Introduction

By carefully investing the contributions paid, the PNO Media Pension Fund secures the accrual of a healthy pension for employees in the media sector. We do this in accordance with the principles of social responsibility.

Responsible investing has been an important departure point in our investment policy for many years. We aim to achieve a profitable and responsible return. Responsible investing is interpreted by PNO Media as: taking into account the environment burden, social factors and good corporate governance in all our investment activities.

In this code, PNO Media explains the fundamental departure points applied by the fund therein. Based on international treaties and codes of conduct, we work out these departure points for the different investment categories. This further describes the different instruments we use to implement our policy in practice and the parties we collaborate with in the field of responsible investing.

The concept of responsible investing is subject to continuous change. The PNO Media code for responsible investing changes in line with the most recent social views on responsible investing. We in particular take into account the views held by our participants on responsible investing. The previous code for responsible investing dates back to December 2012. The code was adjusted in 2016 following an evaluation and comes into force by April 2017.

Click here to download the Code (PDF)

 

SECTION 1. Vision and principles

1.1 Investment objective

PNO Media promotes the interests of participants, retirees and affiliated employers by administering pension schemes. Our investment policy is aimed at creating a situation where the return achieved on the invested capital is such that a consistent indexation policy can be pursued. We do this at an acceptable contribution rate and within defined risk margins, in which we particularly take into account the risk of underfunding. This code is without prejudice to our objective and endeavours to contribute to this objective, where possible.

1.2 Social responsibility

PNO Media is aware of its social responsibility as an institutional investor and wishes to act accordingly. This means that our investment policy takes into account norms and values commonly accepted as such in society. Hence we incorporate social, corporate governance and environmental considerations based on international standards into our investment decisions.

The significance of the investments by PNO Media in the overall financing of individual companies and tiers of government is generally limited. This can partly be explained by the spread we aim to achieve. The influence of the PNO Media socially responsible investing policy on the actions by companies or tiers of government is therefore limited. We collaborate with other investors in order to increase our influence. When defining our social responsibility in concrete terms, we take into account the extraordinary character of the media sector and the desires of our participants, retirees and affiliated employers. PNO Media renders account for the choices it makes and the instruments it applies.

1.3 Fundamental principles

The social responsibility of PNO Media requires us to also involve non-financial criteria in our considerations. In all our investment decisions we take into account the following fundamental principles, based on commonly accepted norms and values:

· respecting human rights
· respecting freedom of press
· respecting labour rights
· protecting health and well-being
· fighting corruption
· preventing tax evastion
· protecting the environment
· preventing climate change
· no controversial arms
· respecting corporate governance standards
· respecting animal welfare standards
· supply chain responsibility
These fundamental principles are explained further in the next chapter. This code is applicable to all investments by PNO Media.

SECTION 2. Fundamental Principles further explained

2.1 Respecting human rights

PNO Media endorses the Universal Declaration of Human Rights adopted by the United Nations in 1948. The Universal Declaration describes the rights and freedoms of every human being, “without any distinction of any kind, including race, skin colour, gender, language, religious beliefs, political or other affiliations, national or social origin, property, birth or other status.” The human rights set forth in the Universal Declaration include:

· right to live and freedom;
· freedom of expression;
· freedom of religion;
· right to a fair trial;
· right to food, work and education.

In 1966, the Universal Declaration of Human Rights was supplemented by the United Nations Covenant on Civil and Political Rights (UNCCPR) and the United Nations Committee on Economic, Social and Cultural Rights (UNCESCR). These agreements declare that civil and political rights, as well as the right to economic, social and cultural development, also form part of the human rights.

PNO Media further endorses the Protect, Respect and Remedy Framework by Professor John Ruggie, Special Representative of the Secretary-General of the United Nations in the field of business and human rights. The framework has been worked out into the Guiding Principles on Business and Human Rights: Implementing the United Nations ‘Protect, Respect and Remedy’ Framework, endorsed by the United Nations Human Rights Council in June 2011.

PNO Media expects companies to respect human rights and that, for that purpose, they:
· set up a policy statement in which the company commits to respecting the human rights;
· carry out human rights due diligence, meaning that companies identify what their (adverse) impact on human rights is, prevent or reduce that impact and render account for how they address that impact;
· set up procedures (grievance mechanisms) in order to counteract the adverse impact on human rights caused or contributed to by the company to.

PNO Media endorses the Tirana Declaration and the Principles for Responsible Investment in Farmland. These guidelines refer to land rights of indigenous people and local communities. The past years have seen a further increase in large-scale land acquisition in developing countries. The lack of consultation and transparency on the allocation of land is a common problem, particularly in those countries. Forced relocations and land disputes often involve a violation of the right to an impact assessment, compensation and rehabilitation. A change in the land use rights without (sufficiently) taking into account the interests of the local population can even result in land grabbing. The Tirana Declaration is a definition of land grabbing that can be used for identifying land investments meeting this criterion. The Farmland Principles refer to agricultural land investments in particular.

PNO Media expects companies to contribute to gender equality. The concept of gender equality entails equal rights, responsibilities and opportunities for men and women. It requires rights, responsibilities and opportunities to be independent of someone’s sex. Gender equality and women emancipation are proclaimed in the Convention on the Elimination of All Forms of Discrimination against Women (CEDAW), the Women’s Empowerment Principles and the Sustainable Development Goals (SDGs) of the United Nations.

Regarding gender equality, PNO Media expects companies to apply and follow CEDAW and the above mentioned Guiding Principles on Business and Human Rights, which states companies should, in all their activities, take into account the differences in human rights impact experienced by men and women. Herein, the due diligence-proces is of vital importance.
2.2 Respecting freedom of press

Freedom of press is mentioned in the UNCCPR as a part of freedom of expression. Freedom of press is under growing pressure due to restrictions placed on Internet freedom, by governments and companies that increasingly seek to regulate the Internet. PNO Media for this reason expects investee companies to respect freedom of press, as described in the recommendations of the Special Rapporteur of the United Nations regarding ‘on the protection and promotion of the right to freedom of opinion and expression’.

2.3 Respecting labour rights

The PNO Media Pension Fund endorses the four Fundamental Principles and Rights at Work of the International Labour Organisation (ILO) in relation to work and working conditions:
· freedom of association and recognition of the right to collective bargaining;
· ban on all forms of forced labour;
· ban on child labour;
· ban on discrimination (on the grounds ethnicity, gender or social origin) with regard to offering work of specific positions.

The UN Guiding Principles on Business and Human Rights emphasises that the obligation of companies to respect human rights applies to all human rights incorporated in international treaties. This includes labour rights, with the Fundamental Principles and Rights at Work as a minimum. PNO Media expect other companies to include labour rights in their due diligence investigation and other measures.

PNO Media supports the goal of decent working conditions as described in the ILO’s Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy. This standard specifically addresses labour rights and company policies and also takes into account health and safety at work, living wages and maximum working hours. PNO Media expects companies to have a policy on these issues. This is in line with SDG 8.

2.4 Protecting health and well-being

PNO Media endorses the right to health.This is a recognised human right, first formulated in 1946 as part of the foundation of the World Health Organisation (WHO) and defined as “the right to enjoy the highest possible standard of physical and mental health”. This subject covers a whole range of issues: access to healthcare, safe drinking water, clean sanity provisions, safe food, accommodation, healthy working conditions, education and information on health and gender equality. The healthcare provisions must be accessible by all, both physically and economically, without distinction.

PNO Media therefore supports the Access to Medicine Index. This organisation assesses the role of pharmaceutical companies in for example the development of vaccines or medicines against the most common (tropical) diseases. PNO Media expect other companies to make an effort in improving their score on this index.
Article 25 of the Universal Declaration of Human Rights declares “Everyone has the right to a standard of living adequate for the health and well-being of himself and of his family, including food (…).” The Voluntary Guidelines to Support the Progressive Realization of the Right to Adequate Food in the Context of National Food Security of the FAO connects the rights to food to the concept of food security. These guidelines present a valuable overview of all relevant factors in realising the right to food.

PNO Media therefore has the intention to sign the Access to Nutrition Index (ATNI) Investor Statement. The ATNI stimulates companies to give consumers access to affordable food and beverages with high nutritional value and to influence consumer decisions on healthy food and active lifestyles.

PNO Media further supports the Water Disclosure Project, launched in 2011 by the Carbon Disclosure Project, which collects data from listed companies across the globe in relation to their water management policies. Expectations are that clean drinking water will become scarce, while at the same time people will be faced with increased flooding due to rising sea levels and climate change. PNO Media considers it of paramount importance that companies map out the (financial) risks and opportunities surrounding water and that they clearly report on this.

2.5 Fighting corruption

Corruption is an act or omission with the objective of favouring a person, group or organisation, without these persons or parties having a legitimate ground to these favours. Corruption entails a wide range of behaviours, including bribery, extortion, fraud, whitewashing, as well as paying bribes. Corruption blocks the development of laws and regulations. Government officials lose their legitimacy if they use their function for personal profits. This undermines the faith in political systems. The tax system in many countries suffers the consequences of corruption. Instead of spending public funds on necessary infrastructure and facilities like schools, hospitals and drinking water services, the money is wasted on unnecessary prestige projects. Corruption also distorts the development of markets and fair competition.

PNO Media endorses the OESO Guidelines for Multinationals and the Business Principles for Countering Bribery by Transparency International with regard to fighting corruption.

Non-transparent lobby activities can have a similar effect as corruption. The European Union (EU), the United States of America (USA) and Canada maintain company registers for the reporting of lobby activities. Reporting in the EU register is voluntary for companies. The USA and Canada’s register is mandatory for companies. PNO Media expects companies to register their lobby activities in such registers.

2.6 Preventing tax evasion

Tax income is fundamental for governments to arrange public goods like health care, education, security, social security and infrastructure. A just tax system in which citizens and companies contribute to the government finances contributes to these public goods. Companies profit from public goods. Nevertheless, there are companies that evade tax by using differences in tax tariffs in different countries or by using loopholes in tax laws. Some companies also evade taxes by using subsidiaries in tax havens. In addition, some companies arrange secret tax deals with governments. All these types of tax evasion and avoidance are harmful to the countries where the actual economic activities occurred. Tax evasion is therefore contrary to the principles of corporate social responsibility.

PNO Media expects companies to comply with the OECD Guidelines for Multinational Enterprises. These Guidelines expect companies to pay taxes to the governments of the countries in which they are active. Companies should comply with both the ‘spirit and the letter of the law’, which means companies should not actively use loopholes in tax laws. PNO Media also expects multinational companies to publicly report on tax payments per country. There are guidelines and legal requirements for companies in especially the mining sector, the oil and gas sector and the financial sector on ‘country-by-country-reporting’ on the number of employees, revenues, costs, profit before and after taxes, received subsidies and payments (including tax payments) to governments. The Base Erosion and Profit Shifting Project of the OECD and the G20 provides a valuable tool for companies in implementing ‘country-by-country-reporting’.

2.7 Protecting the environment

The decisions and activities of organisation have an effect on the natural living environment of people, commonly referred to as the environment. Non-sustainable use of the natural resources of the Earth and the ecosystem services supplied by these resources (natural capital) is in fact destruction of capital. It is important that the natural resources are used carefully and the biodiversity therein protected. The identification and appreciation of natural resources and corresponding services can lead to better decision-making on the management and protection of the natural living environment.

In addition, every organisation must work towards the prevention of environmental pollution and climate change. PNO Media refers to environment pollution if the (living) environment is deteriorated or degraded as a result of human activities. For example, by exposing the environment to chemical compounds, noise, heat, light and energy causing detrimental effects and which potentially compromise the health and prosperity of humans and the biodiversity of nature. Local and regional forms of environmental pollution include soil pollution, air pollution and water pollution.

PNO Media endorses the guidelines of the Earth Charter, the Rio Declaration, the UN Convention on Biological Diversity and UN Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES). Companies are expected to comply with these guidelines.

Finally, PNO Media endorses the Natural Capital Declaration, in which the natural capital concept is the focal point: the natural resources of the Earth and the ecosystem services supplied by these resources.

2.8 Preventing climate change

The main global threat to the environment can be attributed to a change in the global climate as a result of greenhouse gas emissions. In order to prevent climate change, all tiers of governments and companies involved will need to take responsibility. In 2014 the Intergovernmental Panel on Climate Change (IPCC) published the Fifth Assessment Report. The report describes climate change and its consequences. The report concludes it is very likely that human activities have caused more than half of the increase in recorded temperature between 1951 and 2010. The IPCC drafted four scenarios on climate change and its consequences. In the best scenario the increase in temperature will be limited to a maximum of 2°C. To achieve this scenario the average emissions of greenhouse gasses should be reduced with 50% in 2050, compared to the 1990 level. Even if this scenario will be achieved, the consequences of climate change for the environment, the economy, society and human health will be serious and irreversible.

In november 2015, during the 21st Conference of the Parties (COP21) of the UN Framework Convention on Climate Change (UNFCCC) in Paris, countries set the goal to limit global temperature increase until 2100 to 2 °C or even to 1,5 °C.

PNO Media endorses the objectives of the UN Framework Convention on Climate Change (UNFCCC) on counteracting climate change. The fund endorses the reduction objective as formulated by the Intergovernmental Panel on Climate Change (IPCC). PNO Media expects governments and companies to design and implement reduction plans enabling them to make a proportionate contribution to the IPCC reduction target.

2.9 No controversial arms and arms trade

PNO Media does not want to be involved in the production of arms or arms systems, or vital elements therein, which are banned by international law or use of which violates fundamental humanitarian principles. The humanitarian principles referred to include the principle of proportionality (unnecessary suffering must be prevented) and the principle of distinction (separation of military and civil targets). In concrete terms, they are chemical and biological weapons, nuclear weapons, anti-personnel mines and cluster-munitions.
PNO Media endorses the Treaty on the Non-Proliferation of Nuclear Weapons, the Ottawa Convention (landmines) and the Convention on Cluster-Munitions. The nuclear Non-Proliferation Treaty states that the five nuclear states should diminish their stockpile of nuclear weapons. PNO Media therefore does not invest in companies involved in nuclear weapons production. Companies involved in nuclear weapons production for the five nuclear states are also excluded.

The UN Arms Trade Treaty came into force in December 2014. PNO Media endorses the principles on arms trade as described in this Treaty. This means that PNO Media expects companies not to supply weapons or weapon systems, military transport means and other military goods to one or more countries that are subject to an arms embargo (imposed by either the European Union or the United Nations), to countries known to violate human rights on a large scale or that are the scene of a (civil) war, to highly corrupt countries, countries with failing governments or developing countries that spend a large part of their budget on the acquisition of arms. In addition, in correspondence with the Treaty, companies are expected to refrain from arms trade if there is an overriding risk the arms will be used for human rights violations or violations of humanitarian law.

2.10 Respecting corporate governance standards

Corporate governance is the system of rules, practices and processes by which a company is directed and controlled. PNO Media endorses the OECD corporate governance standards (Principles of Corporate Governance) and the International Corporate Governance Network (Statement on Global Corporate Governance Principles).

These corporate governance standards relate to the following:
· the objective of the company, profit for shareholders;
· openness and transparency of operations:
· monitoring and control of operations;
· property, responsibilities, voting rights and corrective measures by shareholders;
· the management and board of the company;
· remuneration policy within the company;
· citizenship, relations with interested parties and ethical behaviour of the company.

An important aspect of corporate governance is transparency. Every individual is entitled to information on the risks of corporate activities. To enable meaningful participation in decision making processes regarding corporate activities, transparency is essential. Companies are expected to be transparent on, amongst others, their activities and its impact on society and environment, ownership of the company and the company’s payments to governments.

PNO Media expects companies to apply standards and guidelines regarding:

· sustainability reporting;
· external verification of sustainability reporting;
· country-by-country-reporting for multinational enterprises on (tax) payments to governments, revenues, profit and costs;
· consultation with stakeholders and maintaining an independent contact point where customers can complain about the company’s activities;
· The GRI Guidelines are a good starting point for sustainability reporting by large companies and multinational enterprises. The High5! methodology is recommended to small and medium enterprises. For reporting, companies can also use guidelines like the UN Global Compact, the OECD Guidelines for Multinational Enterprises and ISO26000. In addition, PNO Media expects companies to report on human rights via the Reporting Framework of the UN Guiding Principles on Business and Human Rights.

2.11 Respecting animal welfare standards

PNO Media endorses The Five Freedoms, the conventions of the Council of Europe with regard to animal welfare in factory farming and transport. PNO Media further endorses the proposal for a Universal Declaration on Animal Welfare by the World Society for the Protection of Animals (WSPA).

These guidelines assume animals to be conscious and capable of suffering. Hence any act that incites violence against animals is rejected. The needs of animals to safeguard their well-being must be respected. This includes:

· access to sufficient drinking water and food appropriate to the type of animal;
· a relatively healthy and stress-free environment;
· prevention of pain, injury and disease;
· possibility to demonstrate natural behaviour;
· creating circumstances that prevent suffering.

PNO Media will engage with companies involved in forms of livestock farming with the sole purpose of producing fur. Regarding forms of livestock farming for food and other consumables, PNO Media deems respecting animal welfare standards of paramount importance.

The Business Benchmark on Farm Animal Welfare (BBFAW), first published in 2012, ranks ninety global food companies on animal welfare. Investors supporting the Benchmark are informed on animal welfare news related to these companies. Animal welfare organisations the World Animal Protection and Compassion in World Farming and investor Coller Capital are the initiators of the BBFAW. PNO Media supports this ranking and has the intention to sign the Investor Statement.

Animal testing for cosmetics and medicines is regulated by law in the European Union:
· animal testing for cosmetics is banned;
· animal testing for medicines is regulated by the 3R-method: Replacement, Reduction, Refinement.

Outside of the European Union laws can be less comprehensive. Nonetheless, PNO Media expects companies outside of the European to comply with these EU regulations.

2.12 Supply chain responsibility

Companies are often part of long and complicated supply chains. By selecting suppliers of raw materials, semi-manufactured goods and other necessary products, companies can influence their supply chain. As recognised in, amongst others, the UN Guiding Principles on Business and Human Rights, the responsibility of companies is not limited to their own operations. Companies should monitor other parties in their supply chain. Companies can ask their suppliers about how they incorporate respect for local and national laws and international norms regarding social, economic and environmental issues, into their policies and procedures. Any requirements companies have of their suppliers in this regard, could be included in contractual agreements.

PNO Media expects companies to take their societal responsibility by applying their sustainability policy to their entire supply chain.

The importance of supply chain responsibility has, since the revision in 2011, also been recognised by the OECD Guidelines for Multinational Enterprises. Businesses should encourage their business partners (suppliers, contractors, sub-contractors, license holders and other entities with whom multinational enterprises work) to apply principles for corporate social responsibility.

The ISO 26000-guideline from 2010 also recognises the importance of supply chain responsibility. ISO 26000 states that the consequences of decisions and activities of an organization can be heavily influenced through its relationships with other organisations. The guideline emphasizes that the sphere of influence of companies contains relationships outside and inside its own organization.

In the United States, the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) was adopted in 2010. Section 1502 of the law, obliges listed companies to, amongst other things, report on their due diligence research regarding the origins of the minerals tantalum, tin, tungsten and gold. The purpose of this is to create more insight into the supply chain and also whether companies contribute to the financing of armed groups in the Democratic Republic of Congo (DRC), through their supply chains. In Europe, there is discussion regarding the details of a law that will be similar to this so-called ‘conflict minerals law’, from the United States.

SECTION 3. Significance for investment categories

3.1 Shares, corporate bonds, property and private equity

PNO Media finances companies directly or indirectly through investments in shares, corporate bonds, property and private equity. PNO Media expects these companies to act in accordance with its fundamental principles. This is not the case if:

1. the company is systematically and repeatedly involved in violations of one or more of the aforesaid fundamental principles, and
2. the company has taken insufficient measures to prevent reoccurrence of similar events in the future. This is the case in one of the following events:
a. the company lacks a coherent policy system which contains the following elements:
· policy principles;
· an operational policy that provides a framework for these departure points;
· adequate procedures for dealing with relevant problems and issues;
· information systems that monitor policy implementation and procedures;
· sufficient training and education teaching staff to adequately implement the policy;
· regular feedback to management; and
· (public) reports.
b. the company does have such a system in place, yet practice shows that its performance shows serious shortcomings.

This in any case applies to companies that manufacture or process cluster munitions, landmines, nuclear weapons or fur. These operations prevent them from meeting the PNO Media fundamental principles and the shares and bonds issued by these companies are excluded from investments.

3.2 Private equity

Investing in private equity relates to the investment in shares of unlisted companies. PNO Media does not invest in individual unlisted companies but only in private equity funds, which in turn invest in a selection of unlisted companies. PNO Media’s fundamental principles are applied during the selection of these private equity funds as well as for the selection of the fund managers that manage the private equity funds. The same approach is applied as that which is described for investment categories in paragraph 3.1. Furthermore, for the private equity funds additional criteria are applied, that are in correspondence with the goals of the initiative note by the members of parliament Nijboer and Groot, regarding excesses in private equity. The selection criteria used by PNO Media for decisions regarding private equity funds are described below.

The point of departure is that private equity fund managers are selected that focus on value creation. The fund managers must demonstrably be capable of making the companies they invest in more efficient and be able to improve a company’s business model. PNO Media does not choose fund managers that mainly focus on asset stripping (partially or completely dismantling the acquired company after a takeover) or financial engineering (the excessive use of outside capital). For an ideal capital structure (leverage), the use of external capital in private equity, comparable to listed companies, is considered normal. During the selection of private equity fund managers, PNO Media will assess the use of external capital by each individual company in the fund, by comparing the leverage at the moment the private equity fund invests, to the leverage at the moment the fund sells the investment. An extreme (increase in) leverage is not desirable. The return on investment for a given company should result from revenue and profit growth, not from financial engineering. Principles for the selection of private equity funds are therefore:

· Value creation must result from the ordinary course of business and financial engineering will be judged negatively;
· At fund level, the general guideline of a maximum of 50% leverage is used;
· Short-term profit goals, for example through asset stripping, are judged negatively and are considered as bad for the continuity of the company;
· Fund managers that sail close to the wind regarding fiscal law and regulation are assessed very critically;
· The set management fee for fund managers should preferably not be a source of profit but is intended to cover costs. A distribution of profit from a minimum return margin (usually 8%) is prudent. By aiming for compatibility with the guidelines of international organisations (ILPA) the ambition for more transparency is realized in the cost structure of the fund manager.

3.3 Government bonds

PNO Media finances tiers of government through investments in government bonds. PNO Media also expects these tiers of government to act in accordance with its fundamental departure points. This is not the case if:

1. a national authority systematically and repeatedly violates one or more of the aforesaid fundamental departure points; and/or
2. a national authority takes insufficient measures to counteract or prosecute structural violations of the fundamental departure points by its residents (individuals and organisations).

These criteria do in any case apply to states which have had sanctions imposed on them by the Unites Nations Security Council. These sanctions are imposed when states violate human rights on a structural basis. The sanctions may be in relation to the trade in certain goods with the relevant country, yet are also often aimed against certain powerful individuals who are subjected to travel restrictions and whose assets are frozen.
PNO Media does not want to invest in government bonds of states who act in breach of its fundamental departure points. Hence PNO Media has decided to exclude from investments government bonds issued by states that are subject to sanctions imposed by the United Nations Security Council.
As a pension fund for the media sector, PNO Media considers freedom of the press of paramount importance. Hence PNO Media has decided to also exclude from investments government bonds issued by states in which the freedom of the press is seriously compromised.
The Press Freedom Index by the international organisation of Reporters Without Borders is decisive in determining the states involved. The organisation fights censorship and laws undermining the freedom of the press. Reporters Without Borders aims to achieve improved safety for journalists and assists journalists who are prosecuted, imprisoned or tortured. The Press Freedom Index assesses all states in the world according to the degree to which government services in the relevant country are responsible for violence against journalists and the level at which the government controls the media and applies censorship. Hence PNO Media has decided to exclude from investments government bonds issued by states in which the curtailment of the freedom of the press is expressed by Reporters Without Borders as ‘very serious’.

SECTION 4. Use of instruments

4.1 Overview of instruments

PNO Media promotes external management companies to select on the basis of social, environmental and corporate governance criteria (the so-called ESG criteria). All asset management companies are aware of the contents of our code and endorse the objectives thereof. In addition, PNO Media assesses the behaviour of companies and tiers of government in which it invests on the basis of its fundamental departure points. If companies act in breach of its departure points, we exert our influence as a shareholder in order to ensure that these companies adjust their behaviour in line with the fundamental departure points. In first instance, PNO Media will contact the company to engage in consultation and use its voting right as a shareholder.

In the event of serious and structural breaching of the fundamental departure points, PNO Media will exclude the company from investments. Government bonds too can be excluded on account of serious and structural violation of the fundamental departure points.

Since PNO Media wishes for the code to be applied uniformly, we have appointed a specialist external research institute to structurally screen all investments, engage with companies and tiers of government, exert voting right on shares and to render account in this respect.

4.2 Integration of ESG criteria by external asset managers

PNO Media instructs national and international, external asset management companies to manage its assets. We anticipate that involving criteria in the field of the environment, human rights and corporate governance (ESG criteria) in investment decisions leads to a better insight into the risks attached to individual investments. Hence PNO Media will make every effort to promote that the external asset management companies include ESG criteria in their investment decisions. We take into account this aspect when selecting and monitoring asset managers. External asset management companies too are contractually bound to comply with the PNO Media Code for Responsible Investing and render account in this respect.

4.3 Exercising the voting right

As an institutional investor, PNO Media relies on the financial markets to function. Companies complying with generally accepted corporate governance standards contribute to the transparency and proper performance of the financial markets in which we operate as investors. PNO Media looks after its interests as a shareholder and promotes both its financial interests and compliance with its fundamental departure points. We do this by exercising our voting rights attached to the shares held by PNO Media. For this, we use the services and infrastructure of a specialist voting advisory firm.

Each quarter, on www.pnomediaverantwoordbeleggen.nl, PNO Media reports on its voting behaviour during the shareholders’ meetings of the companies it holds shares in.

4.4 Engagement

The engagement approach means that PNO Media, via a specialist, external research agency and, where possible, with other institutional investors, engages in dialogue with companies that act in breach of the fundamental departure points.

The objective of this engagement is to realise a clear and structural change in behaviour of companies in which PNO Media invests. If this approach does not produce the desired result and expectations are that the result will continue to be insufficient in the longer term, it may lead to the exclusion of the relevant institution from the investment universe.

In principle, many companies qualify for an engagement on account of them violating the fundamental departure points to a more or lesser degree. Priorities must be set for practical reasons. PNO Media makes a selection of companies and tiers of government it aims to engage with. This selection is subject to regular review, based on new information and the latest developments.
4.5 Exclusion

PNO Media will decide to exclude investments in certain companies or tiers of governments if:
· one of the core activities of the companies is not in line with the fundamental principles;
· reliable sources indicate that acts by the company or the government seriously and structurally breach its fundamental principles; and/or
· acts by the company or the government seriously breach the pri and engagement fails to bring about a change in behaviour in due course.

SECTION 5. Cooperation

5.1 General

Where possible, PNO Media aims to collaborate with other institutional investors in and outside the Netherlands in order to promote compliance with its fundamental departure points, together with research in the field of socially responsible investing.

5.2 Principles for Responsible Investment

PNO Media has signed the Principles for Responsible Investment. These principles read as follows:
· we include the ESG criteria in our investment analysis and decision-making processes;
· we are actively engaged as shareholders and involve ESG subjects in our corporate policy and business practice;
· we ask the entities we invest in to correctly report on the ESG subjects;
· we promote the acceptance and implementation of the PRI principles in the investment sector;
· we collaborate in order to increase effectiveness of the implementation of the PRI principles;
· we report on our activities and the progress we make in the implementation of the PRI principles.

PRI offers PNO Media access to an efficient international network for the exchange of information in the field of socially responsible investing and initiating informal contacts for the execution of the engagement approach as opted for by the fund.

5.3 Research agency

PNO Media uses the services of specialist research agencies in order to implement this code.

SECTION 6. Evaluation

This code must be a reflection of the shared views of our participants, retirees and affiliated employers. Since these views may be subject to change as time lapses, PNO Media will continue to periodically test this code against the views of parties holding an interest in our fund.

SECTION 7. Communication

The media literally is about the comprehensive and timely transfer of information, education and communication. In its capacity of the pension fund for companies in the media sector, PNO Media, more so than anybody else, understands that communication on the policies pursued is paramount. Departure point for our external communication is complete transparency. PNO Media is eager to render account for its policy in the field socially responsible investing and the manner in which the fund implements that policy.

The Dutch Corporate Governance Code recommends that institutional investors, such as pension funds:
· publish their policies on exercising their voting rights on shares they hold in listed companies, on their websites, each year;
· report on the implementation of their policies with regard to exercising their voting rights in the relevant year under review, on their websites and/or their annual reports, each year;
· report if and how they, in their capacity as shareholder, voted during general meetings of shareholders, on their websites, once every quarter.

PNO Media endorses these recommendations and fully complies with them. Hence we have set up a website for the sole purpose of responsible investing, www.pnomediaverantwoordbeleggen.nl. We use this to inform our participants, as well as outsiders who take an interest, as transparently and completely as possible. The website offers a wealth of information on responsible investing, including various research reports, policy documents and current news reports. In addition, our responsible investment policy is explained in detail, as is the manner in which we handle it. The website is further used to render account for our voting behaviour and the engagements we undertake. A report on voting behaviour is published on a quarterly basis which shows, at an aggregated level, how and how often votes were cast during shareholders’ meetings. In addition, visitors can also view whether a vote was cast in favour or against an agenda item, per company.
PNO Media, in its annual report, further renders account for the manner in which it handled its social responsibility.