Responsible and active ownership

SEB is one of the largest institutional investors in the Nordic region, investing in companies worldwide on behalf of private, corporate and institutional clients. Our clients expect us, in our role as shareholders in companies, to act responsibly. This is why it's essential for the companies we invest in to responsibly manage any environmental, social and governance impact that they may be associated with through their business activities.

We believe that companies who actively manage the environmental, social and governance aspects of their business activities are better positioned to reduce risk and take advantage of opportunities. As a large institutional investor, we aim to work with companies to create value in the long-term.

Influencing through dialogue and collaboration

As a shareholder, we at SEB work to influence the companies in which we invest in order to improve their performance in environment, social issues and corporate governance. We do this primarily through dialogue, collaborating with other investors and voting at annual general meetings (AGM). If our dialogue with a company does not lead to a change after a reasonable period of time, SEB can consider excluding the company from its investments.

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 on boards and transparent yearly board evaluations. We regularly participate in 30 nomination committees in Swedish companies where we are among the largest shareholders.

Through our involvement in the UN Principles for Responsible Investment (PRI) and CDP, which works with carbon disclosure, we collaborate with investors worldwide. 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.

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 European utilities companies
  • Human rights in the extractive sector
  • Human rights in regard to access to medicine in developing countries

SEB also participates in Sustainable Investment Forum (SIF) in Sweden, Finland and Denmark, which brings together the organisations working for and with sustainable investments locally.

Systematic screening of companies

SEB’s processes for responsible investments are supported by a systematic screening of Swedish and international companies. This systematic screening aims to detect violations of international conventions and guidelines on environmental responsibility, labour rights, human rights, controversial weapons and corruption. Examples of international conventions and guidelines we follow are the UN Global Compact (unglobalcompact.org) and the OECD Guidelines for Multinational Enterprises (oecd.org).

SEB's ethical and sustainability funds invest only in companies that follow international conventions and guidelines. If a company we invest in is implicated for violating these guidelines, we initiate an active dialogue with the company to influence them to change and improve their sustainability work. If, after a reasonable period of time, the company fails to meet these standards, SEB decides whether to exclude the company from its investments.

Controversial weapons

Some types of weapons are not in accordance with international conventions and guidelines. In 2009 SEB’s Council for Responsible Investment decided to exclude companies that manufacture and/or sell controversial weapons such as anti-personnel mines, cluster munitions, and chemical and biological weapons.

We exclude companies involved in, for example, the production or marketing of these types of weapons, from our equity funds and bond funds as well as several index funds that bear the name of SEB and are included in SEB’s fund offering.

The list of excluded companies is updated semi-annually. Below is a list of companies excluded as of 1 February 2017:

  • Aeroteh SA, Romania
  • Aryt Industries Ltd, Israel
  • General Dynamics Corp, USA
  • Hanwha Corp, Republic of Korea
  • L-3 Communications Holdings Inc., USA
  • Lockheed Martin Corp, USA
  • Motovilikhinskiye Zavody OAO, Russia
  • Orbital ATK Inc, USA
  • Poongsan Corp, Republic of Korea
  • Poongsan Holdings Corp, Republic of Korea
  • S&T Dynamics Co Ltd, Republic of Korea
  • S&T Holdings Co Ltd, Republic of Korea
  • Textron Inc., USA

Nuclear weapons

SEB decided during 2013 that companies involved in the development and production phase of nuclear weapons programmes would not be included as investments in active fixed income funds, equity funds and several index funds that bear the name of SEB and are included in SEB’s fund offering.

SEB believes that the use of nuclear weapons would cause great human suffering which would violate fundamental human rights, which is why we regard nuclear weapons as controversial weapons. Although some countries are allowed to hold and maintain nuclear weapons under the Non Proliferation Treaty of 1968, all treaty signatories have committed to disarmament.

The list of excluded companies is updated semi-annually. Below is a list of companies excluded as of 1 February 2017:

  • Airbus Group NV, France
  • Areva SA, France
  • Babcock International Group PLC, UK
  • BWX Technologies Inc., USA
  • BAE Systems PLC, UK
  • Boeing Co, United States
  • China Shipbuilding Industries, China
  • Cohort, UK
  • Constructions Industrielles de la Mediterranee, CNIM SA, France
  • Finmeccanica SpA, Italy
  • General Dynamics Corp, USA
  • Huntington Ingalls Industries Inc., US
  • Jacobs Engineering Group Inc., USA
  • Larsen & Toubro Ltd, India
  • Lockheed Martin Corp, USA
  • Northrop Grumman Corp, USA
  • Premier Explosives Ltd, India
  • Raytheon Aerospace & Defense, USA
  • Rolls Royce Holding PLC, UK
  • Safran SA, France
  • Thales SA, France
  • United Technologies Corp, US
  • Walchandnagar Industries Ltd, India

Thermal coal

SEB decided in 2016 not to invest in listed companies that derive more than 20 % of the turnover from the extraction of thermal coal.

The list of excluded companies is updated semi-annually. Below is a list of companies excluded as of 1 February 2017:

  • Adaro Energy PT, Indonesia
  • Alliance Resource , USA
  • Banpu, Thailand
  • China Coal Energy H, China
  • China Shenhua Energy H, China
  • Coal India, India
  • CONSOL Energy, USA
  • DMCI Holdings, Philippines
  • Exxaro Resources, South Africa
  • Indo Tambangraya Megah PT, Indonesia
  • Lubelski Wegiel Bogdanka, Poland
  • Semirara Mining & Power, Philippines
  • Tata Power Co, India
  • Yanzhou Coal Mining H, China

Companies in the following index, the MSCI All Countries World, SIX Nordic, OMX and VINX, are screened by SEB's external supplier of sustainability analysis, ISS-Ethix. Read more about how ISS-Ethix works.

To summarise, we apply a basic level of sustainability requirements to all our actively managed funds. This means we do not invest in companies active in controversial weapons, nuclear weapons and thermal coal, as described above. We aim to follow the same sustainability criteria for SEB's index funds and funds-of-funds as we follow for SEB’s other funds. However, different index fund may exclude different companies, depending on which external supplier provides the sustainability analysis. The process of excluding a company from an index fund can take some time. Most of SEB's fund-of-funds meet our sustainability criteria by investing in SEB funds or external funds selected by SEB. When our fund-of-funds invest in non-SEB funds, the external fund manager is required to sign the UN Principles for Responsible Investment or to follow an equivalent sustainability framework internally. SEB pursues an active dialogue with external fund management companies whose funds invest in companies that SEB has excluded.