Frequently asked questions

What is Socially Responsible Investment (SRI)?
Socially Responsible Investment (SRI) is an investment strategy that aims for solid financial returns while at the same time taking into account companies' environmental and social performance.
The best performing companies are characterised by a high degree of transparency and a willingness to communicate openly on the environmental and social challenges they face. In addition these companies have well developed systems, clear goals and committed leaders who focus on continual improvement.
Storebrand is the company in Norway with the longest experience within SRI.

Why does Storebrand expect companies to meet environmental and Social standards?
Storebrand's vision is to be the leading and most respected institution in the Nordic market for long-term savings and insurance. Social responsibility is imbedded in Storebrand´s day to day work and is a pre-requisite for making our vision a reality.

Storebrand currently manages 54 billion euro, and it is this significant capital that is our best opportunity to influence companies. Our SRI work is therefore on of Storebrand´s most important focus areas.

Our financial management relies heavily on a long term perspective. Therefore an important aim is to contribute to sustainable development and a well functioning financial system. corruption, environmental damage, and abuses of human rights upset the stability of financial markets. Investing in companies that actively monitor environmental and social factors reduces the risk of negative surprises.

Do environmental and social standards result in lower financial returns?
The short answer is no. Storebrand has had an SRI policy for 15 years and our calculations show that environmental and social standards do not produce lower returns than similar products without such standards.

What is Pro-Active analysis?
Pro-active analysis is also called Pro-Active screening. Storebrand uses this method to identify companies that are industry leaders in environmental and social responsibility. Each pro-active analysis ranks all the companies in an industry according to a set of criteria. Criteria can include a company's policy methods and results in the areas of environmental and social management. The top ranking companies may be included in Storebrand's SRI funds.

The selection and weighting of criteria relates to the specific risks an industry is exposed to. Within the Textile industry for example, child labour is an important criteria.

What is Negative Screening?
Negative screening is also called Restrictive analysis or simply exclusion. This method is used to identify companies that Storebrand will not invest in. A company may be excluded for breaches of Storebrand's "Group Standard for Responsible Investments". We currently have companies excluded for, for example, the production of landmines, involvement in grand corruption and abuses of human rights.

What companies does Storebrand not invest in?
Storebrand's Group Standard for Responsible Investments covers all of our funds and portfolios where we directly control investment decisions. The standard states that we will avoid investing in companies involved in

• Serious human rights violations
• Grand corruption
• Serious climate and environmental damage
• The production of Cluster Munitions, Landmines, or Nuclear Weapons
• The production of tobacco

In addition we avoid companies who are among the 10% worst performances on environmental and social factors in high risk industries, and companies that take inadequate climate measures in high emissions industries.

The SRI funds Storebrand Pionér and Storebrand Global SRI have two additional criteria; Defence Contracts and Alchohol. These funds invest exclusively in companies that are industry leaders in environmental and social management.

What are "high risk" industries?
High risk industries are industries where there is a significant risk of environmental damage, corruption, and /or breaches of human rights and other established norms. Some examples of high risk industries are Oil and Gas, Pharmaceuticals, Shipping and Textiles.

What is Storebrand's Group Standard for Responsible Investments based on?
Our Group Standard is based on

• The UN Conventions on human rights
• International Labour Organisation (ILO) conventions
• OECD's Guidelines for Multinational Enterprises
• The Ottawa Convention on Anti-personel mines
• The Convention on Climate Change and the Kyoto Protocol

Norwegian People's Aid, Amnesty International and Transparency International have also been important contributers to the development of our Group Standard.

How does Storebrand decide which companies to exclude?
We use several methods to identify companies for exclusion. Our negative screening is based on an Internet search engine which continually monitors the companies Storebrand may invest in. The search engine filters 50 000 news articles daily. These articles are used as a starting point for further analysis.

Information is also gathered from companies' home pages and from NGO's like Amnesty and Transparency International. As a matter of course, companies are contacted by Storebrand so that they have the opportunity to present their own version of events. Through this contact companies often provide us with extra information on a case.

In addition to negative screening, companies are excluded on the basis of industry analyses (Pro-Active analysis). These industry analyses identify the best performing companies within a specific high risk industry (Best in Class companies), but also companies that perform poorly in relation to their industry peers. The 10% worst performers in each industry are excluded from investments at Storebrand.

 Why doesn´t Storebrand publish a "black list" of excluded companies.
The main aim of Storebrand's SRI work is not to exclude companies, but to influence them to work seriously on environmental and social issues. In our opinion the dialogue we have with companies is of better quality because of our decision not to publish black lists. This in turn increases our opportunity to influence companies in a positive way.

Can Storebrand as an investor influence companies?
There have been many examples which show that our role as investor puts us in an important position of influence. We are constantly engaged in dialogue with companies regarding their efforts on envronmental and social issues. Our experience has been that many companies, whether they are based in the USA, Japan or Norway, are willing to change their practices to meet our standards.

In many instances, it is easier for us to influence Norwegian companies, as it is more often here we are a large shareholder. Another factor that increases our influence is co-operation with other investors. If a group of investors is interested in the same topic, the pressure on a company is greater, and it is therefore far easier to affect change.

One example where Storebrand has contributed to improvement is Volkswagen. In December 2005, Storebrand made the decision to exclude Volkswagen from investments, due to a number of cases of corruption in many countries. The exclusion decision was based on the seriousness and widespread nature of the cases and the view that there was a high risk of such cases re-occuring.

We maintained a dialogue with Volkswagen's Investor Relations department throughout 2006 and closely followed the company's clean up and prevention efforts. In January 2006, Volkswagen introduced an ombudsman, internal procedures were tightened, and all external payments were required to be checked by two people.

Organisational changes were also made, resulting in responsibility for anti-corruption being shifted to a higher management level. Volkswagen communicated its anti-corruption stance to its employees through a range of channels and in October 2006 the company introduced guidelines for suppliers which included points on anti-corruption. At the same time a letter was sent to suppliers making it clear that Volkswagen was strongly opposed to corruption in it's operations.

Our opinion is that the initiatives mentioned above are sufficient to reduce the risk of corruption cases in the future. Therefore from January 2007 Volkswagen was re-included and again available for investment.

How serious does a case have to be for a company to be excluded on the grounds of human rights or corruption?
A company must be involved in serious breaches of human rights or "grand corruption". This means that in corruption cases the incidents must be systematic and indicate a culture of corruption within a company. In human rights cases the incidents must be serious and generally widespread. It is for example not enough for one employee to be discriminated against.

After the decision has been made to exclude a company, our fund managers are allowed one month to sell our holdings in the company.

 Child labour is often described as a "necessary evil". What is Storebrand's opinion?
Storebrand's focus in this issue is to work actively against the worst forms of child labour, ie. Labour that is harmful to a child's physical and mental development. However, not all work done by children should be classified as child labour that is to be targeted for elimination.

Children's or adolescents' participation in work that does not affect their schooling, health or personal development, is generally regarded as being positive. In many developing countries child labour is an integral part of both national and family economies. Therefore in instances where a company uses softer forms of child labour in its supply chain, we urge that company to work for improvement rather than cut ties with the supplier in question. A typical and important improvement may be that working children are also given the opportunity to attend school during a working day without their salaries being docked.