the Generali Group are applied to the majority of direct investments (excluding real estate) of the Group insurance companies where they bear the risk (253 billion euro); third party assets are therefore excluded. These Guidelines are the means by which the two aims mentioned above are pursued: to reduce the risk of involvement in activities that are not in line with our ethical principles and to play an active role in the area of human rights and the environment, influencing the conduct of issuing companies.

In particular, it is prohibited to invest in financial instruments issued by companies that:

  • produce weapons that, when used normally, may violate fundamental humanitarian principles (cluster bombs, antipersonnel mines and nuclear weapons);
  • sell military equipment or weapons to countries on the UN arms embargo list, published by Stockholm International Peace Research Institute (SIPRI);
  • are involved in serious or systematic violations of human rights, serious environmental damage, serious instances of corruption, or other particularly serious violations of fundamental ethical standards.

To ensure impartiality and competence in assessment and exclusion procedures, the Council on Ethics for Investments was established, composed of representatives of the main departments involved in the management of the Group investments, of Corporate Social Responsibility, and of the company Generali Investments Europe.
The Council is responsible for assessing the cases of companies whose conduct does not meet the minimum requirements defined by the Guidelines, assessing any evidence supplied by the companies, and where non-existent or unsatisfactory, drawing up reasoned proposals to exclude companies that violate the Group ethical criteria. Top Management are responsible for making final decisions regarding exclusions. Similarly, if the reasons for exclusion no longer apply, the Council on Ethics for Investments proposes the readmission of these companies to the Group investment universe.

Under a wider project on Group investment governance review, a new business procedure to govern the process of excluding issuing companies from the Group investment universe is currently being drawn up, also in light of the important organisational changes that have taken place in the last year.

As at 31 December 2013, investments in non-ethical companies in the insurance portfolios amounted to approximately 58 million euro; since these investments refer for almost all to the most recent exclusions, they are currently being disposed of in accordance with the Ethical Guidelines.

Given that there must be consistency between the investment policy and the voting policy, we strongly favour integrating ESG elements into its voting policy. Generali Investments Europe, the Group asset management company, started this process a number of years ago, favouring the presentation at General Meeting of resolutions concerning the dissemination of best practices relating to governance, professional ethics, social cohesion and environmental protection, and undertaking to rule, on a case-by-case basis, on the proposals put forward by shareholders in this regard. The primary goal is to establish genuine dialogue with directors and managers of the companies and to encourage them to consider such topics in the performance of their activities.

In support of this practice, and with aim of extending it to all Group companies, in early 2014, the Group Voting Policy was formalised in a document, the approval of which by the Board of Directors of the Parent Company is ongoing.

As evidence of the commitment with regard to ethical investment, in 2011 the Group signed up to the Principles for Responsible Investment (PRI), a UN initiative created with precisely the aim of disseminating and integrating environmental, social and governance issues in investment assessments, through the implementation of the six principles. Since 2013, the Group has also participated in the disclosure activities required of companies that have signed up to the PRI.

The Group participates in a number of initiatives and international networks, including those sponsored by the European Forum for Sustainable Finance (EUROSIF) and the Forum per la Finanza Sostenibile (FFS), with a view to comparing the our position with regard to the responsible investment policies adopted with other representatives of the financial sector, helping to establish guidelines and common approaches and promoting the adoption of best practice.

With similar aims, the Group participates in the CRO Forum Sustainability Working Group, which in recent years has produced a number of documents on possible measures that an insurance company may adopt, as both investor and insurer, to manage the reputational risks related to its involvement in controversial activities such as the production of anti-personnel mines and cluster bombs (Banned Weapons) and the extraction of oil from bituminous sands (Oil Sands). In 2013, a new blueprint was published on the integration of ESG aspects in the analysis of country risk.

Besides the approach described regarding the exclusion of issuing companies that are deemed unethical, the responsible investment policy of the Generali Group is also expressed by offering SRI (Socially Responsible Investing) products, for which, by means of an internal methodology, the Group is able to select the best in class companies in relation to the corporate social responsibility and sustainable development policies implemented.

In 2013, as part of the Award for Sustainable Investor of the Year promoted by the Forum per la Finanza Sostenibile, the Generali Group received a special mention for having implemented "an integrated approach to the management of sustainable and responsible investment strategy, acting both on the Group proprietary assets and on a number of products intended for investment clients, using an advanced environmental, social and governance analysis methodology [...] through its commitment, Generali sends a strong signal to the entire sector. The SRI policy represents an element of discontinuity with the past and, at the same time, a reference model for the system."

Assicurazioni Generali S.p.A. - C.F. e P.IVA 00079760328