Being an active owner
Being an active owner is central to our understanding of ESG and Responsible Investing. Therefore, our active ownership activities span across all of our products.
We believe that active ownership is a powerful way to protect shareholder value, enhance long-term returns and foster positive change. We are convinced that ensuring good ESG practices in our funds’ holdings is an important part of safeguarding the long-term interests of shareholders and society. When we want to improve a company’s management of its ESG risks, we exercise our ownership right to support and influence the company. Active ownership, when suitable, is always our preferred approach
Active Ownership can generally be divided into two streams – engagement and voting – both equally important and interdependent on one another.
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 instance in the Board gender ratio. For the 2020-season, we sat on 41 such committees, and during 2019-2020 we saw female representation on these companies' boards improve to 40%. This is in line with our goal of 40-60 representation of any gender.
As an active owner with a clear ESG agenda, we consistently encourage the companies we invest in to strengthen their focus on sustainability. In 2019, we quarantined Brazilian government bonds in response to the government not doing enough to protect the world’s largest tropical rainforest during the outbreak of the Amazon forest fires in 2019. The following year, we were awarded for our long-term engagement with the pharmaceutical industry about the environmental and health impact of pharma manufacturing in India. We also decided to exclude shares of JBS SA worth about 40 million euros based on the company’s environmental record and response to the COVID-19 pandemic.
“We use several different active ownership tools in our engagement process,” says Eric Pedersen, Head of Responsible Investments at Nordea Asset Management. “We collaborate with other investors, sign letters to management and board of directors, go on field visits and make our voice heard through voting and filing shareholder proposals. Currently, because of the COVID-19 situation, we use Teams and Zoom meetings to keep in touch with the companies we engage in.”
To attain the SDGs (UN Sustainable Development Goals) and keep global warming below 1.5°C above pre-industrial levels, all sectors and companies must actively participate in co-creating a greener economy. Already in 2007, we signed the Principles for Responsible Investment and have co-founded the ground-breaking UNEP FI Principles for Responsible Banking, now signed by 220 banks globally. We are involved in several global initiatives that promote sustainability and believe in making a difference together. A recent example of a successful collaboration was the coalition of investors we led against the coal plant Vung Ang 2 in Vietnam.
“Engagement is always our preferred approach, which is why we have an in-house team of responsible investment experts. However, we are also ready to exclude companies that are unwilling or unable to have a serious dialogue on the issues we think are important. The latest examples of this are the Brazilian meatpacker JBS and the Saudi oil giant Aramco,” continues Eric Pedersen.
Updates about our engagement activities can be found here.