Sustainable investment: Not without the depositary

One of the changes that there is no turning back from is the integration of Environmental, Social and Governance (ESG) criteria into the investment process — something that has been applied in practice at MAPFRE AM for a number of years. This new way of doing things is undoubtedly very appealing, but far from easy. Asset managers have a valuable partner to assist them in this undertaking: depositaries

This was discussed by managers and depositaries alike at a round table held as part of ‘Insights Depositaría’ — a symposium organized by FundsPeople in which Eduardo Ripollés, Institutional Sales Director at MAPFRE AM, took part. As the expert explained, the topic of Socially Responsible Investment (SRI) is equally critical at MAPFRE. “It’s in the company’s DNA,” said Ripollés, recalling that MAPFRE’s Corporate Social Responsibility (CSR) was established in 1964: “Fundación MAPFRE is its largest stakeholder, and the manager has a mandate to apply the company’s DNA.” To address this challenge, the insurer signed an agreement in 2018 with the French asset management boutique La Financière Responsible (LFR): “We needed to work with a firm that understood us in our totality.” This global approach is also sought by the depositary: “It’s important for the depositary to grasp what the Board and investors demand of us. The depositary’s role is fundamental for us, because it ensures we cannot fail.”

The services offered by depositories in the field of the ESG go far beyond their work as a guarantor or the provision of knowledge about regulations. When it comes to ESG, the ‘G’ for Governance is becoming increasingly relevant, which thus entails another type of services. This ‘G’ includes voting at Annual General Meetings (proxy voting). “Now the Annual General Meetings are a test, whereas previously they were a procedure. As an institutional investor, we need to be up-to-date, informed and vote,” said Ripollés. He also explained that the voting policy in the company had to be approved by the MAPFRE Board and that it applied to all lines of business, “a policy that we have validated at the international level.” The manager has a specialized corporate governance global equities fund (MAPFRE AM Good Governance): “Proxy voting is well established in the US and becoming increasingly so in Europe. As managers, we are obliged to be active; and for this we need tools.

Read the article in full at https://fundspeople.com/monographic/Insights-depositaria/capitulo/inversion-sostenible-no-sin-el-depositario/