Sustainabiliy Rating

Sustainability can influence companies’ long-term financial performance and it is therefore vital to have the necessary tools to integrate company-specific ESG risks and opportunities into the investment decision-making process.

Since 2012, Storebrand has developed and integrated a Sustainability Rating that provides ESG information to support investment decision-making by ranking companies’ ESG performance in operations, products and services. An ESG Risk Score is provided by our sustainability data provider Sustainalytics, while an ESG Opportunity Score is developed in-house based on several data sources. The ratings are based on companies’ alignment with financially relevant Sustainable Development Goals (SDGs).

Company Sustainability Ratings are systematically integrated into the investment processes used by our portfolio managers. They are applied across a range of investment analyses, including fundamental and trend research and portfolio optimisation on ESG factors.

The Sustainable Development Goals in investments

Since 2015, Storebrand has been actively working to integrate the SDGs into our investment analysis. We believe that they provide an overarching and forward-looking sustainability framework which represents both financial risks and opportunities. Specific Key Performance Indicators (KPIs) are developed to provide an ESG Opportunity Score for the prioritised SDGs.

Following Storebrand’s adoption of the SDGs as a guiding framework, we performed a materiality analysis to identify goals that were financially relevant to companies. The result of this research was a categorisation of the SDGs into three distinct levels: Risks and Opportunities in Core Business, Key Enablers and Fundamental Outcomes.

The first level, Risks and Opportunities, has the strongest link to companies' core business models through their products and services. The second level, Key Enablers, refers to goals that companies can influence through their operations. Fundamental Outcomes mainly address universal issues that fall under governmental responsibility. These goals are likely to be positively impacted if first and second level goals are achieved.

The sustainability rating consists of an ESG Risk Score and an SDG Score. It rewards investee companies that have low ESG risk through sound corporate governance and systems to manage environmental and social risks, for instance climate risk and water risk. The SDG score measure the extent to which companies contribute positively to the UNs Sustainable Development Goals (SDGs).

The sustainability rating enables ESG optimization to assist in stock selection processes in actively managed funds, and in index near funds to increase weights in the highly ranked companies and decrease weights in the laggards. The rating is available for portfolio managers of both actively managed and index near funds. Examples of systematic integration of the sustainability rating are found in the Storebrand Plus funds and the actively managed Global Solutions fund.