Active Ownership

DNB AM divides engagement activities into incident-based (reactive) engagements and proactive engagements. Information on all company engagements are shared with investment professionals in DNB AM through our internal database to inform investment decisions. Engagements may either take place directly with companies, through our external service provider for engagements, or in collaboration with other investors.

Reactive engagement takes place when a company is reported (allegedly or confirmed) to be in breach of the DNB Group Instruction for Responsible Investments. In general, incident-based engagement processes should aim to not exceed two years unless significant progress has been made to rectify the situation that has lead to the suspected breach of the Group Instruction.

To prioritize which reactive incidents to engage on, we assess:

• the severity of the suspected breach
• our ownership status in the company
• the probability that our engagement will have a positive impact on the situation.

The engagement process in a reactive engagement is considered successful if the following criteria are met:

→ the violation has ceased

→ the company has taken a responsible course of action

→ the company has taken a proactive and precautionary approach to improve its policies, routines, and practices to prevent future violations

→ the company’s action is verifiable (where relevant)

If the desired outcome of reactive engagement is not achieved, the engagement process will be evaluated and could be terminated if significant progress has not been made. Several points of action will be considered at such a point, amongst which is the renewal of the objectives for engagement, intensification of the engagement, targeted proxy voting, or the exclusion of the relevant company from DNB AM’s investment universe.

Proactive engagements are conducted with the aim of encouraging companies to mitigate sustainability risks before they materialize, or to take advantage of sustainability-linked opportunities that are not being sufficiently addressed at the present time. Proactive engagement may also be conducted as part of a fact-finding exercise and are important inputs to the investment decision-making process for the portfolio managers in DNB AM. The dialogues may revolve around a specific issue or to raise the company’s general level of awareness around sustainability issues, without the company being suspected of being in breach of the DNB Group Instruction for Responsible Investments.

For proactive engagements, the aim of our dialogue is continuous improvement, and the engagement periods may therefore be more flexible and long-term. To prioritize our proactive engagements, we assess:

- how large of a holding we have in the company

- if this is a company where we will have a large holding in the future

- if the company is a large holding in one of our actively managed funds