Fostering engagement with external asset managers to advance sustainable investment | National Bank of Belgium

© Patrick Van den Branden – NBB

INSIGHT by Michiel De Smet, sustainable investment expert at the National Bank of Belgium

Sustainable and responsible investment (SRI) principles are increasingly guiding investment management. In fixed income for example, thematic assets continue to attract investors and the cumulative issuance of green, social, sustainability, sustainability-linked and transition bonds reached USD 3.9 trillion by end of Q1 2023.

At the National Bank of Belgium, we have gradually been integrating SRI principles into the management of our non-monetary policy portfolios. Importantly, the Bank has formally recognised sustainability as the fourth objective of our strategic asset allocation policy, alongside liquidity, safety and return.


Engagement is a key pillar of SRI strategies. While there is no “one size fits all” definition of SRI, the term is usually considered to cover certain key concepts, such as norm-based exclusion. By publicly sharing their approach to SRI, its objectives and building blocks, investors can send a strong signal to the market and their peers. Earlier this year, the National Bank of Belgium published its SRI Charter, expressing its commitment to achieving a sustainable and inclusive net-zero economy. This document lays out a high-level framework for the inclusion of SRI aspects in the management of the Bank’s own portfolios. Engagement is one of the framework’s five pillars.


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Engagement with external asset managers can drive the integration of sustainability principles. Engagement strategies can take many forms. One example is active ownership, which entails interacting with companies and exercising voting rights to influence their strategy, governance and disclosure, for example in terms of greenhouse gas reduction targets or the preparation of a transition plan. Engagement can also include interaction with policymakers and regulators, such as through consultations, as well as with market participants like data providers. In addition, asset owners can use their interactions with external asset managers to discuss approaches to SRI. The National Bank of Belgium has both internally and externally managed portfolios. As concerns the latter, we have set our SRI expectations during and after the asset manager selection process. Managing portfolios ourselves, we also exchange thoughts with those asset managers on the practical challenges associated with, for instance, portfolio decarbonisation or the integration of biodiversity-related risk.


Engagement with external asset managers can relate to both the manager’s own investment and reporting processes and its influence over companies. Internal matters can include norm-based exclusions in investment policies and the integration of climate-related risks into risk management. Investors can also exercise influence through the external asset manager, particularly in their capacity as shareholders. At the National Bank of Belgium, we engage with the manager of our equity portfolio on the climate transition by discussing relevant voting records and engagement policies as well as the asset manager’s own climate-related targets and disclosures.


As steering and supporting companies in the transition to a sustainable and inclusive net-zero economy becomes increasingly important, so too will active ownership, to which the engagement of external asset managers is key.



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Michiel De Smet is sustainable investment expert at the National Bank of Belgium. Before he led the Ellen MacArthur Foundation’s Finance Initiative and was a member of the EU Platform on Sustainable Finance, advising the European Commission on the EU Taxonomy. Previous positions include policy officer at the European Commission and consultant at McKinsey & Company. Michiel holds a MSc and PhD in mathematics.


All opinions expressed are those of the author and/or quoted sources. is an independent and neutral platform dedicated to generating debate around ESG investing topics.