Active ownership

Engaging for a better tomorrow

Active ownership – using our influence to push investees towards more sustainable business conduct – is central to our responsible investment approach. Our active ownership activities integrate environmental, social and governance (ESG) considerations and span across most of our products.
We believe active ownership is a powerful way to protect shareholder value, enhance long-term returns and drive positive change¹. We are convinced that helping to ensure good ESG practices among our investees is important to safeguarding the long-term interests of shareholders and society. When we want a company to improve its management of ESG risks, we exercise our rights as an owner to support and influence the company.

While we are prepared to exclude companies when deemed necessary, our experience proves that active ownership is often a more effective tool to improve ESG performance, manage risk and identify opportunities for positive change.
Our active ownership efforts include direct engagement, proxy voting, attending annual general meetings and contributing to the development of industry ESG standards.

^{1) There can be no guarantee that an investment objective will be achieved. The value of investments can go up and down, and investors could lose some or all of their invested money}.

What we choose to focus on

Climate

Nordea Asset Management continually assesses climate change risks and the impact of the low-carbon transition on sectors and companies. When it comes to investments, climate change presents a challenge – due to its physical impact and the impact of policy measures and changes in consumer behavior aimed at reducing greenhouse gas emissions.
A key way to ensure the climate resilience of investee companies is to support them in aligning with net zero pathways. This is why we have a target for 80% of our top 200 carbon footprint contributors to be aligned with the Paris Agreement, or be subject to active engagement to become aligned, by 2025.
Collectively, these contributors are responsible for around 79% of the financed emissions associated with our equity and corporate bond holdings.

You can read more about our approach in our Responsible Investment Report

Biodiversity

As the largest asset manager in the Nordics, we play a role in preventing biodiversity loss and channelling capital towards nature-positive solutions.
Ever since we signed the UN Principles for Responsible Investment back in 2007, we have been actively working with our portfolio companies to address biodiversity risks and seize opportunities.
2023 was a milestone year for our activities related to biodiversity preservation and saw us publish our first Biodiversity Report. The Report serves as a position statement on biodiversity and allows us to highlight related activities.
To strengthen our voice as an active owner, we take part in numerous investor initiatives related to biodiversity. The Investor Policy Dialogue on Deforestation (IPDD), which we helped to found, is a good example. The IPDD is a collaborative initiative, backed by the Tropical Forest Alliance and 78 investors. It was set up in July 2020 as a means to engage with government officials, public agencies and industry associations in countries with critically important forests and native vegetation on the issue of deforestation.
During 2023 13% of our total engagements were on biodiversity-related topics.

Good governance

Through our governance-focused active ownership activities, we aim to ensure that our portfolio companies manage ESG risks and other risk types in a sound manner. In this way, we seek to enhance long-term returns and protect shareholder value.
We believe a sound corporate governance structure is essential for creating long-term shareholder value. If companies are affected by governance-related risks, we expect them to report on how they manage both the risks and impacts adequately.
Where corruption is concerned, we expect companies to take a proactive approach and ensure that adequate measures are implemented, with due transparency.
On diversity, we expect boards to include a strong presence of independent and diverse non-executive members.
We also expect our portfolio companies to have a robust tax governance and management framework in place, pay taxes where economic value is created, and provide country-by-country reporting. And we expect them to have a tax policy that outlines their approach to taxation and how it aligns with their overall business strategy.

Human rights

As a responsible investor, we expect companies to comply with internationally recognised human rights principles and manage their impact on human rights. Our expectations apply to both investee companies and their supply chains. Nordea Asset Management (NAM) screens all its holdings for breaches of international laws, human rights norms and labour standards.
Within the broader area of human rights, digital rights have been gaining in prominence. We are part of a collaborative engagement on the topic of digital rights together with 65 other investors and representatives representing over USD 8.7 trillion in assets under management.
The Corporate Human Rights Benchmark (CHRB) measures the human rights performance of the world’s largest publicly listed companies in sectors with high human rights risk. NAM uses the CHRB results to help it assess the effectiveness of companies’ human rights risk management and track their progress in this area. This is especially important given new regulatory requirements for investors to demonstrate that their investments do no significant harm.

How we drive the work

Active ownership can generally be divided into two streams: engagement and voting. These are dependent on one another, and are equally important.

Increasingly, we are being invited by companies in the Nordics to join their nomination committees. Membership of nomination committees is a very efficient way to engage with the companies we have large holdings in – and it enables us to drive real change, for example in board gender ratios.