On this page, you can find product specific information for the fund on sustainability-related aspects. This information supplements the information in the prospectus.
You can read about the fund’s:
You can read about the fund’s:
NO SUSTAINABLE INVESTMENT OBJECTIVEThe fund promotes environmental or social characteristics, but does not have as its objective a sustainable investment.
ENVIRONMENTAL OR SOCIAL CHARACTERISTICS OF THE FUNDThe fund promotes the following environmental or social characteristics:
- sound sustainability practices
- sound environmental stewardship
- do not meet the fund’s enhanced sustainability standards
- are involved in non-ethical or controversial activities
- are involved in activities with significant negative climate impact
The fund seeks to influence issuers’ impact on sustainability matters through engagement on material sustainability topics.
INVESTMENT STRATEGYThe fund applies an actively managed strategy to promote its environmental and/or social characteristics:
“Sound sustainability practices” is attained by investing with the aim to have a better ESG score than that of the reference benchmark. The ESG score and hence the investment strategy takes into account environmental and social dimensions such as environmental capital, social capital and human capital augmented with traditional corporate governance factors.
“Sound environmental stewardship” is attained by investing with the aim to have a better carbon risk rating score than that of the reference benchmark as assessed through relevant climate parameters. Climate parameters weighted in this respect are climate targets, measures and strategies to reduce emissions.
“Enhanced sustainability standards” is integrated in the investment strategy by the exclusion of issuers that:
- are involved in activities, or with a conduct, leading to significant principal adverse impacts and/or as relevant significant harm on sustainable investment objectives
- otherwise express weak sustainability practices
- do not have minimum environmental or social safeguards
“Reduction of involvement in non-ethical and controversial activities” constitutes an ethical overlay to the environmental and/ or social characteristics otherwise promoted by the fund. Under this restriction issuers involved in tobacco and/or controversial weapons are excluded from the investment universe.
“Reduction of activities resulting in significant negative impact on the climate” means restricting investments in issuers involved in thermal coal, tar sands and peat-fired power-generation unless they have a credible transition plan.
“Investee companies’ impact on sustainability matters” is applied through an active engagement strategy. The fund hence commits to engage with companies on material sustainability topics.
MONITORING OF ENVIRONMENTAL OR SOCIAL CHARACTERISTICSA number of processes are in place to monitor the promotion of environmental and/or social characteristics of the fund.
First, the investment team managing the fund has access to a wide selection of ESG data and research through our ESG Data Platform that they use on an ongoing basis to assess new investments and monitor the underlying investments’ performance and management of the relevant sustainability indicators of the fund. Further information on the ESG Data Platform may be found under “Data Sources And Processes”.
In addition, the Danske Bank Investment Risk Team regularly challenges and monitors the extent to which the environmental and/or social characteristics are promoted through the sustainability risk challenger role. The sustainability risk challenger assesses to what degree the investment teams actively consider sustainability matters, address sustainability indicators, take principle adverse impacts into account and how all this affects the portfolio. More specifically, the sustainability risk challenger is tasked with:
- Challenging investment teams on how they meet a fund’s specific sustainability characteristics;
- Monitoring sustainability factors and challenging investment teams on their investment decisions with reference to sustainability aspects;
- Assessing the principal adverse impacts that investment decisions might have on societies;
- Including an evaluation of an investment strategy’s market risk and excess return from a sustainability perspective to ensure that sustainability is not used as justification for poor investment performance.
Moreover, the funds are screened daily to ensure that the applicable investment restrictions are adhered to. The Responsible Investment team in Danske Bank is responsible for maintaining restriction lists that set out the companies and issuers that the fund is not permitted to hold. As restrictions list are integrated into our trading and compliance systems, we can automatically detect whether the fund is holding a security that it, in accordance with the prospectus/investment guidelines is not permitted to hold.
For this fund, the processes that are detailed above are supplemented with the following measures to monitor the attainment of the environmental or social characteristics and the sustainability indicators:
"Sound sustainability practices": within the limitations of its investment objective, the fund aims to have a better ESG score performance of the portfolio than that of the reference benchmark.
"Sound environmental stewardship": within the limitations of its investment objective, the fund aims to have a better carbon risk rating of the portfolio than that of the benchmark.
"Enhanced sustainability standards": the fund excludes companies listed on this restriction list with the exemption of holdings equally captured by the exclusions under "reduction of activities resulting in significant negative impact on the climate". Such holdings can come into the portfolio, if sufficient evidence of a credible transition plan has been presented.
"Reduction of involvement in non-ethical and controversial activities": the fund excludes companies involved in tobacco or controversial weapons activities and sectors according to definitions and thresholds outlined in the Responsible Investment Instruction.
"Reduction of activities resulting in significant negative impact on the climate": the fund excludes companies involved in activities resulting in significant negative impact on the climate according to the definitions and thresholds outlined in the Responsible Investment Instruction followed by the fund, unless the company has a credible transition plan.
“Investee companies’ impact on sustainability matters”: the fund commits to engage on material sustainability topics.
METHODOLOGIESThe attainment of the environmental or social characteristics promoted by the fund are measured as followed:
"Sound sustainability practices" is measured by the fund’s proprietary ESG score.
"Sound environmental stewardship" is measured by a carbon risk rating score.
"Enhanced sustainability standards" is measured by the number of companies restricted as a result of this exclusion.
"Reduction of involvement in non-ethical and controversial activities" is measured by the number of companies restricted as a result of this exclusion.
"Reduction of activities resulting in significant negative impact on the climate" is measured by the number of companies restricted as a result of this exclusion.
“Investee companies’ impact on sustainability matters” is measured by the number of engagements and engagement themes.
DATA SOURCES AND PROCESSESIn order to assess promotion of the environmental and/or social characteristics, the investment team managing the fund leverages Danske Bank’s ESG Data Platform for data and research on the characteristics. Danske Bank’s ESG Data Platform consists of the following ESG data & research providers: CDP, ISS, MSCI, RepRisk, SASB, Sustainalytics, TruevalueLabs, Util, and Verisk Maplecroft. The various ESG data points, which the investment team have, available through our ESG Data Platform is published online: ‘ESG Data Platform’.
A description of indicators that may be used to measure the fund’s other environmental and/or social characteristics is provided below. The descriptions include the measures to ensure data quality, how the data is processed and the proportion of data that is estimated.
“Sound sustainability practices” is measured by the fund’s proprietary ESG score mScore (material ESG Score). This model calculates performance of companies in managing sustainability issues that are most likely to affect company value creation. mScore is essentially built on two key tenets. First, the model identifies those industry-specific sustainability issues that by evidence are most likely to impact companies' financial or operational performance, and focuses on measuring sustainability performance only against them. Materiality assessment of SASB is used as foundation to this assessment, with the addition of Corporate Governance factors. Second, the model calculates performance of companies using indicators from different sources mapped to the industry-specific material topics. With this complementary data approach, the model allows capturing different perspectives on material performance, both inside-out and outside-in factors. mScore model leverages the most researched and supported sustainability standards and high quality raw data from multiple sources to construct a transparent and credible assessment. The fundamental reason for development of in-house ESG score arises from the fact that ESG disclosure is not standardised and mostly on voluntary basis, meaning there is no universal definition of what constitutes to a set of characteristics of a sustainable company. As a result, different ESG service providers have developed different ESG assessment methodologies that correlate very little.
“Sound environmental stewardship” is measured by a carbon risk rating score. ISS carbon risk rating is used for this indicator and measure the climate-related performance of companies, taking into account not only industry-specific challenges and risk profiles, but also considers companies positive impact. Specially the Carbon Risk Rating considers; climate performance development of the company, climate targets, measures and strategies to reduce emissions as well as emissions along the entire value chain, from the procurement of raw materials to the disposal phase of products.
“Enhanced sustainability standards” is measured by the number of companies restricted as a result of this exclusion. “Enhanced Sustainability Standards” is a multidimensional characteristic imposing minimum standards/safeguards on the portfolio in terms of both environmental materiality as well as social materiality. By promoting enhanced sustainability standards, the relevant investment products commit to exclude companies and countries that a) are involved in activities, or with a conduct, leading to significant principal adverse impacts and/or as relevant significant harm on sustainable investment objectives b) otherwise express weak sustainability practices c) do not have minimum social safeguards. These exclusions are a result of assessments made under the proprietary screening model. The screening model is conducted four times a year where multiple data sources such as input from multiple ESG data providers (e.g. ISS, MSCI, Sustainalytics, RepRisk), Input from our investment teams (e.g. through company dialogues, investment analysis), Investors/Nordic institutions having conducted analysis (e.g. Norge Bank Inv. Mgmt. Etikrådet, ATP) as well as Other relevant sources and stakeholders (e.g. NGOs, Academia).
“Reduction of involvement in non-ethical and controversial activities” is measured by the number of companies restricted as a result of this exclusion. “Reduction of involvement in Non-Ethical & controversial activities” constitute an ethical overlay to the environmental and/or social characteristics otherwise promoted by the investment product as per this framework. The reduction of involvement in Non-Ethical and controversial activities applies binding investment restrictions that exclude companies involved in involved in tobacco and controversial weapons as further governed by the Responsible Investment Instruction. For certain funds the exclusions are expanded to cover other types of Non-Ethical & controversial exposures (e.g. Alcohol, Gambling, Military Equipment). Data is provided primarily by ISS ESG, MSCI and Sustaianalytics.
“Reduction of activities resulting in significant negative impact on the climate” is measured by the number of companies restricted as a result of this exclusion. “Reduction of activities resulting in significant negative on impact on the climate” promotes environmental sustainability factors means restricting investments in companies involved in thermal coal, tar sands and peat-fired power-generation unless they have a credible transition plan. For certain funds the exclusions are expanded to cover other types of activities resulting in significant negative on impact on the climate (e.g. Fossil Fuels). Data is provided primarily by ISS ESG, MSCI and Sustainalytics.
“Investee companies’ impact on sustainability matters” is measured by the number of engagements, engagement themes and, where relevant to the investment strategy, the environmental and/or social proposals voted on. Engagements are mapped and logged by investment teams on a continuous basis and aggregated on a quarterly basis.
The Responsible Investment team is responsible for continuously assessing the indicators to ensure that the data contained therein meets the needs of the investment teams and to address any identified issues with data quality. Any new indicators are subject to an assessment against our robust ESG Data Provider Assessment Framework, to maintain the quality of the data. Models are also whenever relevant subject to model validation. Currently, Danske Bank Asset Management estimates no data for any indicator on the platform.
LIMITATIONS TO METHODOLOGIES AND DATAThere are vast amounts of sustainability data available to the management and monitoring of the fund, but the data landscape is characterized by a lack of consistent methodologies and limited transparency on how scores, indicators ratings are calculated for companies. These limitations in data are due to a number of factors, not in the least being that they, in part, a reflection of how sustainability data is produced.
As corporate sustainability disclosures remains largely voluntary, far from all companies issue reports covering their management or approach to addressing the sustainability-related aspects of their activities. Moreover, there is a lack of consensus on the scope and format of reporting and as such, companies that do report do not disclose information in a standardised or easily comparable format. This creates, in certain instance, limitations in relations to the attainment of environmental or social characteristics of the fund. Furthermore, in a bid to support investors in the their assessment of companies, a growing body of ESG data and rating agencies have emerged with their own proprietary scopes and methodologies, which in turn do not allow for comparisons to be made on environmental and/or social issues. In addition, issues emerge across regions and asset classes, small cap and emerging markets in particular, with regards to comprehensive coverage and the availability of quality data.
Various measures are taken to ensure that the attainment of the environmental and/or social characteristics are not affected by these known limitations. In recognition of the lack of consensus and standardisation, Danske Bank’s ESG Data Platform consists of credible sources that are assessed to provide relevant information on the material sustainability-related aspects of an investment. Nonetheless, as methodologies vary across the chosen vendors, information is, where relevant and necessary, validated by the investment teams through the review of corporate reports and engagement with the companies. Finally, to address the risk that arises from metrics being based on modelled rather than reported data, indicators that are used for the attainment of environmental and/or social characteristics, and are, to the extent possible, validated through our model validation framework.
Indicator Data Coverage
|Carbon Risk Rating:||56.1%|
DUE DILIGENCEIn addition to the outlined indicators, the investment teams review financial and sustainability information from multiple data sources (including but not limited to company reports and third-party investment research). Tools, knowledge, research, education and subject-matter expertise are provided to the investment team to support the due diligence processes. The strength of this bottom-up approach is a solid foundation of data, tools and resources that enables the investment teams to conduct due diligence and promote the environmental and/or social characteristics for the fund.
In addition, to the general principles on the integration of sustainability risks, the team will factor in material information to ensure that the attainment of the environmental and/or social characteristics. Sustainability-related aspects may then influence a decision to either buy or increase weighting, hold or maintain weighting, sell or decrease weighting, in order to promote the characteristics.
Sustainability related performance of companies or issuers and good governance practices are promoted through engagement with companies, collaboration with other investors and voting at general meetings. This enable the funds to address higher standards of corporate governance and sustainability within areas such as emissions, energy, biodiversity, water, waste, social and employee matters, human rights as well as anti-corruption.
Finally, screening and restrictions are used as a tool to identify companies that exhibit harmful environmental practices, by contributing, for example, to climate change, biodiversity loss or pollution, or companies that display inadequate social practices on human rights issues or labour standards.
Based on our assessment and company dialogue, we may from time to time decide to divest or restrict investments in a company, in a specific investment strategy or across multiple strategies in an effort to secure the attainment of the environmental and/or social characteristics.
ENGAGEMENT POLICIESThe investment teams engage on a regular basis with investee companies on material ESG matters to seek improvement in performance and processes in order to enhance and protect the value of our investments.
Reasons for Dialogue can be, but are not be limited to, the following:
- Inform about voting decisions and guidelines
- Clarify publicly disclosed information from company
- Conduct research
- Identify and assess quality of available data
- Understand performance and identify potential vulnerabilities
- Develop insights into risks and opportunities
- Identify potential regulatory developments and impacts
Each investment team is responsible for outlining which key ESG issues to engage on and which standards companies are expected to adhere to. This can be done both in a preventive manner, or reactive to address issues that may have already occurred.
The investment teams can interact with companies in different ways (i.e. letters, emails, one-to-one meetings, conferences, site visits, etc.) and with preferred company representatives (e.g., board, chairman, CEO, Investor Relations, Sustainability).
The investment teams must be aware of the risk that they may have obtained insider knowledge. As such, the investment teams follow Danske Bank’s Market Abuse Policy and Market Abuse Directive.
If an engagement is unsuccessful, the investment team can decide to escalate the engagement, or decide to either hold/maintain weighting, decrease weighting, or sell/divest.
DESIGNATED REFERENCE BENCHMARKThe fund applies the reference benchmark to determine if the fund has “sound sustainability practices” and “sound environmental stewardship” that outperform the reference benchmark.
The reference benchmark is a general market index, representing the investment universe, and is not consistent with the environmental and/or social characteristics promoted by the fund.