Sustainability Report 2012 - Generali Versicherung AG

The Code includes the introduction of procedures formonitoring suppliers to check compliance with therequirements demanded and the preparedness to takecorrective actions and to apply sanctions (which mayresult in the termination of the contract) in instances ofnon-compliance.More detailed information is provided in the chapterSuppliers in this document.The Ethical Code for suppliers of the GeneraliGroup is available on the websitewww.generali.com/SustainabilityThe tools Generali employs to manage its sustainabilitypolicies also include the Ethical Guidelines forInvestments, which define the minimum requirementsthat must be observed by all Group investments in relationto certain environmental, social and corporate governanceaspects (ESG). The Group’s objective is to leverage its role ofinstitutional investor, so that it can also effect change throughinvestment activities, by calling for its investee companiesto act responsibly, with particular regard to protection of theenvironment, of the human rights of workers and of the localcommunities affected by its activities, and to the rejection ofany corrupt practice.The approach adopted by the Group involves the exclusionfrom its investment universe of issuing companies that do notsatisfy the parameters established, contained in an ethicalfilter which is applied to own investments in its portfolios(69% of total assets under management in 2012), with theexception of unit-linked investments and third party assets.In particular, investments are prohibited in financialinstruments issued by companies that, directly or throughsubsidiaries:• produce weapons that, when used normally, may violatefundamental humanitarian principles (cluster bombs, antipersonnelmines, nuclear weapons, etc.);• sell military equipment or weapons to countries on theEuropean Union’s arms embargo list, published byStockholm International Peace Research Institute (SIPRI);• are involved in serious or systematic violations of humanrights, serious environmental damage, serious instancesof corruption, or other particularly serious violations offundamental ethical standards.As observed, by doing so, the Group not only wishes torule out the risk of involvement in activities that are not inkeeping with its principles, but also influence the conductof issuing companies. Through dialogue (analysis ofcorporate documents, targeted communications, oneto-oneinterviews), companies are therefore encouragedto act in a responsible manner, and are required to justifyany conduct observed that does not conform to the aboveethical standards. Solely where the companies do not meetthese standards and continue to engage in the behaviourobserved, is provision made for their exclusion from theinvestment universe, which results in the sale of positionspresent in the portfolio as quickly as possible, in view of theneed to protect the portfolio’s value.Furthermore, to ensure consistency of conduct forsafeguarding the Group’s reputation, the exclusion frominvestments must also coincide with the exclusion frominsurance policies and/or supply contracts with thecompanies involved, involving the prohibition to sign newcontracts, once the existing ones have expired.Constant monitoring of information published by governmentsources, international bodies and non-governmentorganisations allows the Group to gain knowledge of potentialbreaches of the ethical principles defined and commencedialogue with the companies involved.Compliance with thePrinciples for Responsible Investment (PRI) and participationin numerous international initiatives and networks, includingthe European Forum for Sustainable Finance (EUROSIF),the Forum per la Finanza Sostenibile (FFS) and the CROForum Sustainability Working Group, also allow the Groupto compare its own stance with the policies adopted by themain international players in the financial industry regardingresponsible investments, helping to establish guidelines andcommon approaches to promoting the adoption of bestpractice. To this end, the two documents produced by theCRO Forum Sustainability Working Group in 2011 and 2012should be noted, concerning possible measures that aninsurance company may adopt, as both investor and insurer,to manage the reputational risks related to its involvement incontroversial activities concerning anti-personnel mines andcluster bombs (“Banned Weapons”) and the extraction of oilfrom bituminous sands (“Oil Sands”).Given that there must be consistency between theinvestment policy and the voting policy, the Generali Groupalso strongly favours integrating ESG elements into itsvoting policy. Generali Investments, for example, started thisprocess, favouring the presentation, at General Meetings, ofresolutions concerning the dissemination of best practicesrelating to governance, professional ethics, social cohesionand environmental protection, and undertaking to rule, ona case-by-case basis, on the proposals put forward byshareholders in this regard. The primary goal is to establishgenuine dialogue with company directors and managersand to encourage them to consider such topics in theperformance of their activities.The Generali Group’s responsible investment policy isembodied not only by the approach described, involving theexclusion of issuing companies considered unethical, butalso by the offering of SRI (Socially Responsible Investment)investment products for which the Group is able to select32 | Assicurazioni Generali - Sustainability Report 2012