Active Ownership and ESG integration
Active ownership
Active ownership, through company engagements and voting, is undertaken to ensure that our investment universe is in compliance with DNB’s Instruction for Responsible Investments and to encourage companies’ development in a positive direction. Another way to influence companies in a positive manner, is by voting at general meetings.
Our company dialogue
Company dialogues may be undertaken to discuss specific ESG incidents (reactive), or to improve companies’ general performance with regards to ESG risks and opportunities (proactive).
As of 31.12.2022, we had engaged with companies on the following topics:
| Topic | Number of dialogues |
|---|---|
Climate change/greenhouse gas emissions | 53 |
| Water and oceans | 22 |
| Biodiversity including Deforestation | 30 |
Other environmental issues | 24 |
Human rights, child labour, labour rights, local communities/indigenous rights | 116 |
Other social issues | 15 |
Board structure and independence | 6 |
Remuneration | 8 |
Other governance issues (including tax and corruption) | 35 |
Total | 309 |
See more detail of examples of company dialogues in our annual and quarterly reporting.
Voting
Our voting guidelines state that we shall vote at all Norwegian general meetings for listed companies we have ownership in, and we have adopted a systematic approach to determining which global companies’ meetings we will vote at:
- Companies where we have a significant position
- The largest holdings in each active portfolio
- Strategically important items, and ESG-related topics
Voting will primarily happen by proxy, but we will physically attend shareholder meetings in certain cases. Our proxy voting service provider, ISS, facilitates the voting process by providing both standard voting analyses, and analyses based on our own voting guidelines. These resources are used to inform our voting decision between the RI team and our PMs. Reoccurring themes include remuneration, issuance of shares, Board structure, double roles (between the Board, management and Nomination Committee) and capital structure (including authorisations). We are also increasingly seeing credible shareholder proposals related to ESG themes, specifically in regards to climate-related disclosure. Other ESG topics include reporting on political lobbying, gender pay disparity and responsible tax practices.
In 2022, we voted at 1267 general meetings. See more information on how we have voted here.
Our long-term focus areas
To help guide our work and to inform the active ownership processes, we define long-term and shorter-term, thematic focus areas.
Our three long-term focus areas have been identified as areas of concern within responsible investments in the coming years and are inherently connected to various other key ESG challenges.
Achievements in 2022
Goals for 2023
Achievements in 2022
- Continued our engagement with companies operating in high-risk areas, including China, Belarus, and the Middle East and North African region.
- Participated in investor collaborations on paid sick leave and repercussions of the pandemic
- on workforce.
- Expanded our engagements with PRI and signed up as an early member of PRI Advance.
- Fully integrated emerging markets supply chain into the human rights area with particular focus on high-risk sectors such as textile, tech, and solar.
Goals for 2023
- Participate in PRI Advance.
- Develop country risk assessment tool to guide engagements with companies operating in high-risk markets.
- Further expand engagements on human and labour rights supply chain due diligence.
- Continue engagements with the investor collaboration KnowTheChain.
- Engage with technologies regarding ethical AI and disinformation on platforms.
- Utilise Global Child Forum data in company engagements on human rights.
Achievements in 2022
- DNB AM continued the collaborative engagement activities on TCFD with Norwegian companies. The ambition to encourage best in class practice regarding climate in Norway. In 2022, the scope of engagements expanded to include biodiversity.
- DNB AM joined a Finance Norway initiated group of financial institutions to develop a market standard regarding GHG reporting in lending and investment portfolios in Norway. This work continued throughout 2022 and will continue into 2023
Goals for 2023
- Continued active ownership with special focus on engaging the largest holdings in the most carbon intense sectors as well as the companies with the largest carbon footprint, regarding emission reduction and target setting, both in direct operations and in supply chains.
- Continue work as part of Finance Norway working group developing a market standard regarding GHG emissions reporting in lending and investment portfolios in Norway.
- Continued collaborations with investors groups for greater impact.
- Participate in Climate Action 100+ in the second phase in 2023.
- Increased reporting of DNB AM’s own emissions, and utilisation of forward-looking metrics in assessment of companies’ trajectories.
- Continue to investigate tools for forward-looking metrics and climate risk identification.
Achievements in 2022
- Engaged with companies such as H&M Group, Renewcell AB and Spinnova Oyj on water related issues for the textile industry.
- Participation in the Mining and Tailings Safety Initiative. The Initiative has been expanded to also cover biodiversity which is closely linked to the topic of water. The investor collaboration have developed engagement guides in 2022 and mapped further engagements for 2023.
- Engaged with companies through FAIRR working groups relating to meat sourcing and sustainable.
Goals for 2023
- Continued participation collaborative engagements such as FAIRR and the Mining and Tailings Safety Initiative.
- Engage with companies on the alignment to the ambitions of the Global Plastic Treaty coalition.
- Engage with companies in the food and agricultural sector on water related issues.
Achievements in 2022
- Extensive engagements conducted, both alone and in investor collaborations (FAIRR-four initiatives, Responsible Mining, Mining & Tailings Safety Initiative, the Investor Working Group for a Deforestation-free Automotive Industry).
- The Finance for Biodiversity Pledge, have been an active member of the initiative (especially regarding engagements and knowledge sharing).
- Joined the UNEP FI Sustainable Blue Economy Initiative.
- Became a partner of Partnership for Biodiversity Accounting Financials (PBAF).
- Nature Action 100: Intention to participate in the company engagements, the active part of the engagement will take place in 2023.
Goals for 2023
- Further progress on the commitments (goals, metrics, engagements, reporting, knowledge sharing) through the Finance for Biodiversity Pledge.
- Work to further integrate the reporting requirements and standards in line with best practice according to the TNFD framework.
- Participate in work groups and use PBAF as an aid in implementing the TNFD framework.
- Take active part in the company engagements organised through NA 100.
Our thematic engagement
In 2023, our engagement strategy prioritises the following shorter-term thematic engagements.
Achievements in 2022
Goals for 2023
Achievements in 2022
Systematic proactive engagements covering the following key sectors:
- Fishing and aquaculture (seafood)
- Offshore oil and gas
- Renewable marine energy
- Marine transport
- Biotechnology (marine)
- Land-based activities with significant influence on the oceans
- Impactful collaborative engagements with FAIRR (Sustainable Aquaculture, Biodiversity Loss from Waste & Pollution) as well as with other leading Norwegian institution.
- Joined the UNEP FI Sustainable Blue Economy Initiative.
Goals for 2023
- Continue the proactive engagements on sustainable oceans, focusing on key sectors including deep sea mining.
- Continue the cooperation with FAIRR (and other relevant collaborative engagements on ocean issues).
- Promoting a sustainable blue economy through the membership in the Sustainable Blue Economy Finance Initiative.
Achievements in 2022
- Continued impactful collaborative engagements with FAIRR (Sustainable Proteins, Animal Pharma and overuse of antibiotics and microbials).
- Impactful engagements with several global pharma companies made in collaboration with the Access to Medicine Foundation (ATM), related to access to antibiotics and other medicines in lower income areas.
- Continued the engagements around nutrition for younger people, collaborating with Access to Nutrition Initiative (ATNI) on marketing on baby formula and other related topics.
Goals for 2023
- Continue the relationship with the Access to Medicine Foundation and the proactive engagements, focusing on critical medicine development and distribution related to lower and middle-income areas.
- Further deepen our cooperation with FAIRR around Sustainable Proteins, Sustainable Aquaculture and Meat Sourcing (overlapping topics with Biodiversity), as well as around Animal Pharma and use of antibiotics.
Achievements in 2022
Topic was introduced in 2023.
Goals for 2023
- Engage companies on issues relating to employee retention and paid sick leave.
- Integrate DEI considerations into voting.
- Engage with technologies regarding ethical AI and disinformation on platforms.
- Utilise Global Child Forum data in company engagements on human rights.
ESG integration
We have close dialogue with our portfolio managers on ESG risks and opportunities.
Based on our screening and in-house research, we highlight potential ESG risks and opportunities to the portfolio managers in addition to alerts on controversial issues. Furthermore, we also provide inputs and recommendations about divesting or investing in securities.
ESG and CO2 data is incorporated into our portfolio management system and is available to all of investment professionals. Many of our portfolio managers use this data in their company risk assessments, financial modelling, and investment decision making in several of our actively managed funds. We have also developed a system for capturing changes in companies’ ESG scores and potential or realised breaches in international norms and standards. This information is sent to portfolio managers on a regular basis. Through this information, we aim to identify warning signals of potential larger incidents. This data may trigger further investigation and discussion with the RI team regarding potential risks and opportunities and the financial effect from this. These discussions may trigger actions such as further investigation, engagement in dialogue with the company, or impact on the investment decision.
The process for ESG integration is constantly evolving, and we aim to further develop the systematic financial modelling utilising material ESG factors.