Nordea as active owner

Five reasons for active ownership

1. Divesting is the ultimate loss. It means forfeiting responsibility and opportunity to influence.
2. When you divest or exclude, you may sell your shares to new owners that may be less concerned with SRI than you are.
3. There is a clear international trend away from exclusion. An increasing proportion of the world’s largest investors seem to believe that active ownership is more successful than exclusion in order to achieve positive changes.
4. The UN’s principles for responsible investment (UNPRI) primarily promote active ownership as a means of change.
5. Hermes is engaging on behalf of many investors, and therefore represents a strong ownership constellation and coordinated active ownership that cannot easily be ignored.

Active ownership - part of the investment process

This means that instead of excluding companies in breach of the norms for socially responsible investment, we encourage the company to try to bring about a change.

In this work of changing behaviour, Nordea’s cooperation partner is Hermes. Hermes has access to the companies’ executive management and boards and performs engagement for a number of investors including Nordea.

SRI committee

Based on advice from Ethix, which identifies companies violating the UN’s Global Compact, Nordea’s own SRI committee decides the level of engagement in the companies Hermes should enter into dialogue with on behalf of Nordea. Hermes then works to change the behaviour of these companies. Since Hermes is talking to companies on behalf of several investors, and not only Nordea, the probability of successful engagement is increased.

Dialogue for behaviour change

This involvement includes a dialogue with the companies’ executive bodies, influence on board composition, cooperation about joint voting at annual general meetings and generally keeping a strict eye on the company.

Nordea believes that dialogue and active ownership is a more efficient way to work to change behaviour. To simply exclude the company, and simply get rid of a troublesome investment, means Nordea will not have the opportunity to change anything within the company. Also, there is no guaranty that new owners will observe the UN’s principles and international norms.

Nordea will exclude companies that lack willingness to change. We keep our customers informed of what we do and what we achieve through our regular customer reports. This is in line with the UN’s principles to report activities and the development in the work of implementing the principles.