Details relating to ownership by our major asset classes (fixed income, equities, real estate, and external managers) are outlined below. This approach applies to all AIA’s directly managed invested assets, and ensures that the relevant information is used so that risks and opportunities are adequately identified, assessed and considered throughout the investment process, and in the investment decisions made by AIA portfolio managers.
a. Fixed Income
AIA’s investment objective is to produce stable and consistent income and returns, which means that we allocate a large proportion of our investment portfolio to fixed income securities, especially long-dated debt securities.
The financial impact of ESG issues can be material on fixed income assets. We aim to actively invest in companies with lower ESG risk - this should not only generate alpha but create a more sustainable business in the long-term.
As noted above, analysis and engagement are performed primarily at the country level for fixed income investment. Coordination of ESG analysis and engagement, however, is performed at the Group level by the Group Investment department.
Consideration of ESG issues is included as part of our equity investment criteria, applicable to both listed and private equity investments We seek to invest in companies which have demonstrated sound ESG performance, risk management, and who have noted their commitments to further improvement. ESG factors are considered during our research analysis and are evaluated together with our corporate financial and earnings forecasts before an investment decision is made.
Similar to fixed income, most of our equity ESG analysis is performed at the country level. As we also have regional equity analysts, coordination of both country and regional ESG analysis and engagement is performed at the Group level by the Group Investment department.
c. Real Estate
At AIA we understand the significant impact that both the construction and operation of buildings may have on the environment. The consideration of ESG issues is one of our key strategies to execute over the life cycle of an investment, which includes acquiring the land or asset, developing building(s), and implementing high quality property management with ongoing reporting of asset performance.
The overall sustainability and environmental impact from a building is always a key consideration in our real estate acquisition. For new developments, at a minimum, we incorporate green building standards as an integral part of the design concept and implement these in the construction phase.
Green and sustainable initiatives also extend to our property management, where we pursue sustainable initiatives in the operation of our buildings. This can reduce the environmental footprint created from our buildings while also helping to lower day-to-day operational costs.