Socially Responsible Investment
In asset management there has been a growing commitment to socially responsible investment (SRI), which includes new non-financial, environmental, social, ethics and corporate governance variables (ESG variables) into management.
In 2008, one of BBVA Group's major asset managers, Gestión de Previsión y Pensiones (GPP), and BBVA Fondo de Empleo signed the principles sponsored by the United Nations. BBVA has set up a clearly-defined roadmap with three core elements:
1. Integration of ESG criteria in the investment process in the pensions and funds area:
This core element covers equity and sovereign debt. As far as equity is concerned, there is a system of leading, middle and lagging companies in each economic sector, identifying the main financial and non-financial risk factors. In the case of sovereign debt, the analysis focuses on the Organization for Economic Cooperation and Development (OECD) member states with a view to making a distinction between leading and lagging companies.
In 2011 ESG criteria were also introduced in due diligence processes that third party funds must exceed to be recommended by BBVA Asset Management.
2. Exercise of voting rights.
In 2011, and since 2010, voting rights have been exercised at all of the Annual General Meetings for listed companies registered in Spain.
The necessary systems to extend the exercise of voting rights to European companies by 2012 were prepared in 2011.
3. Dialog with companies.
This year solidarity funds were also developed in other countries in which BBVA operates. In 2011 the “BBVA Leer es estar adelante” (Read to get ahead) program was launched in Peru. The donated funds will be used to boost the number of Peruvian school children taking part in the “Leer es estar adelante” program, which aims to improve the reading ability of Peruvian children.
Progress was also made with the B+ Educa investment fund in which the investor contributes a percentage of the net monthly interest to the integration scholarship program, an initiative for supporting education in Mexico. B+EDUCA closed 2011 with €292.1 million and 15,410 members.
Finally, since 2008, all of the assets of BBVA’ pension plan for employees in Spain are managed according to Socially Responsible Investment (SRI) criteria while adhering to the United Nations Principles for Responsible Investment (PRI).
Since 2009 an external analyst has given an annual sustainability rating to the portfolio which makes the process more transparent and guarantees application of SRI criteria.
Socially Responsible Investment (SRI)
| (Percentage) | 2011 | 2010 (1) | 2009 |
|---|---|---|---|
| Out of all managed funds | 2.42 | 2.13 | 2.92 |
Pension funds
BBVA Pensiones & Seguros is a leading pension fund manager in Latin America with more than 13.3 million customers, €60,860 million in managed assets at the 2011 year end, and with a share of over 21.5% of total assets in Latin America. This position has made the bank a key player in the development and consolidation of private social provision schemes in the region, as well as a point of reference for countries in other geographical areas.
BBVA is the main institutional investor in countries with pension fund administrators, especially in Chile, where the individual capitalization system with private management was set up just over 30 years ago and where pension funds account for almost 60% of the GDP, unlike other countries with more recent systems where they only represent 10% of the GDP, for example, Mexico, the newest but system but which is growing fast.
Bearing in mind that the percentage of GDP that Pension Fund-managed assets represent and that these channel the majority of domestic long-term savings in countries in whose systems BBVA | Pensiones & Seguros participates, these funds become the main contributors to the development of economies through investment in infrastructure projects and in funds to develop the corporate fabric, thereby contributing toward people’s wellbeing.
In 2011 the BBVA Group continued to contribute to structured debt funds and private equity funds traded in public markets to finance infrastructure projects. These projects had a major social impact in countries in which BBVA participates because they are investing in the construction of major transport links, such as roads, railroads, seaports and airports, and in the construction of social housing and other similar projects that contribute toward the development of emerging countries, by creating jobs and improving people’s quality of life. For instance, in Chile BBVA has participated in major projects such as: Santiago-Los Vilos section of the Pan-American Highway (218 km); La Florida airport (3,000 m2), La Serena; the Av. El Salto - Av. Kennedy Tunnel (4.1 km.); Maipú and La Florida Hospitals (766 beds); Group 1 penitentiary center (Iquique, La Serena, Rancagua 112,000 m2);.