The COVID-19 crisis has pushed social factors to the front of ESG discussions
In March DNB Asset Management published its 9th annual report on responsible investments. The 2020 report highlights a remarkable year in the financial markets which showed a mixed development with the COVID-19 pandemic looming as the key issue throughout the year. 2020 was also the year that responsible and sustainable investments truly became mainstream in the financial markets.
In 2020 the focus on Environmental, Social and Governance (ESG) issues, and particularly “green” technology/new energy, was evident in both fund flow and equity performance. Besides, COVID-19 seems to have accelerated existing ESG trends, such as increased focus on human rights as well as issues in emerging markets supply chains. Climate change has remained high on our agenda and so has the Task Force on Climate-Related Financial Disclosures (TCFD) recommendations. It was good to see that the upcoming themes already was well reflected in our ongoing thematic focus areas.
In the annual report, we show our work within all our four pillars of responsible and sustainable investments: Standard setting, active ownership (through voting and dialogues), exclusions & risk management, and integrating material ESG risks and opportunities into investment processes and decisions.
Our standard setting work is important for defining clear expectations for sustainable corporate strategy and behaviour, and our series of expectations documents are often the starting point for our dialogues with companies. In 2020, DNB AM developed and published two new expectations documents. “Sustainable Oceans” mainly relates to salt water and ocean issues, while “Water” focuses on fresh water and land-based issues.
Active ownership encompasses both dialogues and voting and must be seen dependent upon each other. To leverage our engagements DNB AM often collaborates with other investors. In total, 229 reactive and proactive dialogues were conducted in 2020. We define goals and milestones for each engagement, and measure progress in terms of milestone development towards the final goal. In total, our engagements showed a progress of 168 milestones during 2020.
The coronavirus pandemic has catalysed an increased focus on social issues.
During 2020 we further increased our voting efforts, voting at 248 meetings on behalf of our clients. We also evaluate and vote on shareholder proposals related to ESG issues. Climate-related issues have remained at the centre of focus of these proposals, but the coronavirus pandemic has catalysed an increased focus on social issues. We voted at 30 meetings with shareholder resolutions on the agenda.