Engagements

Engagements in 2020

When we want to improve how a company manages its ESG risks, we initiate an engagement process with it. The timeframe of the engagement process can vary depending on the complexity of the engagement objective. In 2020, we engaged in 924 dialogues with companies in the investment portfolio to ensure that material ESG risks were being adequately managed, or ESG opportunities were being fully harnessed. This marks a significant increase in the number of engagements from the almost 600 that were held in 2019, albeit now in digital format due to the covid-19 pandemic.

Supporting companies in delivering real change

We believe that improved management of sustainability risks and opportunities is vital to creating returns with responsibility, and that engagement can result in a competitive advantage, increasing the likelihood of the companies being successful in the long run – benefitting companies, clients and society at large. Engaging with our investee companies enables us to address material sustainability risks and opportunities. The

dialogue allows us to put forward our expectations on corporate behaviour and to support companies in enhancing their sustainability performance.

NAM’s engagement activities are carried out on behalf of all our funds, and follow this process:

Engagement selection process > Engagement plan with objective > Research and meeting > Report progress or escalate

 

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. Engagements typically run over several years and are carried out either by NAM alone or in collaboration with other institutional investors. Our engagement activities combine the perspectives of portfolio managers, financial analysts and ESG specialists to form a holistic opinion and establish coherent engagement objectives. During the engagement period, we conduct regular meetings with the company and track progress against our pre-defined engagement objectives. Progress reports and outcomes of the engagement are communicated to clients, portfolio managers and financial analysts, allowing the information to be considered in investment decisions.

Should the engagement process fail, we will further escalate the issue through other stewardship activities, for example, with our voting rights.

Our engagement activities fall into one or more of three different categories. The first type addresses companies that are in breach of international norms or conventions or those involved in ESG-related incidents. The second type relates to ESG -related risks or opportunities identified by portfolio managers and financial analysts via our company assessments. The third and final stream concerns our thematic engagements. Thematic engagements are initiated for investee companies with the most material exposure to one or several of our five focus areas:

  • climate
  • human rights
  • good governance
  • water
  • biodiversity

Each theme is closely aligned with the SDGs and relevant ESG risks, and has been selected and defined through close collaboration between ESG specialists, portfolio managers, financial analysts and clients. All of our engagement is tracked on our in-house database and reviewed by the RI team to monitor progress.

Engagement streams

  • Norms- and incident-based engagement: engaging with companies breaching the international norms or conventions or companies having ESG related incidents.
  • Investment-led engagement: engaging with companies on their material ESG risks. 
  • Thematic engagement: engaging on specific sustainability themes in focus. 
 

Covid-19 action

Investor expectations on pandemic response and recovery

In the wake of the covid-19 pandemic, Nordea Asset Management (NAM) signed and communicated to companies several investor statements setting out its expectations concerning how industries, such as meat processing and pharmaceuticals, should respond to the ongoing pandemic. It also sent an open letter to EU leaders from investors on measures needed for a sustainable recovery from covid-19.

What is Nordea Asset Management?

Nordea Asset Management is one of the largest asset managers in the Nordics with a global presence in Europe, the Americas and Asia. Nearly one third of assets are managed in ESG STARS strategies. Abbreviated NAM. 

 

What is Nordea Funds?

Nordea Funds is the largest fund manager in the Nordics, owned by Nordea Bank Abp. Its focus is to actively manage funds and base decisions on business insights, analysis and sustainable criteria.