Aside from our direct impacts on the environment and society, we are able to make a positive contribution to sustainable development through our investing activities by pursuing an investment policy that avoids companies which do not live up to our ethical expectations or environmental and social standards. Investors, analysts and clients are also increasingly interested to see how we respect social sustainability concerns in the management of our investments.
As part of our materiality process we have identified the issue of sustainability in asset management as material.
In accordance with our investment policy we strive for stable, fair market returns in order to be able to meet our underwriting commitments and liquidity requirements at all times while preserving a balanced risk/return profile and broad diversification. Furthermore, we attach considerable importance to our sustainability approach by incorporating environmental, social and governance aspects (ESG criteria). Since as long ago as 2011 we have been applying sustainability criteria in the investment sector; they are continuously refined and set out in writing in our "Responsible Investment Policy". We are guided by the ten principles of the United Nations Global Compact, i.e. we pay attention to aspects relating to human rights, working conditions, the environment and anti-corruption. Similarly, we avoid exposures to issuers engaged in the development and proliferation of controversial weapons. We also make systematic use of exclusion criteria in the area of fossil fuels. These tools are complemented by active participations in sustainable investments, including for example impact investments and renewables. Last but not least, a best-in-class approach establishes the basis for continually improving the sustainability quality of the asset portfolio.
Our fixed-income securities (government and semi-government bonds, corporate bonds and covered bonds) and listed equities have been subject to half-yearly negative screening since 2012. Our investments are evaluated on the basis of individual ESG criteria that we have developed and continuously review in cooperation with a financial services provider specialising in sustainability. Securities of issuers identified as "non-adequate" are actively scaled back. In addition, potential new investments are checked in advance to see whether the issuers violate the defined ESG criteria. Such exposure is rejected if this is found to be the case.
The ten principles of the United Nations Global Compact are a decisive factor in guiding our reviews. Companies that fail to respect human rights or are complicit in human rights abuses are in violation of fundamental principles of the United Nations. Instruments issued by such entities are ruled out for our investment purposes, as are issuers that disregard basic labour standards and environmental protection considerations. Lastly, exposures to companies that have been noted for their use of compulsory/child labour or their involvement in discrimination or corruption are also excluded. In our review of government issuers the focus is on whether they are currently subject to sanctions imposed by the United Nations or the European Union.
As to the criterion of "controversial weapons", we rule out issuers who are involved in the development and proliferation of particularly cruel weapons. In the fossil fuels sector the exclusion criterion applies to issuers who generate 25% or more of their turnover from coal mining, coal-based energy generation or oil sands extraction.
Only around 10 percent of our total asset portfolio cannot be classified according to the aforementioned methodology and criteria. This includes, most notably, investments in real estate and private equity, which given their nature or structure can scarcely be measured reliably according to the ESG criteria that we use as a basis. In some instances, however, these assets also contribute to sustainable development; this is the case, for example, with real estate that has relevant certifications, sustainable products in the infrastructure sector or indeed impact investments.
We have now completed the implementation of our best-in-class investment approach. By regularly measuring the sustainability quality of the existing portfolio, this is another tool that will enable us to structure the portfolio even more sustainably going forward with a focus on corporate bonds.
Lastly, we are increasingly supplementing the aforementioned measures in the existing portfolio with active participations in sustainable investments. With this in mind, a new budget has been created for investment in impact investment funds. The explicit objective here is to achieve appreciable improvements through the broadest possible coverage of the United Nations Social Development Goals (SDGs), inter alia in the fields of food security and nutrition, education, health and well-being, ending poverty, climate action etc. In addition, in the infrastructure sector we invest in renewables as well as in sustainable forest and agriculture funds.
An ESG officer on the investment team ensures the development and application of ESG criteria and implementation of the investment policy. The investment team reports major findings of the screening process and the corresponding investment decisions directly to the Chief Financial Officer, and they are discussed and approved by the Investment Committee. Two members of the Executive Board sit on the Investment Committee.
By exercising our voting rights we are able to influence the conduct of business at listed companies. However, given that the proportion of listed equities in our asset portfolio is less than 1% of our total investments, the effect of engagement in this area is very limited relative to our overall investment universe.
For this reason we have not to date adopted any voting guidelines on environmental and social issues in connection with the sustainable orientation of our investments. Should the share of the portfolio attributable to listed equities increase significantly on a lasting basis, we shall revisit the topic of active ownership and potentially decide on further steps.