Nordea Asset Management’s (NAM’s) commitment to Responsible Investment (RI) is deeply rooted in our Nordic corporate culture, philosophy and business model. It’s in our DNA and we care about all factors that are material to clients’ investments, including those that are non-financial.
Since becoming an early signatory of the UN Principles for Responsible Investment in 2007, we have been actively involved in several Nordic, European and global ESG-related initiatives such as Carbon Disclosure Project, Carbon Action, Sustainable Investment Forums and Water Disclosure Project.
NAM’s RI framework extends to specific strategies and products, using a wide combination of RI approaches. Our STARS strategies, for instance, stand at the forefront of our RI offering, presenting a unique approach to generating attractive returns while adhering to advanced RI standards. Since the launch of our first STARS strategy in 2011, we have built a strong suite of ESG solutions that cover Emerging, Global, European, Nordic and North American equity markets as well as more recently launched as Fixed Income strategies.
Besides the STARS family, our Global Climate & Environment strategy is a sustainability themed portfolio that concentrates on resource efficiency and environmental protection. Moreover, our Global Gender Diversity strategy is a solution aiming to prove it is possible to deliver solid returns by investing in companies with a strong focus on gender balance.
Award Winning RI Team
In order to provide these cutting-edge solutions, Nordea has one of the largest and most experienced RI teams in Europe. The team, formed already in 2009, is truly embedded within our portfolio management and they sit side by side with Equities and Fixed Income teams. In regards of the STARS funds the team contributes to the analysis of the holdings as well as engages with the companies together with the portfolio managers.
Over the years, the team has received awards from several external entities such as Extel and the European magazine “Capital Finance International” (CFI). CFI has awarded Nordea Asset Management “Best ESG Investment Process in Europe” for the past five years in a row (2014 – 2018).
Active ownership is a central component of our corporate-wide overlays. Being an active owner is of paramount importance to NAM. We believe this is a powerful way to protect shareholder value, enhance long-term returns and foster positive change. We do this by exercising our formal voting rights as well as engaging with companies and encouraging them to improve their management systems and ESG performance.
Our active ownership efforts begin with voting on our holdings, attending Annual General Meetings (AGMs) and representation on nomination committees. We vote in about 400 companies (which typically represents around 60% of equity AUM) and we are striving to extend our coverage outside Europe. Our publicly available Voting Portal shows how we have voted in AGMs for stocks held across our funds. Access to the Voting Portal can be found here.
Engagement is the next step of being an active owner and is a crucial component of our RI philosophy and framework. We influence and foster change with our companies by engaging in dialogues around specific ESG topics. Our engagement activities entail constructive dialogues with companies through face-to-face meetings, conference calls, letters or even field visits. As such, it provides an opportunity to improve our understanding of companies that we invest in as well as the ability to influence them. We engage proactively with companies and other stakeholders on behalf of all internally-managed Nordea funds.
A successful example of engagement
Over the years, we have actively and successfully engaged with companies all over the world to ensure they meet our ESG criteria. One such company is Swedish fashion retailer H&M (Hennes & Mauritz AB). H&M works with many of its suppliers in emerging markets to improve labour conditions. Nevertheless, some of the challenges facing these suppliers have caught our team’s attention. On a site visit to Cambodia, Nordea inspected a supplier’s factory that had been flagged after an incident where workers fainted due to extreme heat in the building. Our team spotted several issues such as poor ventilation and lack of access to drinking water. As a result of the visit, a number of immediate action points were made to improve the working conditions. These included better air condition and more drinking stations. However, the engagement work does not stop there. Follow-up meetings are scheduled on an ongoing basis with H&M to ensure that they maintain their focus on improving working conditions in their supply chain.
To learn more about further engagement cases please refer to the Quarterly ESG reporting for STARS Funds.
Transparency and Reporting
For an investor, timely and adequate information is key. We expect companies to report on materiality and support standardized and integrated reporting which incorporates material sustainability information with financial information.
We ourselves strive to be transparent in regard to how we work and incorporate ESG in our responsible investment decisions and activities. We regularly report via our website, through our Annual Report and through the PRI reporting framework.