Read our chapter on the Responsible Investment policy

Read our chapter on the Responsible Investment policy

Read our chapter on the Responsible Investment policy
At SURA IM we structure sustainable development under a long-term view, which considers financial, environmental, social and corporate governance aspects; in such a way that risks and opportunities affecting the compliance of our fiduciary duty can be expected and managed.

As part of a multi-Latin organization, from each of the companies that make up SURA Investment Management, we have the responsibility to take care of the trust placed in us by our clients, fulfilling the promise of value by seeking profitability for their resources, in a context of sustainability and care for our stakeholders. In this aspect, we are aware of the existence of challenges that are characteristic to the processes and style of investment which entail the different types of assets and businesses, at SURA IM we are committed to incorporating environmental, social and corporate governance (“ASG”) criteria in the review of investment opportunities, connecting with the guidelines of the Grupo SURA (“Grupo SURA”) Responsible Investment Structure Policy and the SURA Asset Management (“SURA AM”) strategic sustainability structure, provided that the nature of the business and the market so authorize it.

Scope

This Chapter will be applicable to SURA IM’s investment processes as a guide for the implementation of ASG criteria in the management of its investment portfolios in traditional and alternative assets (subject to the applicable investment policy). Notwithstanding the foregoing, in cases where the guidelines herein expressed are in conflict with the investment guidelines established in their respective mandate and/or investment vehicle, these shall prevail over the provisions of this document.

Also, it is established that in the case of underlying assets of funds and mandates investing in alternative assets, the same parameters of this Chapter shall be applied to the Counterparties (hereinafter defined) with which a contract or agreement for the development of projects is made (e.g. constructors, engineering service providers, among others).

For purposes of this Chapter, “Counterparty” shall mean any entity with which purchase or sale of assets or projects is carried out. Also, entities providing strategic services for the assets or projects that are part of the funds and/or alternative asset mandates, such as.

Construction or project management services;
Engineering and design services;
Legal services;
Real Estate Management Services; Credit Institutions; and Investment Banks & Consulting.

In the event that any mandatory regulatory provision establishes or instructs terms more difficult or restrictive than those set forth herein, such regulatory provisions shall prevail.

Exclusions and Controversies

In the case of investments in the portfolios managed by SURA IM in which it has the power to decide directly on its participation, the sectors, activities or investments considered not to be in accordance with the Structure Policy on Responsible Investment of Grupo SURA, the contents of this Chapter, or the ethical principles of Grupo SURA and its subsidiaries and, where applicable, the regulations of compulsory compliance in the corresponding jurisdiction, will be excluded.

All investments in which the decision to invest is made by the teams and governing bodies of SURA IM and its subsidiaries are considered to be investments in which they have direct power to decide on participation; this category excludes investments that must be made by regulatory mandate, direct order from the owner of the assets in the case of mandates, indexation requirements (pursuant to the benchmark index and/or the positioning of the peer group defined for assessing the performance of each portfolio) or market liquidity conditions.

In order to determine exclusions and controversies in investments, the exposure to each sector or controversial practice must be classified, according to the information published by the entities, the dialogue with their management, or the information gathered from different stakeholders. It is considered that an entity’s income is related to an activity or sector when it has the capacity to decide on such participation, distinguishing the following categories:

  • Pure Player Income equal to or greater than 80%.
  • High exposure Income of 50% or more and less than 80%.
  • Trend Income equal to or greater than 10% and less than 50%
  • Low exposure revenue less than 10%

The following list of investments will be considered as not eligible:

  • Pure players”, with “High exposure” or “Trend” to the pornography production business and/or marketing .
  • “Pure players”, with “High exposure” or “Trend” to the business of sowing, producing, manufacturing and/or marketing of tobacco.
  • “Pure players”, with “High exposure” or “Trend” to the business of producing and/or marketing controversial weaponry (cluster weapons, nuclear weapons, anti-personnel mines, chemical weapons, biological weapons, incendiary bombs, useless uranium ammunition).

The business of producing and/or marketing any product or activity considered illegal or illicit under applicable laws.
Sovereign debt issued by countries ruled by dictatorships or governments questioned for violation of human or civil rights. In Exhibit 01 – “List of restricted countries” - you will find the detail of those countries in which SURA IM will refrain from making any type of investment. SURA AM’s corporate investment risk team will be responsible for updating the list at least two (2) times per year. Meanwhile, all investments related to any of the following activities or sectors will be considered as controversial:

  • Human rights violation;
  • Discrimination;
  • Violation of the right to free affiliation and collective negotiating;
  • Forced labor or labor performed under duress;
  • Child labor;
  • Affecting public health and/or animal welfare;
  • Threats to vulnerable communities and/or minorities;
  • Contamination and/or deterioration of ecosystems;
  • Affecting the rights of shareholders;
  • Falsification of public information; and
  • Corruption, including extortion and bribery.

SURA IM’s Risk Committee will define the necessary criteria, the aspects that must be reviewed and the depth of analysis required for the Traditional Investments team to file the controversial cases to be evaluated by the Committee.

The Committee shall also be empowered to define whether special monitoring should be given to investments in sectors or activities which, without being formally classified as controversial under the terms of this Chapter, may often present risks related to potential non-compliance with the principles preserved herein regarding the observance of ASG criteria. Such sectors and activities may include, by way of example:

  • Air transport of passengers and cargo;
  • Exploration and production of basic and precious minerals;
  • Hydrocarbon exploration, production, transport and refining;
  • Petrochemical industry;
  • Production of clinker, cement and concrete;
  • Generation of electrical power with fossil fuels other than coal; and
  • Forestry and pulp and paper production.

In investments made in products managed by third parties, the ASG policies of the managers and the funds managed by them will be taken into consideration by the SURA IM team, within the set of variables analyzed in the assessment and selection process of the investment alternative. Also, in the management of mandates, what is defined by the client will be applied first, regardless of the review of the mentioned activities or sectors.

Analysis methods

The ability to implement ASG criteria in investment decision making varies depending on multiple factors such as the asset class invested in, the market in which the assets are traded, the discretion in implementing the decisions and the regulatory context. In this way, SURA IM’s investment process will incorporate ASG criteria in the review of investment opportunities, seeking in all cases to invest in companies, projects and structures that, in addition to having attractive potential returns, have a positive impact on sustainable development. The incorporation of ASG criteria may be leveraged by access to the opinions of an external party with the capacity to make conclusions on the matter, or in internal design methods, which allow for a reasonable understanding of the risks and opportunities that each investment alternative represents in terms of sustainability (e.g. climate change, social opportunities and corporate behavior).

Governance
 

The Sustainability and Corporate Governance Committee of SURA AM’s Board of Directors will be the body in which strategic and general guidelines will be discussed and provided regarding the incorporation of ASG criteria in SURA IM’s investment processes, and will be in charge of approving the modifications to this Chapter. At the same time, SURA IM’s Risk Committee will be the organization responsible for coordinating resolutions on ASG issues and dispute resolution for traditional assets, taking into account the provisions and powers of the other government organizations that participate in the applicable investment process.

Regarding the management of alternative assets, the investment regulations of the funds managed, in terms of the ASG policies, shall be in line with this Chapter, and it shall be the responsibility of the Investment Committee of each fund to ensure the correct implementation and to establish the parameters for dispute resolutions and exclusions. The previous, regardless of the fact that the Risk Committee of SURA IM will be informed in due course.

Each case of investment in controversial or exclusion sectors or activities must be exposed and discussed in SURA IM’s Risk Committee and/or in the Investment Committee of the relevant alternative asset fund, when applicable, which may instruct on one of the following actions: 

  • Maintain the investment;
  • Maintain the investment, subject to improvement/change actions by the issuer and/or Counterparty;
  • Abstain from investing or increasing exposure; and Carry out an orderly disinvestment process, provided that market and business conditions allow it.
  • For investments maintained in the portfolios in controversial or exclusion sectors or activities, which have been reviewed at the corresponding organization, a follow-up must be carried out at least once a year.
  • In any case, all controversial or exclusion events that have been analyzed by SURA IM’s Risk Committee or the Investment Committee of an alternative asset fund, must be documented and reported by the Risk Committee to SURA AM’s corporate risk and investment team, as well as to the sustainability team.

Disclosure

SURA IM’s Compliance area will be responsible for the administration of this policy and will manage its disclosure and updating with the areas involved. In addition, it will have the support of SURA AM’s sustainability area.