Delen as a responsible investor

Delen Private Bank specialises in discretionary portfolio management, which means the bank invests assets in the name of and on behalf of its clients. Its investment decisions have a substantial impact on society.

At Delen Private Bank, Delen Private Bank Luxembourg and Delen Suisse, customers' assets are invested in investment funds when filling portfolios. All these investment funds, without exception, consistently apply the responsible investment policy.

Through its responsible investment policy, Delen Private Bank contributes to very different Sustainable Development Goals or SDGs, with responsible consumption and production (SDG 12) and climate action (SDG 13) being the main ones.

47.6 billion euro managed responsibly

Delen Private Bank invested €47.6 billion of its customer assets through the funds managed by Cadelam, the bank's fund manager.

Under the recent European Sustainable Finance Disclosure Regulation (SFDR) legislation, all our funds are given an article-8 rating. This means that these funds promote sustainability features, without sustainability being explicit objective of the funds.

Europe has set ambitious goals in the field of ESG (ecology, social responsibility, and good governance), and calls in part on financial institutions to take responsibility. These institutions are required to identify, assess, and monitor the ‘principal adverse impacts’—in other words, sustainability risks—of their investment decisions and advice, across all three ESG domains.

Through three pillars—integration (of non-financial criteria), dialogue (with companies to support their sustainable transition), and exclusion (of companies with excessive sustainability risks)—Delen Private Bank responds to the European legislator’s expectations to mitigate sustainability risks. We outline these pillars below.

Integration of non-financial criteria

For all investments in our in-house funds, we consider ESG parameters alongside the financial performance of companies. Environmental, social, and governance considerations are fully integrated into every investment decision.

A company's financial health is only sustainable in the long term if it also performs well on non-financial criteria. Independent data provider Sustainalytics has built a strong reputation over the past 25 years as a global leader in sustainability research. Sustainalytics analyses and rates companies based on ESG risks, using a scale from 100 to 0. The lower the score, the lower the ESG risk for the company.

Because Cadelam takes ESG factors into account when making investment decisions, our in-house funds have a low average ESG risk score.

Let’s take take climate care as an example—more specifically, carbon intensity (carbon emissions relative to revenue): the companies in our portfolios have significantly lower scores in this area compared to the benchmark index.

Based on a company's ESG risk score, the bank can take one of two approaches when investing or considering an investment: either it engages in dialogue with the company to encourage sustainable improvement (the second pillar: engagement), or it excludes the company from all portfolios (the third pillar: exclusion).

Dialogue with companies to help support their sustainable transition

Engagement refers to the ongoing and constructive dialogue between the investor and the companies in which it holds a stake. As a shareholder, the investor (in our case, Cadelam) not only has a right to a share of the profits but also gains a degree of influence over corporate policy through voting rights.

Through constructive discussions and concrete commitments, Delen Private Bank and Cadelam encourage companies to actively pursue their transition toward a more ecological, socially just, and better-governed world.

Delen engaged in dialogue with 287 companies, representing 83% of the holdings in its portfolio.

Exclusion of companies with excessive sustainability risks

Selling or excluding companies from the portfolios is the most drastic measure in sustainable wealth management. When engagement—through dialogue or voting at the General Meeting—does not yield sufficient results, or when a company's sustainability profile shows a negative trend, divestment becomes necessary.

Over the past two years, we have internalized part of the analysis process, replacing exclusion lists provided by external parties. With the support of research firm Sustainalytics, this analysis has become more concrete and targeted.

Our fund manager, Cadelam, excludes five categories of companies: those involved in non-conventional weapons or tobacco, companies with severe ESG risks or climate-related sustainability risks, and companies that consistently violate the UN Global Compact principles.