Supporting sustainable change through engagement
- Sustainable banking newsletter
ABN AMRO engages with companies in which the bank’s clients invest, aiming to enhance their sustainability performance. These engagement activities are conducted in collaboration with various engagement partners. As an active shareholder, the bank aims to convince companies to take steps in their sustainability transition.
Strategic decisions made by a single company can have a profound impact, such as significantly reducing the use of plastics, addressing human rights risks and reducing emissions. Therefore, as part of ABN AMRO’s broader aim to foster responsible investment, the bank supports and encourages companies ABN AMRO’s clients invest in to adopt more sustainable business practices.
This structured is facilitated in collaboration with external investment managers and engagement-partner . The bank's role in this process varies, encompassing activities such as flagging important issues, monitoring progress, conducting assessments, and actively participating in discussions with company leadership. “We aim to influence companies’ business practices, mainly with the focus on enhancing the management of environmental, social, and governance (ESG) issues,” says Martina Zhekova, analyst ESG & Sustainable Investing at ABN AMRO.
Stewardship Report
Information on this kind of engagement is published in the of ABN AMRO Investment Solutions (AAIS), the asset manager of ABN AMRO. The report highlights the engagement strategies and metrics across multiple regions and sectors.
Martina: "We engage on a wide range of ESG topics. This year, our engagements focus mainly on urgent climate challenges. In addition, we are responding to important trends such as biodiversity risks, geopolitical instability, digitalization and artificial intelligence (AI).”
AI influence
Margot Seeley, head of ESG and Sustainable Investing at AAIS, explains that sustainability themes often intertwine. “In the technology sector, we are investigating the energy needs of AI-driven services. At the same time, the ethical aspects of AI also have our attention. AI adoption has taken off rapidly, but so have the stakes. We are seeing bias amplified through algorithms, discrimination automated at scale and privacy invaded in ways we are only beginning to understand.”
An American ESG asset manager with whom AAIS is working closely entered into discussions with large listed companies about the ethical approach of artificial intelligence, resulting in first agreements on the ethical use of AI in the form of principles and governance.
Such measures can also reduce the risks of image damage and lawsuits, says Margot. “We expect that the companies that lead with ethical AI will be the companies that determine what responsible innovation looks like in the future.”
Working together
Martina highlights another example of engagement together with the Platform Living Wage Financials (), a group of 22 financial institutions promoting living wages in global supply chains. "Through collective influence, we engaged with two major companies in the clothing and chocolate sectors, advocating for long-term improvements for employees," Martina says. These discussions prompted both companies to identify areas for improvement, such as setting clear targets and enhancing transparency.
Martina and Margot emphasize the importance of collaboration in engagements such as these in order to be successful. Margot: “The engagement processes often take a long time, but can bring about change when large asset managers representing a significant portion of shareholders, work together.”
“Collaborative dialogue is also more effective than simply excluding investments,” says Martina. “If you exclude a company, you lose the opportunity to talk to management. Selling a stock or bond position is therefore often less effective in achieving sustainable change than engagement.”