MetLife Investment Management Europe Limited (the “Company”)
Regulation (EU) 2019/2088 of the European Parliament and of the Council of 27 November 2019 on sustainability‐related disclosures in the financial services sector (the “Sustainable Finance Disclosure Regulation” or “SFDR”)
Statement under the SFDR
The MetLife group is committed to sustainability. MetLife, Inc., the ultimate parent company of the Company was the first U.S.-based insurance company to become a signatory to the U.N. Global Compact. MetLife, Inc. reports to the Dow Jones Sustainability Index (DJSI), an annual corporate sustainability assessment, the Carbon Disclosure Project (CDP), and MetLife has aligned its annual sustainability reporting via MetLife’s annual Global Sustainability Report to the Global Reporting Initiative, the Sustainability Accounting Standards Board, and the Task Force on Climate-related Financial Disclosures. Additional information about the MetLife group’s sustainability initiatives can be found within our annual Sustainability Report at https://sustainabilityreport.metlife.com/report/.
In addition, MetLife Investment Management (MIM), the MetLife group’s institutional management platform, which includes MetLife Investment Management, LLC, MetLife Investment Management Limited (the “Delegated Investment Managers”) and the Company, is a signatory to the Principles for Responsible Investment (PRI) and is a member of the Global Impact Investing Network (GIIN). The Company has delegated investment management services with respect to the funds and portfolios under its management to the Delegated Investment Managers.
1. Policies on the integration of sustainability risk in the investment decision-making process
The Company, in conjunction with its MIM affiliates, integrates financially material sustainability risks and opportunities into its research, analysis and investment decision-making processes with regard to the funds and portfolios under the Company’s management.
The Company believes information about principal adverse impacts (PAI) of sustainability factors influences investment performance and are important considerations to effectively manage risk and achieve investment objectives. The SFDR defines sustainability factors as “environmental, social and employee matters, respect for human rights, anti‐corruption and anti‐bribery matters”. The investment due diligence process, which MIM and the Delegated Investment Managers carry out on behalf of the Company, involves reviewing financially material environmental, social and governance (ESG) factors, including:
Environmental
Matters pertaining to environmental issues are identified and discussed to determine the issuers’ impact on the environment (including air, water, land protection, climate change and resource use) and the risk that such issues present to the credit profile or business operations. MIM and the Delegated Investment Managers also evaluate, on behalf of the Company, the prospective liabilities of an issuer resulting from its environmental impacts, including payments relating to penalties imposed by government agencies, litigation risk or future remediation spending requirements.
Social
Evaluating issues related to labour unrest, health and safety, compliance with labour regulations, and general labour relations and conditions. It also reviews risks associated with product safety and suitability to ensure companies have sustainable business operations. How a company manages relationships with its employees, suppliers, customers, and the communities in which it operates is important to the investment analysis.
Governance
Evaluating the diversity, independence and qualifications of corporate boards and management teams to assess the extent to which companies are prepared to face future risks and act in the best interests of the business, shareholders, and other key stakeholders, focusing on identifying management teams that clearly and consistently communicate information regarding ESG factors material to their respective business.
Risk management is ingrained in MIM’s culture and integrated throughout the organisation. When MIM and the Delegated Investment Managers are assessing investment opportunities on behalf of the Company, ESG considerations are a vital part of the due diligence process and the Company believes adhering to sound ESG practices can minimize financial risk, such as controversy triggered by loss of customers, fines, penalties, and environmental clean-up costs. Relevant ESG risks and third party ESG risk ratings, as may be applicable and available, are included as a part of the overall risk assessment.
Within the meaning of Article 4 of the SFDR, the Company does not currently maintain comprehensive data regarding the PAIs. However, the Company is currently focused on identifying and implementing more detailed PAI data gathering and reporting methodologies. We set out further information in this regard in the section titled “Principal adverse impacts of investment decisions on sustainability factors”.
Active Engagement
The Company and MIM believe active engagement with company leadership is a key to managing investment risk. Investment analysts frequently interact and engage in discussions with a firm’s senior management throughout the initial due diligence process and as part of the portfolio monitoring process. Ongoing dialogue helps to raise awareness of sustainable business practices.
Investment Screens and Client Mandates
In addition to our standard ESG investment practices, as described above, specific guidelines are applied as requested by our clients and client directed investment screens are incorporated into our investment process, as applicable. Examples of these types of requests can include establishing guidelines based on minimum third-party ESG scores, offering potential solutions to address asset owner net-zero pledges, and implementation of a variety of ESG related exclusionary investment screens, including but not limited to certain types of investments associated with fossil fuels, weapons, and tobacco.
The Company has chosen not to develop a shareholder engagement policy as the Company does not currently (nor will in the near future) have any funds or portfolios under management which invest in companies the shares of which are admitted to trading on a regulated market situated or operating within a member state of the European Economic Area (“EEA”) nor does it invest directly in shares traded on a regulated market in the EEA. Additional information about the Company’s policy in this regard can be found on our website at:
https://investments.metlife.com/europe/regulatory-disclosures/srd-statement/
Asset class-specific information on the integration of sustainability risks in the investment decision-making process
The Company has appointed the Delegated Investment Managers to provide investment management services to the funds and portfolios under its management. The integration of sustainability risks and how those risks are managed is determined on an asset class-by-asset class basis by teams of portfolio managers and analysts specialised in specific asset classes (Investment Teams). It is these Investment Teams that implement investment decision-making, and the Company has, in consultation with these Investment Teams, formulated this Policy:
Fixed Income
Risk management is ingrained in MIM’s culture and integrated throughout its investment process. When assessing credit risk related to any investment opportunity, MIM conducts bottom-up, fundamental research and focus on multiple factors. ESG considerations are a vital part of MIM’s due diligence, as it seeks to identify issues that may impact the reputation of a borrower as well as its financial condition, credit rating and transaction pricing. MIM believes that adhering to sound ESG practices can minimize financial risks, such as controversy-triggered loss of customers, fines, penalties, and environmental clean-up costs. Both MIM’s public and private credit teams have a dedicated ESG- focused section included within their internal credit memos. Relevant ESG risks and third-party ESG risk ratings, as may be applicable and available, are included as a part of MIM’s overall risk assessment.
Real Estate
MIM embraces its role as a responsible real estate lender and investor. MIM understands the impact buildings have on people, communities, and the environment. MIM also knows that issues such as climate change, regulatory environments and building operational efficiencies will increasingly impact lending decisions and financial performance. Risk to property damage from climate-related events, such as hurricane and flood, are considered as part of MIM’s due diligence process. Flood zone determination, as well as hurricane modelling, is performed to understand the potential risk of damage for acquisitions. MIM uses a commercial mortgage ESG questionnaire that collects data on sponsor-level sustainability practices and accomplishments, including written policies, public disclosures, and memberships in sustainable organizations. MIM also tracks LEED certification and Energy Star status at the time of loan origination. MIM also uses an ESG Acquisitions Assessment (Assessment) as part of the required due diligence for all new real estate equity investments. The Assessment seeks to assess the resilience of each asset from both a short- and long-term perspective. MIM developed and implemented the MetZero program, based on a Carbon Cascade approach, that seeks to aggressively reduce emissions in our MIM managed real estate equity properties. MIM is pursuing carbon neutrality in several of its real estate fund products.
2. Principal adverse impacts of investment decisions on sustainability factors
The Company is supportive of the aim of this requirement which is to improve transparency and investor understanding of how investment decisions impact sustainability factors across society and the environment.
At the current time, the Company does not consider the principal adverse impact of investment decisions on sustainability factors at entity level.. This is principally because of a lack of consistent, accessible and accurate data from the underlying portfolio companies. However, the Company may consider the impacts of its investment decisions on sustainability factors at a product level for certain funds or segregated mandates.
At entity level, the Company will maintain the position of not considering principal adverse impacts on sustainability factors until such time as it feels it has the necessary data to be able to make these considerations meaningfully and report on them clearly.
The Company will review this position regularly and will update investors accordingly with relevant information, should the position change.
3. Information on remuneration policies
The Company has a remuneration policy which complies with the requirements of:
- the European Union (Alternative Investment Fund Managers) Regulations 2013;
- the European Communities (Undertakings for Collective Investment in Transferable Securities) Regulations 2011;
- the Commission Delegated Regulation (EU) 565/2017; and
- the Central Bank (Supervision and Enforcement) Act 2013 (Section 48(1)) (Undertakings for Collective Investment in Transferable Securities) Regulations 2019.
The Company’s remuneration policy includes information on how it is consistent with the integration of sustainability risks in accordance with Article 5 of the SFDR.
The Company affirms that its remuneration policy is aligned with the Company’s approach to responsible investment including the incorporation of financially material ESG factors into investment decisions (where relevant) and seeks to ensure that its remuneration structures do not encourage excessive risk‐taking with respect to sustainability risks.
The Company carries out an assessment of the performance of its identified staff (as defined in the remuneration policy) when assessing and determining variable remuneration. Individual performance is assessed holistically using both quantitative and qualitative measures which may include goals related to financial performance, people and culture, business and customer, and an assessment of whether the relevant employee has complied with the Company’s sustainability policies, as applicable.
The Company ensures that the remuneration of identified staff is reasonably aligned with the interests of the Company and the funds and individual portfolios it manages and will promote effective risk management (including with respect to long and short-term interests, and sustainability risks where relevant).
4. Information on the Integration of sustainability risks into the investment advice process
The Company is authorised by the Central Bank of Ireland as a UCITS management company and AIFM, with the ability to carry out additional activities including the provision of investment advice under the MiFID top up permission.
The Company is committed to incorporating sustainability risks into its investment analysis. The Delegated Investment Managers’ ESG investment policy considers material environmental, social and governance factors when evaluating and selecting investments. The MIM ESG Investment policy is available at https://investments.metlife.com/content/dam/metlifecom/us/investments/about/esg/pdf/mim-esg-investment-policy.pdf.
The Company recognises the significance of our clients’ sustainability preferences and integrates them into our investment advice.
Where the Company provides a personal recommendation, as defined under MiFID II, the Company will incorporate sustainability into the provision of investment advice in accordance with clients’ sustainability preferences.
The Company does not currently provide investment advice on any SFDR classified article 8 or article 9 funds or client mandates. As such, the Company doesn’t currently take adverse sustainability impacts into account in the provision of investment advice.
5. Future updates to this statement
This statement will be kept under review and updated to comply with the Company’s obligations under the SFDR.
