Sustainable Finance Disclosure Regulation (SFDR)

Sustainable Storebrand

Storebrand has been focusing on sustainable investments for over 25 years. We have sought to be in the forefront of sustainability, and this has been important in our strategies ever since. Therefore, we welcome the increased focus and standardization that will come as a result of the EU’s Green Deal.

Storebrand created a sustainability team back in 1995 and worked with this for 10 years before we became a founding member of UNPRI. In 2015 we created a new set of our sustainability funds: the Plus Fund Family and we have accelerated our focus ever since. After the Paris agreement and the creation of the Sustainable Development Goals we incorporated these into our analysis and sustainability ratings.

In 2018 we committed ourselves to phase out all coal investments by 2026 and in 2019 we implemented a new sustainable investments policy covering all the companies in the Storebrand Group. Furthermore, in 2020 we put into action our deforestation and climate policy, accelerating our phasing out of coal.

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EU Sustainable Finance Action Plan 

The European Union (EU) has adopted The Sustainable Finance Action Plan (SFAP) as part of its “European Green Deal”. The goal is to promote sustainable investment across and beyond the EU.  The SFAP will come into effect in several stages, starting in March 2021.The EU’s objective is for the union to be carbon neutral by 2050, and the SFAP is a key part of reaching this goal. For the financial sector there is a new Sustainable Finance Disclosure Regulation aiming to better classify and streamline the sustainability credentials of investment funds, and a new EU Taxonomy for classification of different economic activities. The taxonomy has six environmental objectives and will make it easier for investors to compare financial products promoting environmental characteristics.

The SFAP has three main objectives: 

1.
To reorient capital flows towards sustainable investment and away from sectors with high green house gas emissions
2.
To manage financial risks stemming from climate change, resource depletion, and environmental degradation
3.
To foster greater transparency and long-termism in financial and economic activity in order to achieve sustainable and inclusive growth

EU’s Sustainable Finance Action Plan are relevant for asset managers, pension funds, banks and insurers, among others. There will also be sustainability indicies developed for better benchmarking and comparability of investment strategies and funds.

EU Sustainable Finance Disclosure Regulation

The EU Sustainable Finance Disclosure Regulation (SFDR) is a new set of EU rules for increased comparability and reduced greenwashing among financial products. The regulation will increase the information available for investors about both the potential positive and negative impact of their investments and the related ESG risk.

The new disclosure regulation is, together with the above mentioned Sustainable Action Finance Plan a crucial part of the EU’s Sustainable Finance Framework and European Green Deal. The SFDR sets out strict criteria for the classification of funds that defines itself as sustainable. These criteria er described in the regulation’s Articles 6, 8 and 9.

  • Article 9 funds, also known as ‘products targeting sustainable investments’, covers products targeting bespoke sustainable investments and applies “… where a financial product has sustainable investment as its objective.”
  • Article 8 funds, also known as environmentally and socially promoting’, applies “… where a financial product promotes, among other characteristics, environmental or social characteristics, or a combination of those characteristics, provided that the companies in which the investments are made follow good governance practices.”
  • Article 6 covers funds that are not Article 8 or 9, however sustainability may still be part of the portfolio manager's process, e.g. by assessing the sustainability risk. Note that this category covers all other products and will as a consequence include everything from funds that report sustainability as not relevant to funds that have good integrations of sustainability – only not as defined by the SFDR (for example, an index fund that excludes the worst companies from an ESG perspective).

Sustainable Investments in the Storebrand Asset Management Group

Storebrand Asset Management (SAM) is a wholly owned subsidiary of Storebrand ASA listed on the Oslo Stock Exchange (ticker STB). The Storebrand Group has roots back to 1767 and is a leading player in the Nordic market for long-term savings, pensions, banking and insurance.

Storebrand Asset Management owns several asset managers, collectively forming an asset management group. All Storebrand Asset Management entities are bound by a framework, which consists of a comprehensive set of exclusion criteria (norm-based and product-based) and principles that the respective entities must adhere to in its investment process. Whilst this policy sets forth the overarching entity level descriptions, there might be specifications at brand level that are not captured. For more specific disclosure from the respective brand, please consult their websites. 

Investment Process Strategies

We fundamentally believe that investing in companies well positioned to deliver on the UN’s Sustainable Development Goals (SDGs), will deliver better risk-adjusted long-term returns for our clients. We see sustainability risk as an environmental, social or governance event or condition that, if it occurs, could cause an actual or potential material negative impact on the value of the investment.

Therefore, our investments are to contribute to the achievement of the SDGs, but without causing harm or having an adverse impact on society and the environment.

By combining different strategies, our investing approach focuses on both:

1.
Reducing the adverse sustainability impact our investments may cause
2.
Contributing to positive sustainability impact by allocating more investments in sustainability opportunities


1. Reducing adverse sustainability impact


Description of main adverse impact categories

Storebrand identifies, manages and reduces adverse sustainability impact in its portfolios by following, among others, the OECD Guidelines on Responsible Business Conduct for Institutional Investors. When assessing to what degree companies manage adverse impact, we are guided by the OECD Due Diligence Guidance for Responsible Business Conduct and the OECD Guidelines for Multinational Enterprises in addition to the UN Guiding Principles for Business and Human Rights.

Storebrand has been working with reducing adverse impact in its portfolios since the turn of the century and it has identified the following as main adverse sustainability impact categories that applied to all equity and debt portfolios:

  • Adverse impacts affecting the environment and climate such as: severe environmental damage; Green House Gas emissions; biodiversity loss; deforestation
  • Adverse impact affecting workers, communities and society such as: violations of basic workers' rights; forced labor; gender/diversity discrimination or indigenous rights violations
  • Adverse impact in connection with gross corruption and money laundering
  • Adverse impact in connection with controversial weapons (landmines, cluster munitions and nuclear weapons)
  • Adverse impact in connection with tobacco products

We have also identified some products as adverse impacts that we aim to avoid in some or all of our funds. Please see the product related descriptions.

Prioritizing and addressing adverse impact:

Storebrand addresses these adverse impacts by using several combined strategies that involve:

  • Screening and excluding companies that do not live up to Storebrand's investments standards based on international norms and conventions and/or companies that are involved in the production of certain unsustainable products.
  • Engaging with companies to discuss these adverse impacts with the aim to improve corporate behavior and thus reduce the adverse impact
  • Integrating sustainability risk ratings in financial decisions to avoid or invest less in companies with high sustainability risk and prioritize or invest more in companies with low sustainability risk

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2. Contributing to positive sustainability impact:

Storebrand's investments aim to contribute to the achievement of the Sustainable Development Goals and thus moving capital towards more sustainable companies while ensuring no harm to society and the environment.

There are several tools that assist us in integrating sustainability across a number of portfolios.

  • Sustainability Score
  • Solution Companies
  • Solutions Database
  • Green Bonds
  • Infrastructure


Sustainability in Financial Advisory

Sustainability is integrated in our investment advice by taking into account client preferences for sustainability and informing them about the risks associated with ESG. In order to construct a portfolio in line with client preferences we have applied a sustainability rating on all our mutual funds. The score is aggregated on fund level and combines a vast number of data on environmental, social and governance metrics.

Principal adverse impacts on sustainability factors are included in our investment advice by informing our clients about how we work with reducing these impacts in all our portfolios through the Storebrand Standard.


Sustainability in Remuneration

Integration of ESG in management is given special weight within the overall assessment, where compliance with Storebrand's ESG standards and policies is the minimum level within all management areas. Furthermore, emphasis is placed on the individual team and the individual employee's contribution to further development both in the form of improvements to Storebrand's standards, and in existing and new products.