Sustainability in our offering
Companies that actively manage the environmental, social and governance aspects of their business are more able to reduce risk and seize opportunities. We therefore work proactively to support our portfolio managers by integrating ESG (environmental, social and governance) factors in their investment decisions. In 2015, SEB strengthened the role of sustainability aspects in management of all major asset classes.
Exclude – negative screening
SEB excludes companies involved in production or marketing of controversial weapons and the development or production of nuclear weapons programmes.
Our sustainable and ethical funds do not invest in companies that do not align with international conventions and guidelines, such as UN Global Compact and the OECD Guidelines for Multinational Enterprises on environmental responsibility, labour rights, human rights, controversial weapons and corruption. Other sectors that are excluded are alcohol, weapons, tobacco and/or pornography. The funds also avoid companies with main revenues from commercial gambling.
Reduced coal exposure
From 1 July 2016, SEB excludes companies involved in thermal coal extraction, ie mining activities, where coal accounts for more than 20 per cent of the company's or group's turnover. SEB also increases the active management through dialogues with energy-related companies, where coal as an energy source exceeds 10 per cent. The decision is implemented for SEB's actively managed equity and fixed income funds, while index funds will implement this during the autumn 2016.
Include – positive selection
SEB is increasingly using positive selection in fund management, and actively include companies that perform well within environmental areas. In 2015, two funds with such approach were launched, SEB Sustainability Fund Global and SEB Sustainability Fund Sweden.
These funds have stricter exclusion criteria as no investments are made in companies directly involved in coal, gas and/or oil extraction. In addition to this, we add positive screening, companies that perform well in three specific environmental areas: carbon emissions, water consumption and toxic emissions. These companies will be over-represented across all funds and asset classes going forward.
SEB's ambition is to include sustainability factors and analysis in all investment processes.
External funds in our fund offering
Funds from suppliers other than SEB, external funds, are evaluated by a special fund analyst team. We require all new external fund management companies to have signed the UN Principles for Responsible Investment (UN PRI) or to follow an equivalent sustainability framework internally, and to exclude controversial weapons.
The companies we have had long-time relationships with, and that might not have signed PRI, we work actively to make them sign the principles and thereby commit to achieving certain internationally recognized standards in sustainability. In July 2016, 90 percent of these fund companies had signed the PRI. We also pursue an active dialogue with the fund companies whose funds invest in companies that SEB has on exclusion lists.
In 2016, SEB launched its fourth microfinance fund for institutional investors. SEB has in less than three years become the largest player in Europe. About 4.5 billion SEK has been invested through microfinance institutions reaching more than 17 million micro-entrepreneurs in 33 developing countries.
SEB is the only bank in the Nordic market that can offer institutional clients this type of investment. SEB's traditional life insurance companies invest in microfinance funds, which are thus made available to private pension customers.
Acting responsibly as an owner forms an important part of the mandate given by our customers. Therefore, it is essential that our portfolio companies manage the environmental, social and governance impact associated with their businesses. As a shareholder SEB aims to influence companies to improve their performance in environment, social issues and corporate governance. This is done primarily through dialogue, collaborations with other investors and voting at annual general meetings (AGM).
Overall we monitor a universe of more than 2,500 companies to identify the key issues for engagement. On the corporate governance side, we engage actively in AGMs as well as in nomination committees, with a particular focus on gender equality in boards and transparent yearly board evaluations. We regularly participate in some 30 nomination committees in Swedish companies where we are one of the largest shareholders.
We have direct and indirect dialogues with companies, and we are part of nominating committees in the companies in which we are relatively large owners. We also have direct dialogues with corporate management groups and boards of Swedish companies, where we often are among the largest owners. In 2016, we had discussions with portfolio companies around issues such as child labour and corruption. In total, we held over 450 dialogues, direct and indirect, with portfolio companies. If the dialogue with a company does not lead to a change after a reasonable period of time, we can consider excluding the company from its investments.
Through our involvement in the UN Principles for Responsible Investment (UN PRI) and CDP, which works with carbon disclosure, we collaborate with investors worldwide in order to influence our holdings.
Our key areas in 2016 as related to PRI and CDP are:
• Climate, with a focus on palm oil
• Climate, with a focus on carbon emissions from utilities companies
• Human rights in the extractive sector
• Human rights in regard to access to medicine
We also work with Hermes Equity Ownership Services, an international leader in dialogue with companies. Hermes EOS maintains ongoing, direct dialogue with the management and the board of the companies in which we invest. Working with other asset managers, under the leadership of Hermes EOS, enables us to be even more successful in conducting dialogue with companies outside Sweden.
SEB also participates in the local SIF's (Sustainable Investment Forum) in Sweden, Finland and Denmark, that brings together the forces working for and with sustainable investments locally.
Collaboration against corruption
Since 2010, SEB has via PRI been part of an international initiative on anti-corruption and has worked to influence companies where there is a lack of clarity regarding the company’s anti-corruption work. In one of the initiatives, which started in 2013, 34 investors engaged in dialogues with 32 companies in areas such as governance, policies and guidelines. In June 2015, when this round of dialogues had come to an end, 28 of the 32 companies had improved.