Engagement themes for Storebrand Asset Management 2021-2023

General Principles for Engagement

Storebrand's Risk and Ownership Team is in dialogue with a large number of companies each year, seeking to influence them to move in a more sustainable direction.

Creating shareholder value:

We believe that companies that are able to proactively manage sustainability risks, as well as adjust their strategies and business models to embrace sustainable solutions, will also create increased shareholder value over time. Thus, the shareholder value we offer our clients also encompasses environmental, social and governance value.

Aiming for a positive impact:

Ultimately, we aim for our investments to have a positive impact. We therefore do not only engage with companies to require them to redress wrongs (reactive engagement). We also engage to lift sustainability standards in a proactive way so as to address potential sustainability risks before they can become impacts, as well as to encourage good practices. Accordingly, we allocate more resources to these proactive engagements, engaging for long periods of time and, where possible, with other investors for more leverage and better results.

Nordic approach:

We are a Nordic actor. This means that we have more leverage in Nordic countries where we are more known and where our exposure can be high (size of holdings). We will prioritize our proactive engagement with Nordic companies, where our Nordic position and knowledge of these companies enables for constructive and meaningful dialogue that creates value both to these companies, to Storebrand, and our clients. This however does not limit us to engaging only with Nordic companies, as aspects such as the materiality of ESG risks, exposure, and the ability to have greater impact on ESG issues remain important factors for considered in the prioritization of our engagement work with companies outside of the Nordics.

Multi-stakeholder engagement:

We understand that many sustainability issues cannot be just solved by companies or investors alone, they require the involvement of other stakeholders. As a result, we engage with other stakeholder, such as governments, industry organisations, environmental and human rights organisations or labour unions. In particular, we consider policy level engagement an important factor in stimulating change since we believe regulation sometimes is required to advance many sustainability issues.

Targeted engagement

We engage companies on their sustainability practices, management of risks to people and the environment, developments in accordance with changing regulations, mitigating reputational risks, and expectations from their shareholders and society at large. In our experience, the best results are achieved through co-operation with other investors and when engaging individually, through targeted engagement with companies where our ownership level is highest.

Engagement Themes for 2021 – 2023

The Race to Net-Zero

Storebrand is committed to achieve net zero greenhouse gas emissions across all its assets under management by 2050. Storebrand was one of the founding members of the United Nations-convened Net-Zero Asset Owner Alliance. We also became a member of the Net Zero Asset Managers Initiative in 2021. Our long-term ambition is backed up by short-term strategies and by 2025 emissions for specific asset classes will be reduced by 32%.

We have designed an engagement approach to create an impact in the real economy and encourage companies to define and implement climate strategies align with the goals of the Paris Agreement and reaching net-zero emissions by 2050 or sooner. A special focus will be given to 20 emitters¹ generating amongst the most emissions in our portfolios. We will also continue to engage with a number of banks in order to understand their exposure to the fossil fuel industry. Our participation in the Climate Action 100+, The Institutional Investors Group on Climate Change (IIGCC) as well as the Principles for Responsible Investment (PRI), connects us with like-minded investors and offers platforms for collaborative engagement.

We expect investee companies to:
  • Implement a strong governance framework which clearly articulates the board’s accountability and oversight of climate change risk.
  • Take action to reduce greenhouse gas emissions across the value chain, consistent with the Paris Agreement’s goal of limiting global average temperature increase to well below two degrees Celsius above pre-industrial levels, aiming for 1.5 degrees.
  • Provide enhanced corporate disclosure in line with the final recommendations of the Task Force on Climate related Financial Disclosures (TCFD)
  • Support for effective measures across all areas of public policy that aim to mitigate climate change risks and limit temperature rise to 1,5 degrees Celsius. Storebrand will no longer invest in companies that deliberately and systematically lobby against the goals and targets enshrined in the Paris Agreement.
  • Support just transition by including workforce and community issues in climate-related engagement on corporate practices, scenarios and disclosures.

¹Norsk Hydro ASA, DFDS A/S, Yara International ASA, Elkem ASA, Angang Steel Co Ltd, Haci Omer Sabanci Holding AS, Wallenius Wilhelmsen ASA, Gazprom PJSC, Odfjell SE, Equinor ASA, Petroleo Brasileiro SA
Waste Management Inc, JFE Holdings Inc, Nippon Steel Corp, Lafargeholcim Ltd
Wilh Wilhelmsen Holding ASA, SSAB Svenskt Stal, Jiangxi Copper Co Ltd, LUKOIL PJSC, Euronav NV

Biodiversity and ecosystems

Nature underpins all economic activities. Businesses depend on it for direct inputs, such as water and materials. They also have an indirect dependence on it for production processes, such as through erosion control and flood protection. Protection and sustainable management of oceans, forests, wetlands and other sensitive ecosystems is essential to long-term social and economic stability. Environmental degradation puts at risk the capacity of nature to continue to generate the ecosystem services which businesses and society depend on. Failure to recognize business dependencies and impacts on nature exposes companies, and the financial institutions that invest in them, to ‘hidden’ risks.

We expect companies to mitigate impacts on biodiversity and ecosystems through commitments at the organisational level and respect international agreements such as the UN Convention on Biological Diversity. Companies depending on or impacting biodiversity and ecosystems should integrate relevant nature-related risks and opportunities into their corporate strategy, risk management and reporting. Reporting standards and principles in this area are still evolving, and once the Task Force on Nature-related Financial Disclosure (TNFD) has delivered a standardized reporting framework for biodiversity, we expect our investee companies to report in line with these recommendations.

We call on companies to demonstrate a commitment to halt the loss of biodiversity and degradation of ecosystems through taking the following steps:

  • Companies should have strong awareness and governance around nature-related risks and opportunities.
  • Companies should set biodiversity commitments and create action plans with short-, medium- and long-term targets, and disclose performance against these.
  • Companies should assess their direct and indirect dependencies and impacts on biodiversity and ecosystems and incorporate such assessments into their policies and business management.
  • Companies involved in value chains of commodities with deforestation risk should adopt no deforestation or no-conversion commitments.
  • Companies should adopt a precautionary approach where there is a risk of significant biodiversity and ecosystem impacts and disclose information at the appropriate level of detail on operations in or sourcing from environmentally vulnerable areas.

Resilient Supply Chains

Respect for labour rights in company supply chains has been an important engagement theme for Storebrand over the years. Building on this work, it will be make it our main focus theme for engagement within social issues in 2021 -2022.

After watching the devastating effects, the pandemic has had on millions of supply chain workers' health and their precarious working conditions, it is more important than ever to build more resilient supply chains. The pandemic has made all vulnerabilities in supply chains even more visible and it also gives us a better opportunity to discuss and address them with companies across different sectors.

We understand that many of the challenges in supply chains cannot be solved just by companies or investors alone and thus a multi-stakeholder approach is essential to make progress. For this reason, Storebrand is participating in different engagement initiatives that also adopt such an approach and cover different issues pertaining supply chains and involved different stakeholders, not just the companies.

For example, we are signatories and participate in engagements on forced labour, in general, based on data from Know-the-Chain in collaboration with the Investor Alliance for Human Rights. More specifically within this issue, we are also involved in engagements discussing the situation of Uighurs in the Xinxiang region in China. Within the Investor Alliance, Storebrand has also been engaging with companies on Covid-19 measures in the supply chain for over a year. In 2021, Storebrand joined the Platform for Living Wages Financials too to have more leverage on this issue by joining other investors and a more structured approach through research, methodology and dialogue with other stakeholders. Addressing living wages and helping to create the structures supporting them, not only has an effect on workers' health and working conditions in general, but it also allows for the eradication of other social issues such a poverty, child labour, forced labour and low-living standards. Last, disclosure on these issues is also extremely important for investors and therefore we support the Corporate Human Rights Benchmark initiative.

So far, Storebrand is engaging with companies within the garment, ICT, food and renewable sectors. We ask companies to carry out human rights due diligence in their supply chains and thus encourage them to:

  • Identify, assess, avoid and mitigate human right risks by implementing policies and practices in covering areas such as: Commitment and governance; traceability and risk assessment; purchasing practices; recruitment and worker engagement
  • Remediate for negative impact caused by implementation of remediation programs as an answer to their grievance mechanisms
  • Adopt a meaningful engagement with suppliers and other important stakeholders. For companies that share the same suppliers, collective dialogue can increase leverage, both with suppliers and with governments. Collaboration in multi-stakeholder initiatives, with labor unions, governments, industry association can be crucial to solve systemic risks and identify sector-wide solutions.
  • Disclose and report on efforts to address human rights risk across supply chains by using as guidance the UN Guiding Principles Reporting Framework and or initiatives based on them.

Corporate sustainability disclosure

As an investor with a high focus on sustainability, Storebrand believe that all companies should report on standardized and company specific sustainability metrics. This will benefit all stakeholders and increase transparency. The level of oversight and reporting on ESG-specific issues are good indicators of how a company measures and manages its exposure to sustainability risks. This is important to us as investors.

Increased reporting will improve the flow of sustainability information to investors and others alike. It will make sustainability reporting by companies more consistent, so that investors, banks and regulators can use comparable and reliable sustainability information. Companies based in the EU will be subject to regulations that streamlines and demand such reporting, but we will demand the same disclosure from publicly listed companies in all countries.

We believe that it is in everyone's interest that companies report on how sustainability issues affect their business, and how their own operations and products/services impact people and the environment.

Currently there are differing standards and few regulatory requirements on corporate sustainability disclosure, leading to non-comparable and insufficient information. This means that we as investors do not have a good enough overview of the sustainability risks our portfolio companies are exposed to. We need this information to be comparable and verifiable to channel our investments towards the most sustainable companies.

We will therefore highlight the importance of consistent, reliable and verifiable reporting on sustainability indicators in our dialogue with our portfolio companies in the period 2021-2022.

We expect our investee companies to:

  • Integrate sustainability risks and measurable targets into decision making process
  • Provide enhanced corporate disclosures in line with TCFD recommendations where applicable
  • Disclose their remuneration policies and packages for senior management and that these are aligned with the companies' sustainability targets
  • Report on diversity in the company, such as gender pay gap and diversity initiatives
  • Report on their commitments to adhere to international standards such as the UN Global Compact Principles or other similar frameworks.

A fund having performed well in the past is no guarantee for future returns. Other factors with an impact on how a fund may perform in the future include market developments, the fund manager's performance, the fund's risk profile, and management fees. When the shares a fund is invested in decline in value, it may lead to negative returns.