We believe that improved management of sustainability risks and opportunities is vital to creating returns with responsibility and that engagement can result in competitive advantage, increasing the likelihood of companies being successful in the long run – benefitting companies, clients and society at large.
In line with our net zero commitment, in 2021 we set a target to ensure that by 2025, 80% of the Top 200 largest contributors to our financed emissions will be assessed as Paris-aligned, or else be subject to engagement to become so. This target will increase to 100% by 2030. In 2022, we’ve initiated a concerted engagement campaign to communicate our expectations of Paris alignment amongst Top 200 emitters. Read more about that work in our Nordea Responsible Investment Annual report.
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 pre-defined engagement objectives. Engagement may entail a dialogue with the companies’ executive bodies, influence on board composition, cooperation with other investors on joint voting at annual general meetings, and generally keeping a strict eye on the company. The dialogue allows us to put forward our expectations on corporate behaviour and to support companies in enhancing their sustainability performance. Progress reports and outcomes of the engagement are communicated to portfolio managers and financial analysts, allowing the information to be considered in investment decisions. In cases where an engagement relates to critical issues for the specific investment case or the general investability of a company, failure to meet expectations will entail escalation of the issue through other stewardship activities, such as voting, and ultimately the consideration of quarantine or divestment.
NAM’s engagement activities are carried out on behalf of all our funds, and follow this process:
Engagement selection process
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Engagement plan with objective
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Research and meeting
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Report progress or escalate
Engagement streams
Our engagement activities typically fall into one or more of three different categories.
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.
This relates to material ESG-related risks or opportunities identified by portfolio managers, financial analysts and ESG analysts via our company assessments.
Addresses companies that are in breach of international norms or conventions or those involved in ESG-related incidents. Significant deviation from the relevant peer universe on PAI metrics may also trigger engagement.
This type of engagement is initiated for investee companies with the most material exposure to one or several of our four focus areas:
Biodiversity
Climate
Good governance
Human rights
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.
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