Managing directors: Dieter Aigner, Hannes Cizek (CEO), Michal Kustra
Raiffeisen KAG actively engages with companies to protect the interests of its clients in the best feasible way.
As one of Austria's leading asset managers, Raiffeisen Kapitalanlage-Gesellschaft (Raiffeisen KAG) is aware of its fiduciary duties towards its clients. As part of these obligations, it actively engages with companies to protect the interests of its clients in the best feasible way.
The term "engagement" is a collective term for corporate dialogue and the exercise of voting rights. However, it is also often used as a synonym for dialogue with companies. The aim of corporate dialogues and the exercise of voting rights is to make use of all the
opportunities and rights that shareholders have in relation to the invested company. This is also referred to as "active ownership". Engagement can take place via informal discussions, standardised dialogues or by using formal channels in the form of voting at annual general meetings. Which form of engagement has the higher chance of success depends on the specific situation. If the variants of mere dialogue do not bear fruit or do not lead to the expected success, there is still the option of influencing the company in a publicity-effective manner by exercising voting rights or speaking at the Annual General Meeting.
These engagements can serve different purposes: on the one hand, to accurately assess the company's financial situation and development. The proactive and constructive dialogue serves to provide the most accurate possible assessment of the company at a financial level, including its environment, and to identify potential risks. As part of our proprietary research activities in the "Future Transformation Topics" (Zukunfts-Themen), valuable questions are developed in this regard.
On the other hand, from a sustainability perspective, these engagements also serve to persuade companies in terms of improved corporate social responsibility (CSR) or improved sustainability within the respective company itself. These improvements should bring sustainable benefits to the companies – and therefore ultimately also to the owners – which should also be reflected in improved operating results in the long term. In this way, both sides in the engagement process should benefit in the long term. This dialogue also gives Raiffeisen KAG the opportunity to present itself to the respective companies as a sustainable and long-term oriented investor, even if this takes place together with
other investors in so-called collaborative engagements.
Shareholders' voting rights are exercised either directly or indirectly via proxies. The company's own and publicly accessible principles are followed, which are based on a transparent and sustainable corporate governance policy and cover important topics that are regularly discussed at Annual General Meetings. This leads to the identification of non-financial opportunities and risks, whi-
le the targeted addressing of current events ensures the most accurate possible assessment of the company, its environment, and potential risks.
The following chart shows an overview of the engagement initiatives, whereby it is important to note that the engagements are not only with companies that Raiffeisen KAG is already invested, but also in securities that are not in Raiffeisen KAG funds.
In the engagement process, both sides, the investors, and the companies, should benefit in the long term.
2. Executive summary
430 corporate dialogues
491 supported through initiatives
416 attendance at annual general meetings
256 ESG
1,338 total contacts with companies
Raiffeisen Capital Management views corporate dialogue as an opportunity to actively enter into dialogue with companies to gather internal information on specific topics and companies as well as to express concerns about sustainability risks. The chart shows the absolute number of contacts initiated with companies from 1.1.2024 to 31.12.2024. Corporate dialogue covers a wide range of topics, and contacts with companies can address fundamental aspects as well as ESG1 topics In total, Raiffeisen KAG conducted 1,338 com-
7 collaboratively in working groups
pany contacts in the 2024 reporting period, of which 430 were dialogues with companies and 491 attendance at annual general meetings. Of these contacts, 416 were conducted via collaborative engagement as a participant in different initiatives. Note: The number reported in the chart does not correspond with the total of the named companies because some engagement processes spanned multiple years, and were reported as such. Some company contacts are provided as examples multiple times.
This not only has a positive effect on the performance of our investment funds, but also improves the performance of the companies themselves.
Ten years ago, fund managers attended the annual general meeting or had a meeting at conferences where they asked one or two questions, and in many cases that was it. The COVID pandemic has made online meetings much more socially acceptable. We are now in contact with many companies four or five times a year, which would not have been possible in the past. What's more, companies have massively expanded their investor relations departments. Where there used to be one investor relations manager, there are now six or seven, and even up to 20 people at large companies. On the one hand, the companies themselves are realising that they benefit from talking to investors; on the other hand, the regulatory requirements have also increased massively in recent years.
3.2 Interview with Jürgen Maier
Jürgen Maier is an equity fund
manager
for Emerging Markets and a specialist in companies from India and South Korea.
How different is the importance of exposure to Emerging Markets compared to developed markets?
Maier: In my opinion, you generally get more valuable information at meetings in many Emerging Markets than when visiting companies in developed markets. While the developed markets are already comprehensively
Do you believe that engagement can contribute to better fund performance in the long term?
Schmitt: I believe that involvement on both sides contributes greatly to positive development. On the one hand, we get to know the companies better, but on the other hand, the companies also get to know themselves better. We often make them aware of aspects of their business or any weaknesses that they hadn't really focussed on before - and they may even become more productive as a result. This not only has a positive effect on the performance of our investment funds, but also improves the performance of the companies themselves.
analysed and many analysts deal with these companies, in the Emerging Markets it is often the second and third tier companies that offer particularly valuable insights. There are also significant differences when it comes to sustainability. Our sustainable Emerging Market equity fund was launched in 2017. When the fund was launched, the challenge was that although some companies were very well positioned in terms of sustainability, they did not provide their data to the data providers. These companies were therefore encouraged to report their data to the analysers. Our feedback to these companies was that they were doing a great job and were also very well positioned in terms of sustainability, but that no investment could be made on our part without providing information to the data providers.
As
an investor, you have to be particularly vigilant in the Emerging Markets as there are some companies that operate in a questionable manner and the judicial system in these markets is not yet as mature.
As a specialist for India, you visit the country once a year and talk to the companies. What is the relevance of visiting companies in India directly?
Maier: On-site visits are very important to me, as they give me a deep insight into the company. During one-on-one meetings, however, I deliberately don't spend too much time with the company itself. Especially in India, it has proven to be a good idea to talk about the supply chain and the competition in order to get a comprehensive overall picture. Interestingly, the management is often very open and willing to provide information.
Another crucial aspect in India is the background check network. As an investor, you have to be particularly vigilant in the Emerging Markets as there are some companies that operate in a questionable manner and the judicial system in these markets is not yet as mature. In the USA, management is taken to court and punished for dishonest behaviour. In the Emerging Markets, on the other hand, those responsible can buy their way out of criminal proceedings. It is therefore essential for global investors to have 100% confidence in the management. These background checks through good local contacts are therefore of the utmost importance. In other Emerging Markets, there are also restrictions on how analysts are allowed to pass on information. They are often not allowed to disclose certain details in writing, whereas they can speak much more openly and honestly on site.
Do you have a question that you particularly like to ask in dialogue with companies?
Maier: For me, it is always particularly valuable to observe how a company treats its employees. This is often a good indicator of the overall health and culture of the organisation. If employees are valued by management and are proud of how long they have been with the company, it speaks for a positive working environment. Especially with Indian companies, I see motivated employees as a strong
sign that the company can be successful. This aspect becomes even more interesting when comparisons are made within the sectors. If there are major deviations from the competition, this is an important point for me and one that I definitely address. Further training opportunities within the company, which are very much utilised by the workforce, are also a sign of a company's long-term success.
Do you also give companies a message, especially in the field of sustainability?
Maier: Yes, I do that too. Before I visit a company, I thoroughly research what the data providers have to say about the company and then address these points specifically. It is particularly effective when I confront the company directly with the competition. The companies themselves often come up with suggestions for improvement, which can be very revealing.
A notable example in social sustainability are large Indian IT companies such as Tata Consultancy. These companies have started to introduce maternity leave followed by flexible working hours for women. When such large companies act as role models, this is usually adopted throughout the sector – and with some delay is also extended to other sectors. India has developed positively in this area in recent years. Fifteen years ago, parental leave followed by flexible working hours was still unthinkable in Indian IT companies. However, the large companies made a start and smaller companies have adopted this model. In the meantime, this practice has also become established in other sectors. This shows how positive changes in one area can spill over to other areas and ultimately lead to broader social sustainability.
What is your general mood on site visits to India?
Maier: I have been travelling to India regularly since 2007. I make a habit of talking to taxi drivers, waiters, and hotel staff. These conversations provide valuable insights into the political and economic situation in the country.
It is important to be careful with what is reported in the press, as there are often considerable differences to the actual mood on the ground.
In India in particular, I notice that most people are currently of the opinion that they will be better off in two to three years than they are today. This positive mood, the belief that hard work will lead to a better life, is something that we lack a little in Europe. Many people in
4. Prime engagements
In 2022, Raiffeisen Capital Management launched a new initiative for corporate contact by the name of Prime Engagement, and the first measurable results were achieved in 2023. These flagship engagement projects are intended to ensure that expertise is broadened and communication with selected companies is stepped up.
These will either be companies with representative positions in Raiffeisen Capital Management’s current investment funds, stocks with a high level of market capitalisation and thus a high index weighting, or wellknown names that attract a great deal of media attention.
If Raiffeisen Capital Management has held long-term positions in an identified
India are firmly convinced that their efforts will bear fruit.
As fund managers, we often live in a bubble, surrounded by brokers and analysts. This is precisely why it is particularly exciting and enriching to capture the mood on the ground. These direct impressions can be a valuable addition to the formal analyses and reports and offer an authentic perspective on developments in the country.
candidate in the past or will do so in the foreseeable future, that company will be classified as a prime company based on a proposal by fund management.
The following engagement measures are mandatory for these names: Besides playing an active part in their annual general meeting, regular contact with the company is to be initiated at the highest level possible, not least as an opportunity to explain Raiffeisen KAG’s sustainability objectives. Following a detailed sustainability analysis, these objectives are discussed with the company and turned into clear target agreements (potentially including interim targets). Raiffeisen KAG evaluates and documents any progress made. This is designed to broaden expertise regarding the companies, potentially improve their sustainability strategies, instigate changes, and showcase Raiffeisen KAG to them as a sustainable, longterm, and reliable investor.
4.2 List of prime engagements
along the entire value chain by 2050. Other targets include increasing the customer satisfaction rate to 93%, achieving fair gender representation at CEO-3 management level, reducing total recordable incidents by, and doubling the positive impact on communities through volunteering.
The Capital Markets Day offered Raiffeisen
Capital Management the opportunity to assess SGS's progress in these areas and to align their own engagement goals with the company. Participation in such events is an important part of Raiffeisen KAG's ESG engagement strategy to ensure that investments are not only financially successful but also sustainable.
SGS SA Switzerland Industrials
MONDI PLC United Kingdom Industrials
LENZING AG Austria Industrials
CIE DE SAINT-GOBAIN SA France Industrials
DARLING INGREDIENTS INC. United States Household
VOESTALPINE AG Austria Industrials
ROCHE HOLDING AG Switzerland Pharma
NOVO NORDISK A/S Denmark Pharma
ASML HOLDING NV Netherlands Technology
EQUINOR ASA Norway Oil
ESSILORLUXOTICA France Health Care
TURK TELEKOMUNIKASYON AS Türkiye Telecommunications
MYTILINEOS S.A Greece Utilities
WEG SA Brazil Utilities
TATA CONSULTANCY SERVICES LTD. India Technology
GOLDWIND SCIENCE & TECHNOLOGY CO., LTD. China Industrials
PPF TELECOM GROUP BV Czech Republic Telecommunications
CPI PROPERTY SA Czech Republic Real Estate
5. Corporate dialogues
Fundamentally speaking, Raiffeisen KAG distinguishes between three forms of corporate dialogue.
» In addition to primary and secondary research, Raiffeisen KAG uses corporate dialogue to get a clearer picture of the financial situation of companies and to ascertain to what extent ESG aspects are taken into account in the company. Corporate dialogue can take the form of direct and indirect contact, company visits, conferences, and conference calls. Corporate dialogue plays a particularly important role in the context of sustainability. This is often initiated on the basis of relevant current topics such as electromobility, palm oil, and microplastic. In such cases, Raiffeisen KAG takes a thematic approach to several companies from the same sector so as to be able to compare the engagement results.
1
2
Direct corporate dialogue in the form of individual conversations or group meetings, with a focus on the company and its specific ESG performance.
3
Direct corporate dialogue as part of thematic or sectoral research, with a focus on the theme or sector-specific ESG factors.
Direct and indirect corporate dialogue are part of the collaborative engagement process, in the course of which we work together with other ESG-minded investors and broadly address a certain thematic area of focus. Generally, the relevant topics are defined by initiatives that coordinate collaborative engagement. In this process, a company can function as the “lead investor” or as a “supporting investor”. Lead investors prepare the corporate dialogue in detail and arrange contacts with companies. Supporting investors are integrated into the dialogue and also support the process with content.
The results of engagement in various different topics are published regularly in the INVESTMENT ZUKUNFT newsletter. www.rcm.at/at-en/retail/topics/sustainability
Future Transformation Topics (Zukunfts-
Themen)
Engagement and the company engagement evaluations are incorporated into the overall assessment of companies and are thus a central element in the fund management’s sustainable investment process. To achieve the greatest possible impacts from engagement activities, target companies are identified through so-called Future Transformation Topics (Zukunfts-Themen) on the basis of
internal research and using data from external research agencies. Relevant topics and questions for the engagement activities are defined on the basis of the Future Transformation Topics. Seven interdisciplinary teams were formed for the following topics: energy, infrastructure, materials, technology, circular economy, mobility, as well as health care, nutrition and well-being.
Raiffeisen KAG evaluates engagement activities through the so-called engagement matrix. Here, the intensity of the engagement (annual general meeting, completion of a general questionnaire, individual or group discussions, collaborative engagement, prime engagement) is weighed against the quality of the communication and achieved results and shown as a score (A, B, C, D or N). A score of “A” is assigned for outstanding communication, a positive impact, or the qualification of the company as prime. A score of “D” leads to the exclusion of the company based on the engagement findings. The following charts show
the engagement scores for our sustainable, global equity fund.
Relevant topics and issues for specific engagement activities are repeatedly derived from the "think tanks" of Future Transformation Topics. This makes it possible to draw on enormous specialist "know-how" in dialogue with companies and to discuss upcoming issues at the highest level. The aim of the derived engagements is to identify the areas that have a particularly high impact on people, the environment and the economy or could be particularly relevant in the future. The proportion of
6. Event-related commitments
In addition to the engagement activities with companies based on existing processes, participation in initiatives, and defined focuses, acute issues can also arise throughout the year that require special engagement. Two examples of such shareholder engagement will be shared here.
OMV AG (OMV for short) is an internationally active integrated oil and gas company and, with a market capitalisation of more than 15 billion euro (as of December 2024), one of Austria’s largest listed industrial companies.
OMV's business activities cover the entire value chain of the oil and gas industry, from exploration and production to refining, marketing and petrochemicals. OMV is active in more than 30 countries worldwide and currently employs more than 23,000 people. OMV attaches great importance to sustainability and has set itself ambitious targets for reducing CO2 emissions. The company invests in renewable energy and innovative technologies to support the transition to a low-carbon economy. This makes OMV a major player in the global energy industry, characterised by its extensive expertise and strategic investments in sustainable energy projects.
One significant acquisition was the purchase of Petrom in 2004, a move that has proven to be extremely successful despite initial risks. Petrom now has a market capitalisation of around 10 billion euro, produces its own gas and has significantly increased its share of renewable energies in recent years through mergers and acquisitions as well as in-house production.
OMV is investing heavily in low-carbon projects and plans to invest 13 billion euro in areas such as geothermal energy and carbon capture and storage (CCS) by 2030. Despite current bans on CCS in Austria, OMV sees this technology as essential for a sustainable transformation.
Another innovative project is the ReOil technology, which aims to save around 34 per cent of CO2e emissions by 2030 through the chemical recycling of waste streams. A new demonstration plant is set to increase capacity to 16,000 tonnes of used plastic per year and will serve as a design basis for future plants worldwide. Raiffeisen KAG's fund management team took the opportunity to meet and discuss with the company's top management on several occasions in 2024. For example, CFO Reinhard Florey presented OMV's results in February 2024: In 2024, OMV achieved the second-best result in the company's history, almost excluding the chemicals segment. This reflects the strong financial performance and the successful implementation of the transformation strategy. Mr Florey also highlighted the progress on CCS projects in Norway and the ReOil plant, which is being commercialised globally. The merger of Borealis and Borouge shows further growth potential and synergies, especially in the technical area. To summarise, the meeting showed that OMV remains on course for success despite regulatory and market-related challenges by forging ahead with strategic alliances and innovative projects. Another relevant meeting took place on 27.8.2024, at which CFO Reinhard Florey once again answered questions from the fund managers of Raiffeisen KAG. The purpose of the meeting was to discuss the second tranche of the senior bond issue and the financing of OMV's extensive capex programme. Mr Florey emphasised the company's strategic focus on the three pillars of chemicals, efuels and
traditional energy businesses, with the latter helping to finance the transformation.
At a face-to-face meeting on 3.12.2024, which was attended by Alfred Stern, CEO of OMV, among others, the topic of Russian gas was raised again. OMV had been awarded 230 million euro from Gazprom in arbitration proceedings. In order to secure this sum, OMV temporarily suspended payments to Gazprom for agreed gas volumes, whereupon Gazprom stopped deliveries to OMV on 16.11.2024. OMV confirmed that all customers can be supplied without Gazprom deliveries by relying on alternative sources such as liquefied natural gas from the USA and Qatar and higher imports from Norway.
The acquisition of Petrom in 2004, which proved to be extremely lucrative, was also discussed. Petrom now has a market capitalisation of around 10 billion euro and plays an important role as an electricity producer in Romania. OMV is also investing around 13 billion euro in low-carbon projects by 2030, including geothermal energy in the greater Vienna area and carbon capture and storage (CCS) in Norway.
Another key project is the ReOil technology, which aims to save 34% of CO2e emissions by 2030 through chemical recycling of waste streams. A pilot plant has been in operation at the Schwechat refinery since 2018.
OMV has also set itself ambitious sustainability targets to become a net-zero emissions company by 2050. To achieve these goals, specific interim targets have been defined, such as reducing the CO2 intensity of business activities by at least 30% by 2025 and absolute Scope 1 and Scope 2 emissions by at least 60% by 2040.
To summarise, despite the challenges associated with gas supplies from Gazprom, OMV continues to take strategically important steps to ensure its energy security and at the same time drive forward sustainable projects. The meetings and the resulting discussions clearly show that OMV has a clear focus on strategic diversification and sustainability. Despite many uncertainties, including geopolitical ones, the company remains committed to achieving its ambitious goals and consolidating its position as a leading energy company.
ENI S.p.A.
ENI S.p.A. (ENI for short) is an Italian multinational energy and oil company with a market capitalisation of more than 45 billion euro and more than 34,000 employees worldwide (as of December 2024). Originally founded as an oil and gas company, ENI has developed into an integrated energy group with oil, natural gas, petrochemicals, chemicals, power generation and renewable energies. ENI is listed on the Borsa Italiana in the FTSE MIB benchmark index and in the EURO STOXX 50 share index. ENI is involved in significant environmental problems, particularly in Nigeria, in the Niger Delta region. The company's activities, together with other multinational oil companies such as Shell Plc, have led to severe pollution and environmental degradation. For example, significant pipeline leaks have contaminated water sources, destroyed farmland, and severely impacted the livelihoods of local communities. For example, according to analyses by the NGO Fair Planet, an oil spill in 2022 from Shell pipelines in Bayelsa state ruined farmland and waterways and affected the local fishing community. Legal action has been taken, such as the case filed by the Ikebiri community in Bayelsa State against ENI to demand clean-up and compensation for damages caused by oil spills.
Among other things, these problems were addressed at a meeting on 2.9.2024 between
representatives of Raiffeisen KAG and managers in ENI's sustainability department. The main topic of this meeting was the problems raised in Nigeria, in particular ENI's 5% stake in a joint venture with Shell Plc (SPDC), which can be held responsible for a lot of environmental damage. In this discussion, ENI presented its oil leakage and environmental management activities in detail. According to this, extensive and annually increasing cleanup measures and reforestation are being carried out. According to ENI representatives, the local operating company NAOC, which was active onshore, was sold on 22.8.2024 – one year earlier than planned. No new investments are currently planned in this area. The 5% stake in SPDC, which operates offshore 5 , remains part of ENI. Otherwise, the company's ambitious long-term LNG* targets would not be achievable. ENI explained that the oil spills are due to sabotage activities, the frequency of which historically correlates strongly with the oil price. 3% of the budget of this business activity is intended to benefit local communities. According to ENI, no new onshore investments are planned, all of these assets have been sold, while the offshore assets will remain in place for the long term.
5) LNG stands for liquefied natural gas. Onshore means "on land". It refers to activities that take place on land, such as oil production or onshore wind turbines. Offshore means "off the coast" or "at sea". It refers to activities that take place in the sea, such as oil platforms or wind farms in the sea.
8. Topic-related engagement
Raiffeisen KAG publishes the magazine INVESTMENT ZUKUNFT on a quarterly basis, in which a specific topic from the field of sustainability is examinded in detail. After thorough analysis and detailed consideration of the respective topic, companies are identified that are deemed significant for the specific topic from Raiffeisen KAG’s perspective. Part of this precise analysis is the dialogue with companies on the respective focus of the publication.
The main topics in 2024 were:
Artificial intelligence, March 2024
Oceans ecosystem, July 2024
The future of flying, October 2024
Electromobility, engagements 2024, publication date February 2025
8.1 Artificial intelligence
ARTIFICIAL INTELLIGENCE
ADVANTEST CORP.
ALPHABET INC.
ASML HOLDING NV
CAPGEMINI SE
DYNATRACE INC.
LASERTEC CORP.
SALESFORCE INC.
SNAP INC.
SOFTBANK GROUP CORP.
TOKYO ELECTRON LTD.
UIPATH INC.
WIX.COM LTD.
TENCENT HOLDINGS LTD.
Perhaps the most important investment topic in 2024 was the hype surrounding artificial intelligence (AI). The topic of AI also includes dialogue with leading and researching companies in this field. In the course of its engagement activities, Raiffeisen KAG contacted key companies in this area and confronted them, amongst others, with the following general questions about their activities in the field of artificial intelligence, as well as the social opportunities and risks that arise in this context.
1. How do you integrate AI technologies into your business processes?
2. Do you currently use AI technologies in your business operations, and in which areas do you see AI as a game changer?
3. Can you tell us about your company's AI research and development efforts, and in which areas do you see the greatest potential for market growth?
4. How does AI contribute to the promotion of fairness and equal opportunities in your company, taking SDG6 10 into account?
5. Will AI replace jobs in your company?
6. As part of its digital strategy, the EU regu-
lates artificial intelligence to create better conditions for the development and use of this innovative technology. It recommends that AI systems, which can be used in various applications, be analysed, and classified according to the risk they pose to users. Above all, the European Union wants to ensure that AI systems used in the EU are safe, transparent, traceable, non-discriminatory, and environmentally friendly. How does your company handle these regulations, and does this have an impact on your business model?
7. What risk management strategies are in place to address potential technological, operational, and cybersecurity risks associated with AI and quantum computing?
Only 50 kilometers from the Austrian border lies the Temelin nuclear power plant, operated by the Czech utility company CEZ. Therefore, the safety standards of this facility are also of great importance to Austria. According to their own statements in response to this question, CEZ's nuclear power plants have undergone a series of stress tests, which included simulations of extreme natural events. Based on the experiences and lessons learned from
6) SDG stands for Sustainable Development Goals, the UN's objectives for sustainable development.
the Fukushima nuclear power plant accident in Japan, additional specific requirements were identified to further enhance the safety of the nuclear power plants. CEZ is continuously working on improvements to the safety standards to keep up with technological advancements in this field. Here is a selection of interesting answers from leading technology companies:
Question 2 - Capgemini
The shortage of skilled labour is a "neverending story" in the tech industry. The French tech and IT consultant Capgemini sees the greatest potential for the operationalization of AI in supporting employees. They should become more efficient, productive, and agile through AI. operationalising AI in supporting employees. AI should make them more efficient, productive, and agile. Capgemini
specifically trains its employees to utilise the full capabilities of AI for various areas of activity. Whether it is the creation of documents and source code in the IT department or AIsupported recruitment processes to attract the best talents. In its own industry and for the company's operational activities, Capgemini does not see AI as a game changer, as IT solutions for clients need to be considered individually.
Question 7 - Tencent
Integrated AI systems, which have access to various data within a corporation, can be an attractive target for cybercriminals. Therefore, AI is of particular importance to the Chinese tech giant Tenchent. Tencent operates WeChat, one of the largest messenger apps, with around 1.3 billion monthly users. Tencent is committed to the "Four Principles of AI" and strengthens its data security measueres, including the AI Data Security Management Policy, which emphasizes data minimization and the prohibition of illegal data trading. The company prioritises the protection of sensitive data, grants access rights restrictively, and conducts regular security assessments. Additionally, Tencent has developed a risk assessment framework for new AI products that establishes clear responsibilities.
8.2 Marine pollution
MARINE POLLUTION
BHP BILLITON
RIO TINTO
GLENCORE
ANGLO AMERICAN VALE
NEWMONT MINING TECK RESOURCES
FORTESCUE LTD.
SOUTH 32 LTD.
ANTOFAGASTA PLC.
CHINA HONGQIAO
GROUP LTD.
NORSK HYDRO ASA
The state of the world's oceans is crucial to the stability of the Earth's ecological balance. However, negative environmental influences on the world's oceans, their effects and consequences are difficult for most people to grasp and therefore literally disappear below the surface of the water. The universe of investable companies in the area of "cleaning the world's oceans" is very small. Therefore, engaging with companies is a promising way for investors to address the issue of potential negative impacts on the world's oceans and at the same time encourage companies to improve their environmental behaviour. Due to their business model, mining companies have the largest share of negative ecological impacts worldwide, including pollution of the world's oceans. Therefore, mining companies, including the giants BHP Billiton, Rio Tinto and Vale, were contacted and confronted with the following questions:
1. What measures does your company take to minimise the environmental impact of its mines on marine pollution, what environmental management systems are in place to prevent pollution in the event of a disaster, and how are these environmental impacts monitored?
2. How does your company handle the disposal of hazardous waste and chemicals from its mines?
3. Is the water quality near your mines measured, if so, can you provide us with data?
4. What investments does your company make in sustainable mining practices and technologies that protect and preserve the marine environment?
Here is a selection of interesting responses from leading mining companies:
Question 4- Anglo American Environmental protection requires investment. In dialogue with Raiffeisen KAG, the company Anglo American presented what it claims to be one of Brazil’s largest water recycling pro -
jects. The Minas-Rio project is the longest iron ore pipeline in the world and has a length of 525 kilometres. It got the capacity to transport 26.5 million tonnes of iron ore per year. Technically, the ore is transported through the pipeline in the form of slurry. In 2021, the company has announced that it is studying the possibilities to recycle the wastewater from the pipeline in cooperation with the port of Açu. Raiffeisen KAG will continue to pursue the Anglo American and Minas projects.
Questions 1,2 and 4-
BHP
The use of raw materials is essential for the success of the transition to an ecological and sustainable economy. Just think of the massive expansion of lithium production for use in e-mobility as an example of the future demand for raw materials. Unfortunately, the mining and extraction of raw materials of all kinds can cause major problems for the environment and people.
This includes soil and water pollution caused using chemicals such as acids and heavy metals in the extraction of ores and minerals. The use of explosives and the burning of fossil fuels to generate electricity pollute the air and cause an above-average number of accidents resulting in personal injury. The extraction of mineral resources and the construction of the necessary infrastructure such as roads and mining facilities result in massive changes to the landscape. This destruction of habitats and the associated displacement of the indigenous population and animal and plant species has a clear negative impact on biodiversity. Mining also harbours an above-average risk for miners and local residents, as they often come into contact with toxic substances and dust particles.
Exactly in these areas of tension operates one of Australia's largest companies and a global leader: BHP (Billiton).
In November 2015, one of the worst environmental disasters in history occurred in Brazil: the Bento Rodriguez dam burst. The dam,
8.3 Airlines
AIRLINES
AEGEAN AIRLINES
AMERICAN AIRLINES
ATLAS
DEUTSCHE LUFTHANSA AG
EASYJET PLC
FEDERAL EXPRESS
FINNAIR OYJ
SINGAPORE AIRLINES
SOUTHWEST AIRLINES
TURK HAVA YOLLARI
WIZZ AIR
PEGASUS HAVA TASIMACILIGI
LATAM
Warren Buffett, probably the world's bestknown investor, has always had an ambivalent attitude towards investments in airlines. In 2013 the 94-year-old described airlines as "the worst investment in the history of mankind". Airlines should not only be viewed in a differentiated way from a financial and fundamental perspective, but also raise numerous questions in terms of sustainability. In hardly any other business sector are CO2 emissions as obvious as in aviation. Investments and strategies to promote more sustainable flight operations are therefore of particular importance. Raiffeisen KAG's engagement with the largest global passenger and cargo airlines has precisely driven this forward. Contact was made with these companies and the following questions, among others, were asked:
1. What strategies are you pursuing to drive forward the decarbonisation of your flight operations, and how do zero-emission aircraft fit into this strategy?
2. What measures are you taking to increase the use of Sustainable Aviation Fuel (SAF) and other alternative drive technologies?
3. How do you plan to adjust ticket prices to reflect environmental costs and promote sustainable travel?
4. What changes do you expect to see in the supply industry because of the introduction of new technologies, particularly in propulsion technology and new aircraft fuels?
5. How do you assess the risks and opportunities arising from the introduction of regulatory measures such as an internationally applicable paraffin tax for your airline?
Here is a selection of interesting answers from leading airlines:
Question 1: WIZZ AIR
It is hard to imagine Vienna International Air-
port without the Hungarian low-cost airline. With a fleet of 190 aircraft, the airline ranks a proud third in Europe and is the most important airline in Central and Eastern Europe. To decarbonise this fleet, the company has presented a three-stage plan. In the short term, the focus is on renewing the fleet and increasing operational efficiency. In the medium term, WIZZ AIR plans to use Sustainable Aviation Fuels (SAFs) and implement carbon removal technologies. In the long term, the company aims to operate exclusively emission-free future technologies in combination with SAFs.
To promote the innovative strength of aircraft manufacturers, WIZZ AIR has signed a Memorandum of Understanding with aircraft manufacturer Airbus to promote hydrogenpowered aircraft. This partnership is intended to explore the challenges and opportunities for the operation of hydrogen-powered aircraft by WIZZ AIR. WIZZ AIR is also a member of the "Renewable and Low-Carbon Fuels Value Chain Industrial Alliance" and promotes the use of renewable and low-carbon fuels in aviation to give investors security in this business segment.
Question 2: LUFTHANSA
The blending of biokerosene with conventional fuels offers considerable potential to transform aviation in a sustainable way. While the demand for Sustainable Aviation Fuels (SAF) is increasing, the supply is currently limited. In addition, technical adjustments to aircraft are required so that SAFs can gradually replace fossil paraffin. For this reason, LUFTHANSA is investing in partnerships to ensure the availability of SAFs. These long-term co-operations with companies such as the energy company Shell and the Norwegian group Neste secure the supply of the coveted resource SAF. LUFT-
HANSA promotes the commercialisation of SAF and develops pilot projects together with its partners in order to research new production methods.
Like WIZZ AIR, LUFTHANSA is also part of a research consortium with Airbus to investigate alternative propulsion technologies such as hydrogen and electric drives.
Question 3: FINNAIR
Philanthropic surcharges, such as those for the preservation of tropical forests in remote regions, have often been criticised. It is therefore even more important that climate compensation for flights is certified and transparent in order to minimise the risk of greenwashing. At Finnair, voluntary carbon offsets are always certified climate projects or promote the use of SAFs. However, the actual reduction of CO2 emissions is better than offsetting emissions. The Finnish airline anticipates higher flight prices overall in the future. On the one hand, this is due to
increasing EU regulations; on the other hand, sustainable biokerosene is significantly more expensive to produce than fossil alternatives.
Question 5: LUFTHANSA
"The introduction of a national paraffin tax is off the table for the time being," reports the German airline LUFTHANSA in an interview with Raiffeisen Capital Management. However, according to LUFTHANSA, there is the possibility of an EU-wide tax, in which the airlines would have to bear a large part of the financial burden, which would make it even more difficult to compete on the international market. For LUFTHANSA, a level playing field on a global level is crucial, when it comes to the decarbonisation of an internationally active industry such as the aviation industry.
8.4
Electromobility
ELECTROMOBILITY
HYUNDAI MOTOR
FERRARI NV
MERCEDES-BENZ GR
VOLKSWAGEN AG
RENAULT SA
PORSCHE AG
WINNEBAGO INDS
LI AUTO INC
GENERAL MOTORS C
FORD MOTOR CO
RIVIAN AUTOMOT-A
LUCID GROUP INC
THOR INDUSTRIES
GWMOTOR
TATA MOTORS LTD
BYD COMPANY
MAHINDRA & MAHINDRA
MARUTI SUZUKI
Whether you agree with it or not, electric cars are still on the rise and, according to numerous manufacturers, are unstoppable. Green licence plates will be standard for most new cars from 2030 at the latest, even if the topic is the subject of controversial debate in the media and politics. Internal combustion engines are becoming rarer, while electric vehicles are here to stay. The majority of market-leading car manufacturers remain convinced of this propulson system and are significantly reducing the production of conventional combustion engines. This became clear through the dialogue with the largest automotive companies worldwide. For Raiffeisen KAG, dialogue with renowned car manufacturers is part of the fund management's engagement activities. Raiffeisen KAG has held talks with the most important automotive companies and confronted them with, amongst other things, the following questions:
1. How do you ensure that the materials for your batteries are sourced sustainably and ethically, especially nickel and cobalt? Do you produce the batteries yourself or do you buy them in?
2. How will you compete in the growing electric vehicle market, particularly against competition from Asia?
3. What plans do you have to improve the charging infrastructure for electric vehicles? In your opinion, what measures should be taken by the legislator?
4. How do you see the development of e-mobility in markets where there is still little or no charging infrastructure?
5. Has your view of e-mobility changed in recent years, will your future product range consist exclusively of e-cars, or do you still see a future for combustion engines? How do you see the political influence on this topic?
Here is a selection of interesting responses from leading automotive companies:
Question 2, RENAULT:
Price pressure from Asia, which at first glance sounds like the potential downfall of European e-mobility, is not a new situation for these companies. First came Japanese cars, then Korean, and now producers from China. According to RENAULT, this competition has had the following effects in the past: European manufacturers are kept awake and fit, innovation is strengthened and ultimately the consumer benefits. Nevertheless, the Europeans need to do their homework, and that means launching electric cars in the low-price segment. RENAULT will offer a fully electric Twingo model for less than 20,000 euro in early 2026. When asked by Raiffeisen KAG how they intend to achieve this ambitious goal, RENAULT replied that reducing the number of components in the car is the key to cutting costs. For example, the new Twingo model is to consist of just 700 individual parts; RENAULT's current combustion models contain more than twice as many. With regard to international car manufacturers who want to conquer the European market, RENAULT referred to the existing network of car dealers and mechanics. Asian cars also need a sales strategy, but RENAULT relies heavily on its distribution network and customer care. To sell cars successfully in Europe, a showroom in the city centre is not enough.
Automobile production is largely a scale business: those who produce more cars can reduce unit costs and have a firmer grip on the economic wheel. Based on this economic principle, the Japanese manufacturers Nissan, Honda and Mitsubishi announced a merger in December 2024 to form a global group from three smaller manufacturers. RENAULT can also benefit from this merger,
as the company is Nissan's main shareholder.
Question 4, RENAULT:
In the developed markets, the charging infrastructure is being eagerly improved, but for car sales the question is whether electric vehicles have a future in regions such as North Africa or South America. RENAULT sees the hybrid car as a better solution for these markets. This is because the largely inadequate charging infrastructure currently makes it impossible for electric cars to penetrate the market. According to RENAULT, the actual CO2 emissions must also be considered. If electric cars are charged with coal-fired electricity, the emissions problem is merely shifted and occurs at a different point in the value chain.
Question 5, VOLKSWAGEN , FERRARI :
E-mobility is currently the subject of heated debate, and the future of this technology is often questioned. However, the decisive factor is which cars are produced. Raiffeisen KAG asked car manufacturers specifically about the drive system of the future.
For VOLKSWAGEN, the answer is clear: VWs, Seats, Audis and Co. will only drive electrically in the future. Neither the public debate nor
the current market environment will change this. However, demand for hybrids and range extenders (internal combustion engine-powered generators for electric cars) will last longer than originally thought. For example, the Wolfsburg-based car manufacturer has presented new SUV and pickup models with range extenders, which are intended to appeal to American consumers in particular. Naturally, luxury car manufacturer FERRARI takes a different view. The transition to electric cars must take place together with consumers; the car industry must listen to customers and give them time to embrace the new technology. With regard to its own luxury cars, FERRARI points out that there is no alternative to the unique driving experience that, from Maranello’s perspective, can only be achieved with combustion engines.
Detailed reports and further answers can be found in the publications INVESTMENT FUTURE , which are published on the Raiffeisen KAG website.
For Raiffeisen KAG, one of its key responsibilities as an asset manager is to exercise its shareholder voting rights. These rights are exercised personally at the respective annual general meetings or by way of proxy voting. Raiffeisen KAG has selected the independent
firm IVOX Glass Lewis (IGL) for its proxy voting needs. Raiffeisen KAG’s principles for exercising voting rights are based on a transparent, sustainable corporate governance policy and are intended to cover significant topics that regularly arise at annual general meetings.
Spring is a PRI initiative7 for the responsible stewardship of nature that addresses the systemic risks of biodiversity loss to protect the long-term interests of investors. In doing so, the initiative aims to contribute to the global goal of halting and reversing biodiversity loss by 2030. Spring aims to improve corporate practices and ultimately deliver positive, real results while protecting and enhancing
investment returns. In the first phase, Spring will focus on tackling forest loss and land degradation in priority regions and promoting responsible practices in corporate political engagement. We also want to support the work of other conservation initiatives as we recognise the need for multiple approaches to a sustainable future.
11. Engagement activities
7) PRI stands for the Principles for Responsible Investment, a United Nations-backed initiative that aims to integrate environmental, social and governance (ESG) factors into investment decisions and promote sustainable investment practices. Company contacts
MAVI GIYIM SANAYI VE TICA-B
TURK SISE VE CAM FABRIKALARI
TAV HAVALIMANLARI HOLDING AS
ACWA POWER CO
NAHDI MEDICAL CO
OTP BANK PLC
BANGKOK DUSIT MED SERVICE
SOLAR INC
MOBILITY AG
ENERGY INC
TECHNOLOGIES INC
ENERGY INTERNATIONAL
INC
POWER INC
TECHNOLOGIES INC
INC
PATTANA PUB CO
TELECOM INC
TURKIYE IS BANKASI-C
DANSKE BANK A/S
BANQUE FED DU CREDIT MUTUEL
BANK GROUP LTD
AMRO BANK NV-CVA
SAFARI INDUSTRIES INDIA LTD
HANA FINANCIAL GROUP
SHINHAN FINANCIAL GROUP LTD
ANGLO AMERICAN PLC
ANTOFAGASTA PLC
CHINA HONGQIAO GROUP LTD
GLENCORE PLC
TINTO PLC
TENCENT HOLDINGS LTD
TURKIYE SINAI KALKINMA BANK
APOLLO HOSPITALS ENTERPRISE
OTP BANK PLC
PORR AG
MAGYAR TELEKOM TELECOMMUNICA
MOL HUNGARIAN OIL AND GAS PL
INFINEON TECHNOLOGIES AG
SOUTHWEST AIRLINES CO x
HACI OMER SABANCI HOLDING
AKBANK T.A.S.
SUMITOMO MITSUI FINANCIAL GR
TOYOTA MOTOR CORP
FIRSTRAND LTD
FIRSTRAND LTD
BIRKENSTOCK HOLDING PLC
DSV A/S
OMV AG
AG ANADOLU GRUBU HOLDING AS
CLEAN ENERGY FUELS CORP
CHENIERE ENERGY INC
EMERA INC
SAUDI ARABIAN OIL CO
SAUDI BASIC INDUSTRIES CORP
JAHEZ INTERNATIONAL CO
SAUDI AWWAL BANK
AL RAJHI BANK
MBANK SA
INPOST SA
UBISOFT ENTERTAINMENT
MILLICOM INTL CELLULAR-SDR
CAPGEMINI SE
VINCI SA
WILLIAMS COS INC
CHART INDUSTRIES INC
DINO POLSKA SA
S.O.I.T.E.C.
STMICROELECTRONICS NV
OVH GROUPE SAS
SOPRA STERIA GROUP
contacts
ALLEGRO.EU SA
DEUTSCHE BAHN AG
UBM DEVELOPMENT AG
CA IMMOBILIEN ANLAGEN AG
LANXESS AG
AMERICAN EXPRESS CO x
MEDTRONIC PLC x
CISCO SYSTEMS INC x
PROCTER & GAMBLE CO/THE
ARM HOLDINGS PLC-ADR x
INTL BUSINESS MACHINES CORP x
CF INDUSTRIES HOLDINGS INC
FIDELITY NATIONAL INFO SERV x
BOUYGUES SA
TELENOR ASA
TEXT SA
DINO POLSKA SA
AGRANA BETEILIGUNGS AG
AMAG AUSTRIA METALL AG
AMS-OSRAM AG x
STANDARD BANK GROUP LTD x
DASSAULT SYSTEMES SE
AMS-OSRAM AG
ANDRITZ AG
ANDRITZ AG
POWSZECHNY ZAKLAD UBEZPIECZE
AUSTRIA TECHNOLOGIE & SYSTEM
BAWAG GROUP AG
BAWAG GROUP AG
HOLCIM LTD
BECHTLE AG
CA IMMOBILIEN ANLAGEN AG
DUERR AG
EVN AG
GEBERIT AG-REG
LANDIS + GYR GROUP AG
LENZING AG
contacts
MAYR-MELNHOF KARTON AG
MEYER BURGER TECHNOLOGY AG
PALFINGER AG
PORR AG
SEMPERIT AG HOLDING
SIEGFRIED HOLDING AG-REG
SONOVA HOLDING AG-REG
STRABAG SE-BR
TEAMVIEWER SE
VERBUND AG
VOESTALPINE AG
WIENERBERGER AG
RAIFFEISEN BANK INTERNATIONAL AG
UBM DEVELOPMENT AG
AMAG AUSTRIA METALL AG
PALFINGER AG
UNIQA INSURANCE GROUP AG
OESTERREICHISCHE POST AG x
TELEKOM AUSTRIA AG x
DOCMORRIS AG x
GURIT HOLDING AG-BR
PIERER MOBILITY AG
VAT GROUP AG
SIKA AG-REG
ARYZTA AG
EMMI AG-REG
FISCHER (GEORG)-REG
ORIOR AG
KOMAX HOLDING AG-REG
PARTNERS GROUP HOLDING AG
HUBER + SUHNER AG-REG
DORMAKABA HOLDING AG
GRENERGY RENOVABLES
DERMAPHARM HOLDING SE
3I INFRASTRUCTURE PLC
STHREE PLC x
REPLY SPA x x
ALFEN N.V.
SINCH AB x
TRUECALLER AB-B x
WAVESTONE x x x
COLOPLAST-B x
AKSA ENERJI URETIM A.S. x
STRIDE INC x
MAVI GIYIM SANAYI VE TICA-B
HALYK SAVINGS BANK-GDR REG S
ASELSAN ELEKTRONIK SANAYI
ORSTED A/S
MOTOR OIL (HELLAS) SA
PUBLIC POWER CORP x
NATURA &CO HOLDING SA x
WALMART DE MEXICO SAB DE CV x
ASPEN PHARMACARE HOLDINGS LT x
B3 SA-BRASIL BOLSA BALCAO x
GRUPO AEROPORT DEL SURESTE-B
SLC AGRICOLA SA
RAIZEN SA - PREFERENCE
SUZANO SA
VIBRA ENERGIA SA
CREDICORP LTD
ENEL CHILE SA x
BB SEGURIDADE PARTICIPACOES x
BANCO BTG PACTUAL SA-UNIT x
B3 SA-BRASIL BOLSA BALCAO x
BANCO ABC BRASIL SA x
BANCO SANTANDER CHILE x
WEG SA x
MAYR-MELNHOF KARTON AG x
STRABAG SE-BR x
contacts
PALFINGER AG
MLP SAGLIK HIZMETLERI AS
D-MARKET ELECTRONIC SERV-ADR
BUDIMEX
BILL HOLDINGS INC
CHINA TOWER CORP LTD-H
KE HOLDINGS INC-ADR x
VIPSHOP HOLDINGS LTD - ADR x
GALATA WIND ENERJI AS x
BEIJING BEISEN CLOUD COMPUTI
LINGYI ITECH GUANGDONG CO -A
NEW ORIENTAL EDUCATION & TEC
PGE SA
EREGLI DEMIR VE CELIK FABRIK
BANK OF CHENGDU CO LTD-A
CHONGQING RURAL COMMERCIAL-A
BANK OF CHONGQING CO LTD-A x
TITAN CEMENT INTERNATIONAL T x
CHINA CITIC BANK CORP LTD-H
KINGDEE INTERNATIONAL SFTWR
GEELY AUTOMOBILE HOLDINGS LT
TENCENT HOLDINGS LTD
JD.COM INC-CLASS A
EAST BUY HOLDING LTD
FUYAO GLASS INDUSTRY GROUP-H
DIDI GLOBAL INC
YUM CHINA HOLDINGS INC
XIAOMI CORP-CLASS B
SANY HEAVY INDUSTRY CO LTD-A
NETEASE INC
CHINA RESOURCES LAND LTD
BAIDU INC-CLASS A
WILL SEMICONDUCTOR CO LTD-A
CHINA MERCHANTS BANK-H
AIER EYE HOSPITAL GROUP CO-A
BANK OF COMMUNICATIONS CO-H
BYD CO LTD-H
HAIER SMART HOME CO LTD-H
IND & COMM BK OF CHINA-H
PICC PROPERTY & CASUALTY-H
ALIBABA HEALTH INFORMATION T x
TRIP.COM GROUP LTD
TOTALENERGIES SE x
SGS SA-REG
PIERER MOBILITY AG
HANNOVER RUECK SE
HOLCIM LTD
NOVO NORDISK A/S-B
ORLEN SA
SUMITOMO MITSUI TRUST GROUP
LASERTEC CORP
ASAHI GROUP HOLDINGS LTD
SHOEI CO LTD
ASTELLAS PHARMA INC
ISETAN MITSUKOSHI HOLDINGS L
NIDEC CORP
OLYMPUS CORP
SUMITOMO MITSUI FINANCIAL GR x
SEIKO EPSON CORP
TOKYO ELECTRON LTD
ULVAC INC
ADVANTEST CORP
MICRO INC
SONY GROUP CORP
CORP
SHISEIDO CO LTD
AZBIL CORP
DAIFUKU CO LTD
FUJIFILM HOLDINGS CORP
MURATA MANUFACTURING CO LTD
DISCO CORP
UNICAJA BANCO SA
MAHINDRA & MAHINDRA LTD
EQT CORP
12. Detailed presentation of voting behaviour and attendance at general meetings
