Background and purpose
The purpose of the foundation is to secure pension commitments issued by Nordea Bank Abp, filial i Sverige and by other Swedish companies and branches in the Nordea Group. The foundation serves as collateral for the pension obligations borne by these companies and branches.
The responsibility for the pension commitments rests with the employer that promised the pension. Thus, the foundation does not assume this responsibility or pay out any pensions. The employer has the right to ask the foundation to pay compensation for costs and provisions for pensions. This is regulated in the Swedish Act on Securing Pension Obligations (SFS 1967:531).
The purpose of the foundation is achieved by the foundation managing funds assigned to it by the employers to secure their pension obligations. The aim of the asset management is to ensure a stable and positive long-term development of the Foundation’s assets so that they constitute good collateral for the pension obligations secured in the Foundation.
One form of investment made by the foundation is in funds encompassing equities issued by companies in the EEA (European Economic Area) that are traded on a regulated market. More information about the foundation’s management and investment profile can be found under the heading Investment strategy below.
Nordea Bank Sweden’s Pension Foundation provides this information in accordance with the Act on Securing Pension Obligations and applicable regulations from the Swedish Financial Supervisory Authority.
The Foundation’s financial position
The foundation has a sound financial position and an overall satisfactory surplus, i.e. the value of the foundation’s assets exceeds the value of the secured pension obligations.
More detailed information about the foundation’s financial position can be found in its most recent annual report (pdf, 3 MB).
Principles for shareholder engagement
The Foundation has engaged Nordea Investment Management (NIM) to manage the Foundation’s investments in accordance with the principle of discretionary management. This means that NIM continuously makes decisions about the Foundation’s investments within the framework of the agreement.
NIM instructs Nordea Funds Ltd (NF) or Nordea Investment Funds S.A. (NIFSA) to manage the funds included in the Foundation’s portfolio. NF and NIFSA apply their own internal rules and practices concerning active ownership in their shareholder engagement activities, in which they represent all owners of the funds, including the Foundation.
Against this background, the foundation does not conduct any engagement activities on its own, and it is thus not relevant for the foundation to adopt its own policy for shareholder engagement.
Further information about the engagement activities carried out in relation to the funds managed by NF and NIFSA can be found here.
The aim of the foundation’s investments is to secure the long-term pension obligations in a satisfying way and at the same time create opportunities to improve the financial position.
The foundation has adopted an investment strategy which makes it possible for the portfolio as a whole to generate a good return over the medium to long term, given that the pension commitments, for which the Foundation represents collateral, run for a long time. The objective is that the return will exceed the financing cost of the commitments by one to two percentage points per year over the long term. To be able to reach the target return, some risk exposure in the relationship between the portfolio and the pension obligations is necessary.
The investment strategy (including the equity investment strategy) builds on the principles of matching, diversification and portfolio investments.
- The matching principle means that foundation’s portfolio is invested in such a way as to make it possible to achieve the return objective.
- The diversification principle entails that the portfolio encompasses a spread of different asset classes, markets, sectors etc., with the aim of minimising the effect of individual events among the portfolio’s holdings.
- The portfolio investment principle means that the portfolio may contain assets which on their own may been seen as risky, but which in the context of being part of the portfolio have characteristics which mean that the matching and diversification principles are adhered to.
More detailed information about the foundation’s investment strategy can be found in the investment guidelines (pdf, 264 KB).
Agreement with asset manager
According to the agreement with NIM, the foundation receives regular written reports regarding the portfolio’s development, its contents and other matters. In addition, NIM regularly attends the foundation’s board meetings, where NIM presents the portfolio’s development and reports on any relevant market events and market prospects which can potentially affect the portfolio in both the short and long term.
The agreement with NIM applies until further notice, with the possibility for both parties to terminate the agreement after observing a certain period of notice.
The fee which NIM receives for the assignment is based on the market value of the foundation’s portfolio. The fee involves a performance-based reimbursement component in that an increase in the portfolio’s value results in an increase in the fee. Thus, NIM has an incentive to work to ensure that the portfolio develops positively in the long-term.
The portfolio’s return after the deduction of transaction costs forms the basis of the foundation’s assessment of how NIM has performed its assignment. In this way, the foundation monitors NIM’s costs for the portfolio’s turnover.
The foundation does not monitor the portfolio’s intended turnover rate or limits on the turnover rate. The reason for this is that the foundation instead evaluates NIM’s return after deduction of transaction costs.
The foundation’s follow-up and evaluation of NIM’s assignment, together with the foundation’s possibility to terminate the agreement, encourages NIM to base its investment decisions on assessments of the portfolio companies’ results, in order to ensure that the portfolio gives as good a return as is possible. In the same way, the agreement encourages NIM to engage in the portfolio companies with the aim of improving their results.
Sustainability risk policy
This policy provides the principles and the overall rules for the management and control of sustainability risk in the foundation.
The foundation strives to contribute to the transition towards a sustainable future by investments into sustainable solutions and activities that are creating positive, measurable and sustainable impacts on society while simultaneously delivering attractive returns. The Foundation believes that including sustainability risks in the investment decision-making process can enhance the risk-adjusted returns of the investments, both by mitigating long-term sustainability risks and potentially creating values finding sustainably attractive investments.
Sustainability risk means an environmental, social or governance (ESG) event or condition that, if it occurs, could cause a negative material impact on the value of the investment.
Since the foundation does not directly manage its own assets, sustainability risk related issues are handled by the external asset manager Nordea Investment Management AB (NIM). The foundation requires that the asset manager integrates sustainability risks in the investment decision-making process when building and monitoring portfolios and that international ESG conventions and norms are considered in the asset manager’s investment analysis, decision-making processes and governance.
NIM’s investments are carried out in accordance with the Nordea Asset Management (NAM) Responsible Investment Policy, which means that in those funds where the policy applies (actively managed funds and enhanced index funds), ESG considerations are integrated in the investment process. Baseline safeguards are also deployed through NAM's Responsible Investment Policy, which bans investments in companies active in the production of illegal or nuclear weapons and companies with exposure to coal mining exceeding a predefined threshold. Moreover, NIM also manage a Private Equity portfolio on behalf of the Foundation. NIM’s Private Equity team considers ESG risks when selecting Private Equity funds and also target funds with measurable sustainable impact.
The foundation also requires that the asset manager considers principal adverse impacts (PAIs) of investment decisions on sustainability factors and that the asset manager publish and maintain on its website a statement on due diligence policies with respect to those impacts. Through NIM the foundation considers PAIs on sustainability factors at the entity level, covering assets managed by NIM, with the exception of certain assets where the necessary data is not available. The environmental and social impact of the activities of all NIM investee companies is assessed by NIM on an ongoing basis through a PAI integration due diligence process. Companies considered as outliers on one or more PAI indicators are analysed further by a Responsible Investments (RI) team and a recommendation for action is made to NIM’s Responsible Investments Committee (RIC) in a process similar to the one applied for norms breaches. For a description of principal adverse sustainability impacts and more information in this connection, please refer to NIM’s Principal Adverse Impact Statement and Responsible Investments Policy with link above.
The remuneration principles set out in this Policy have been determined in light of the foundation’s activities, risk profile, goals, long-term interests, financial stability and results as a whole. The long-term interests of the persons whose pension benefits are secured through the Foundation have also been considered.
The foundation’s main activity is to secure pension commitments for entities in the Nordea Group. For this purpose, the foundation manages a portfolio of assets with the aim to generate a good and stable return over the medium to long term, given that the pension commitments secured by the foundation run for a long time. The foundation’s risk profile does not leave room for investments or activities which would jeopardize the foundation’s ability to maintain its long-term investment strategy.
In light of the above, the remuneration principles adopted by the foundation shall ensure that remuneration is paid in reasonable amounts, that predominantly fixed remuneration is used, that variable remuneration is paid only if deemed appropriate in order to secure a proper implementation of the foundation’s investment strategy, and that sound and effective risk management with respect to sustainability risks is promoted. Variable remuneration may not incentivise risk-taking, which is excessive in light of the foundation’s investment strategy, or with respect to sustainability risks, or which create a conflict of interest in relation to the Foundation or persons whose pension benefits are secured through the Foundation.
The external asset manager NIM considers sustainability risk when setting targets and evaluating performance in their variable remuneration pay schemes. All employees on variable pay scheme are measured against both qualitative as well as quantitative targets suitable for their position and tasks. All employees have performance goals linked to risk and compliance performance, including sustainability risk, which require adherence to high standards. For more information please refer to NIM’s disclosure on integration of sustainability risks in remuneration.
The foundation has no employees and no salaries are paid.
The foundation does not pay any remuneration to its Board members.
Remuneration for work which is carried out for the foundation under an outsourcing agreement shall be aligned with market practice. The outsourcing agreement shall include terms which clearly govern the remuneration payable under the agreement.
In order to avoid conflicts of interest the Board member may not participate in the proceedings or decisions in which the Board member directly or indirectly has his own interest.