Nordea comments to Fair Finance Guide study “Irresponsible Investments” in 2018

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04-10-18 14:51 | Responsible business

Fair Finance Guide has published a study on how banks live up to principles of responsible investments with a focus on human rights. Nordea has chosen not to participate in the study as the methodology used by Fair Finance Guide is in our view outdated and not aligned with our belief of how to effectively drive change within companies. The study fails to provide a nuanced assessment of Nordea’s work in the area. The methodology is biased towards exclusion, while we promote active ownership. Other biases include the limited selection of companies, while we invest in thousands of companies around the world. The methodology also to some extent punishes banks because of their fewer dialogues with the companies, irrespective of the quality of the dialogues. Banks are furthermore punished if they are unable to present detailed documentation of the dialogues with the companies without considering that this would undermine the ongoing engagements with the companies. 

Stora Enso is an example of a company that was included in the study. In the study, the company is accused of being an irresponsible investment due to their previous sub-supplier involvement with child labour in Pakistan that was discovered in 2014. We had an extensive engagement with Stora Enso and conducted numerous field visits to the company’s factories in Pakistan, China and Brazil. Stora Enso ended its activities in Pakistan and is now working proactively with sustainability issues. A video of our field visit to Stora Enso in Brazil is available in the following link.

Nordea Asset Management is the largest asset manager in Northern Europe and we therefore have a higher absolute exposure to companies compared to our Swedish peers. At Nordea, we have worked with responsible investments for a long time. We were the first bank to sign the UN Principles for Responsible Investments (as early as in 2007). Nordea is unique in terms of how we engage and have dialogues with companies and sectors, conduct interviews and go on field visits. 

The study by Fair Finance Guide does not consider how we actively engage and drive change within companies through our ownership. Active ownership often results in significantly better results, compared to standing aside and excluding. As owners, we use the right to exercise our votes on relevant climate resolutions at company AGMs. Our voting behavior is transparent and can be freely monitored via this link.

In situations when companies fail to engage with us or fail to demonstrate any improvements of their management of sustainability risks, Nordea may exclude the company. It should also be noted that Nordea invests EUR 6 billion in companies providing climate solutions and contributing to the transition to a low-carbon future through our Climate fund and the fund family Stars. 

We always strive to improve, become more transparent and efficient in how we adjust, mitigate and engage, to enable our clients to make relevant choices for a sustainable future. It is an integrated and business-driven part of our activities at Nordea to take responsibility for issues such as the environment, labour rights, human rights, transparency and compliance. We have increased resources in this area and have one of the largest teams in Europe working with this full time. 

In contrast to the findings of Fair Finance Guide, our processes for responsible investments have been awarded by many external parties and are considered the best on the market. According to a report by the UN PRI from 2018 (“PRI Assessment 2018”), Nordea received the rating A+. The consultancy firm Söderberg & Partners completed a study where Nordea got a top ranking in most fund categories based on fund companies’ efforts to engage with companies and steer them in a more sustainable direction. Nordea tops five out of seven categories based on average ranking for all funds within the respective category. Nordea also receives the highest sustainability score among Swedish banks from the ESG rating provider Sustainalytics. Nordea has a rating of C by ISS-oekom compared to industry leaders that has a rating of C+. By MSCI ESG Ratings assessment, Nordea has received a rating of BBB as of September 28, 2018 The magazine CFI has awarded Nordea’s processes for responsible investments as the best in Europe for four years in a row (link). 

Our policy for responsible investments (pdf, 89 KB) provides additional information, together with our policy on Sustainability (pdf, 1 MB), our annual reports on sustainable finance (pdf, 1 MB) and our position on climate change (pdf, 326 KB)

Our clients are central to everything we do at Nordea and sustainability is high on our agenda.
Together with customers and partners, Nordea enables the transition to a sustainable future.

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