Sustainability is an integral part of Savings Bank’s asset management. We apply responsible investment policy in all of our funds. We use different below mentioned strategies depending on the asset class.
Responsible investment refers to a strategy and practice to incorporate environmental, social and governance (ESG) factors in the investment decisions and active ownership. In relation to the environment, this can include topics such as sustainable development, biodiversity and energy issues. The relevant areas of social responsibility can include human resource policy and working conditions, respecting human rights and equality, supporting local communities into and appropriately addressing product safety. Assessments of governance can include the independence and remuneration of the Board of Directors, the paying of taxes and maintaining anti-corruption and anti-bribery practices.
We believe implementing responsible investment processes improves long-term returns. Incorporating ESG issues into investment processes helps manage the risks and seek opportunities. We also want to contribute to the shift towards more sustainab society and businesses.
Savings Bank’s asset management (Sp-Fund Management Company) signed the UN supported Principles of Responsible Investment (PRI) in 2014 and is also committed to taking environmental, social and governance-related factors into account in its investment activities.
We report our activities to the PRI annually.
As a signatory to the UN Principles for Responsible Investment, we are committed to the following:
- We will incorporate ESG issues into investment analysis and decision-making processes.ESG issues are part of our investment process.
- We will beare an active owners and we incorporateinclude ESG issues into our ownership policies and practices.
- We will seekpromote the appropriate disclosure on ESG issues by the entities in which we invest.ESG reporting of our investment targets.
- We will promote the acceptance and implementation of theresponsible investment principles within the investment industryin the financial sector.
- We will work together to enhance our effectiviness in implementing responsible investments.cooperate with other investors to promote the responsibility of investment activities.
- We will report on the realisation of the principles of responsible investment and the development of our practices and operating procedureson our activities and progress towards implementing responsible investments.
Besides PRI we are also part of other investor initiatives. Savings Bank’s asset management (Sp-Fund Management Company) is an active member of Finland’s Sustainable Investment Forum (Finsif).
In July 2018, we joined CDP’s climate, water and forest investor members. CDP is an organization that collects information from companies related to for example climate change management, water consumption and emissions.
In 2019 we signed Climate Action 100+ investor initiative. The initiative ensures that the world’s largest corporate greenhouse emitters take necessary action on climate change. The companies include over 100 systematically important emitters in different industries.
At Savings Bank’s asset management, applying the principles of responsible investment has been incorporated into the investment analysises and decision-making processes. We continuously develop our investment process from the perspective of responsibility.
Designated portfolio managers are responsible not only for the return and risks of their portfolios, but also the application of the principles of responsible investment in their practical investment activities. Portfolio managers also analyse the material ESG risks and opportunities of their investments.
The person charged with the coordination of ESG issues monitors the activities of responsibille investments, produce internal analyses, report and continuously develops the responsible investment practices of Sp-Fund Management Company. He or she also promotes the responsibility investments in cooperation with other investors, for example, through stakeholder meetings and networks.
We exclude from our direct investments companies that manufacture, sell or market controversial weapons that are prohibited by international agreements. Controversial weapons refer to weapons such as land mines, cluster bombs, biological and chemical weapons and, in some cases, nuclear weapons.
We also exclude form our direct investment some thermal coal users and producers. Exclusion is for mining companies where over 25 per cent of revenues come from thermal coal energy or where the production is significant. Electricity companies that uses significant amount of thermal coal are exclude. If a company has a proven strategy or plans reduce thermal coal and minimize their environmental impact, it can avoid exclusion.
We do not directly invest into tobacco manufacturers.
We regularly screen our direct investments with regard to exclusions and international norms and agreements. The analyses is done both internally and via service provider.
We monitor especially the development of the companies whose shares are included in our portfolios. Our aim is to increase openness, transparency and responsibility of our investee companies. Where necessary, we directly engage with the companies and aim to influence that the companies take action in response to violations and promote a responsible and sustainable way of operating. We aim to discuss ESG issues in company meetings and emphasise their significance. Our funds participate in the General Meetings of our investee companies, in accordance with the principles of ownership steering.
Read more of our ownership policy here.
We use external asset managers to complement the scope of our investment activities. We choose responsible, financially sound and reliable partners whose investment philosophy is close with our own. We prefer companies that have signed the UN Principles for Responsible Investment.
Sp-Fund Management Company only invests in funds whose management company is located in a country party to OECD’s AEOI agreement, or the agreement on the automatic exchange of tax information, or in the case of the USA, to the FATCA agreement similar to the AEOI.
Climate change is one of the issues affecting our wellbeing. The risks related to climate change and new regulations might have significant economic impact on certain industries and geographically important areas.
We also consider the climate activities of our investments. We calculate carbon footprints of our funds in order to increase transparency of environmental and carbon risk.
Carbon footprints are one way of measure climate impact. We calculate semiannually the carbon footprints of our funds with direct equities and corporate bonds. We publish them if the coverage is over 50 per cent of the holdings.
You can read the carbon footprint report here.
Säästöpankki Ympäristö has a separate impact report, which you can read here.
Impact and thematic investing are coming more popular among responsible investing. Investors want more often choose funds that promotes also their values. Besides profits, an investor might want a positive, measurable impact of their investments. Few of the key areas are sustainable development and environmental solutions.
Säästöpankki Ympäristö is an impact fund that enhances the sustainable use of environment. The fund invests in companies and other that focus on climate change mitigation and environmental solutions. The fund reports quarterly on the positive environmental impacts of its investments.
One purpose of sustainable finance regulation is to reorientate capital flows towards a more sustainable economy. This will be achieved, for example, by fostering the transparency of financial products from a sustainability perspective.
Regulation (EU) 2019/2088 on sustainability‐related disclosures in the financial services sector (SFDR) defines sustainability risk as an environmental, social or governance event or condition that, if it occurs, could cause an actual or a potential material negative impact on the value of the investment.
At Savings Bank’s asset management, environmental, social and governance matters are incorporated into the investment analyses and decision-making processes. More detailed information about our responsible investment strategies and how we integrate sustainability risks in the investment decision‐making processes could be found at Principles of Responsible Investments and Ownership Policy.
The Sp-Fund Management Company Ltd will prepare policies and develop investment advice processes and support tools so that customers can make informed decisions on the environmental, social and administrative aspects of products and services after the legislation on investment advice in this regard is completed and available.
The Sp-Fund Management Company Ltd will prepare and announce due diligence policies of adverse sustainability impacts in its investment decisions-making processes and investment advice after the ESAs have developed regulatory technical standards on the content, methodologies and presentation of the needed information and they are available for use. We analyse adverse sustainability impacts and for example we exclude certain sectors or individual companies from our direct investments. We also publish different indicators of our funds like carbon intensity and we monitor how our investee companies follow international norms, i.e. the Global Compact.
The remuneration policy includes information on how the policies are consistent with the integration of sustainability risks. Renumeration must not conflict with responsibility and integration of sustainability risks. Remuneration currently includes sustainability risks, such as certain indicators of social factors.