Three perspectives from three experts: Part 2: Why sustainability is so natural for us

Svein Aage Aanes, Head of Fixed Income

Although we have a strong global fixed income business, we are primarily focused on our local, Nordic markets, where we have a significant market share. We believe that we have a clear competitive advantage through long-term interaction with issuers and counterparties in the Norwegian and Nordic region. The Nordic fixed income markets have grown substantially over the past 10 years, both in terms of investment quality and high yield - and they now offer investors well-diversified financial centers with many opportunities to outperform. At the same time, the Nordic fixed income markets are somewhat less thoroughly analyzed, so we believe that there is an opportunity to create an information advantage for specialized asset managers.

DNB Asset Management takes a very active role in sustainability work. ESG is integrated into our portfolio management for all products and asset classes. We also offer a wide range of impact and enhanced ESG products. As Nordic companies are analysed in less detail than their major counterparts in the US and Europe, the ESG ratings from MSCI and/or Sustainalytics are lower for Norwegian and Nordic companies respectively. Therefore, we have decided to launch an internal program for company valuation. For this project we sent targeted sector-specific questionnaires to banks, utilities and real estate companies. We use the resulting assessments in the overall risk assessment of the specific companies and also as input for the dialog with individual banks and companies. In this manner, we work to improve transparency in ESG reporting and also support companies in improving their ESG policy as well as their ESG work in the dialog and in making clear the requirements we place on issuers in this regard.

Janicke Scheele, Head of Responsible Investments

The Scandinavian region has a long history of integrating corporate responsibility into society. DNB Asset Management has systematically worked with responsible investments for decades. In general, companies in the Nordics have a higher ESG score and have long had a strong focus on innovation, culture and integration of sustainability. At a global level, the Nordic countries have a society with a high degree of confidence in the various actors.

As Norway’s largest bank, DNB aims to promote sustainable value creation by integrating ESG aspects into all business operations. DNB’s overall sustainability goals are:

• DNB is a driving force for equality and diversity
• DNB Finances sustainable growth through loans and investments
• DNB combats financial crime and contributes to a safe digital economy
• DNB helps its customer manage their personal finances.

As an asset manager, our job is to generate returns for our clients. We do this whilst also ensuring that investments are sustainable and responsible. We believe that these are not mutually exclusive, as we believe that sustainable companies will perform better financially in the long term. Everyone who invests in our funds should have the assurance that we consider both financial and ESG risks and opportunities in everything we do.

Knut Hellandsvik, Head of Equities

Geographical differences in the industry have increasingly diminished in recent years thanks to technological progress. The covid-crisis has accelerated this process even further. Although generalizations should be treated with caution, I would argue that ESG has been part of our DNA for decades. However, I have the impression that many of our colleagues in the US and other parts of Europe are catching up in this area. Some of the companies in the Nordic region are considered leaders in terms of corporate governance. Last but not least, the region has produced some of the world's leading companies in areas such as renewable energy, waste handling and biofuels.

We are fundamentally convinced that companies with sustainable business models will outperform those that do not in the long term. When we invest, we try to assess how the particular company influences the world. At the same time, we aim to find out how the environment and its stakeholders affect this company. We try to predict how issues such as climate change, regulations and consumer preferences will affect this company in the future. An important part of our investment decision process are the different scenarios that we integrate into our financial models. Although we have a list of companies that we exclude because they are not meeting our sustainability criteria, we are increasingly looking for companies that are driving solutions to some of the world's most pressing problems. In doing so, we are using not least the United Nations Sustainable Development Goals (SDG) as a framework.