RI Annual Report 2023

Responsible Investments Report 2023

Advertising for profesional investors only Any investment decision in the sub-funds should be made on the basis of the current prospectus and the Key Information Document (KID) or the Key Investor Information Document (KIID) for UK investors.


Contents RI Annual Report 2023

3 5 5 6 7 8 9

ESG highlights

2023 at a glance

ESG highlights of the year

ESG Awards

Active in the global RI Community New investor initiatives 2023

Sustainability at Nordea

11 12 12 14 15 17 20 20 21 22 23 26 28 31 32 33 34

Our Responsible Investment approach

ESG Governance and Teams

Responsible Investment framework

Responsible Investment Strategies at NAM Focus on NAM’s Engagement Strategies

Active Ownership

Active Ownership


Active Ownership activities 2023 Thematic engagement focus areas

Engagement campaign: Methane engagement, 2023 update

Engaging on forever chemicals


Voting statistics Voting activities

Outlook 2024

Nordea Nordea is the largest financial services group in the Nordic region (approx. 10 million personal customers and 600,000 corporate customers1) and one of the biggest banks in Europe. We want to make a real difference – for our customers and for the communities in which we operate – by sharing our extensive expertise based on 200 years in the banking business. About Nordea Asset Management 2 Nordea Asset Management (NAM) is part of the Nordea Group. We are an active asset manager with a global business model, offering services to institutional clients in Europe, the Americas and Asia. We manage investments across the full spectrum of asset classes. Our third-party distribution franchise services a wide range of international fund distributors, including many of the leading global wealth managers. We distribute our products through banks, asset managers, independent financial advisors, insurance companies and family offices. Our client base is equally split between Nordea Group-related and external clients. With EUR 251bn (31 December 2023) in assets under management, we have been experiencing strong growth over the past decade. 1) As at 31.12.2023. 2) Nordea Asset Management it is the functional name of the asset management business conducted by the legal enti- ties Nordea Investment Funds S.A. and Nordea Investment Management AB and their branches and subsidiaries. Nordea Investment Funds S.A. is the management company and Nordea Investment Management AB is the investment manager of all funds belonging to NAM. Reference to companies or other investments mentioned should not be construed as a recommendation to the investor to buy or sell the same but is included for the purpose of illustration.

RI Annual Report 2023


Facing forward

The time is always right for responsible investment

2023 was a complicated year for asset managers. Global markets were subjected to persistent inflation, political turmoil and the effects of climate change. Many investors retreated into defensive positions and cash alternatives. However, as we begin a new year, I’m encouraged by what I see.

We put decarbonization into practice In keeping with our commitment to RI and investors’ prefer- ences, we have continued our efforts to help clients decarbon- ize their portfolios. In an effort to achieve real-world change, our Global Climate Engagement Strategy is taking a unique contrarian approach by engaging with companies often excluded by ESG enthusiasts. Many currently high emitting sectors will remain central to the world economy after the energy transition is completed. We therefore strive to push them towards green transition through firm and consistent engagement already now. Many investors are looking for broader-based portfolios that could help them achieve their decarbonisation goals. To meet this need, we have worked side-by-side with clients to inno- vate bespoke beta plus, credit and fundamental equity solu- tions that fulfil their carbon commitments. Decarbonising portfolios are high priority for many clients as they will need to make good on emissions reduction pledges – hence, we will continue this type of collaboration over the coming years.

The integration of ESG/sustainability into investment decisions is gaining momentum, driven both by regulatory activity and real-world concerns. Morningstar’s annual Voice of the Asset Owner Survey 2023 reported that “more than two thirds of asset owners (67%) believe ESG has become more material to investment policy in the past five years, with environmental factors driving materiality.”3 Responsible Investment is a long game. With issues such as cli- mate, biodiversity and human rights at the top of the agenda for authorities and conscientious investors, companies unable to live up to the rising level of due diligence required will be increas- ingly locked out of the world’s largest markets. While 2023 saw a handful of investors backtracking on their climate commit- ments, these were overwhelmingly dwarfed by the number of entities seeking to strengthen sustainability pledges.4 That is why in 2023 we remained focused on decarbonization, ramped up our engagement activities, expanded our diversity horizons and gained critical recognition for fighting the good fight.

3) Nearly 70% of Asset owners say ESG has grown more relevant to Investment process, Morningstar.com, 4 Oct 2023. 4) ESG trends in 2023, PwC.com.au.

RI Annual Report 2023


Our engagement efforts paid off Active ownership continues to be a strong focal point for us and last year, we saw the fruit of one particularly important engagement. After several months of engagement, Brazilian state-owned oil and gas giant Petrobras and US group EOG Resources joined the Oil and Gas Methane Partnership (OGMP) 2.0 in January 2023 – OGMP 2.0 is the gold standard in methane measurement, reporting and target setting. Our collaborative engagement focused on encouraging 15 companies in the oil and gas industry to join OGMP 2.0, identify actions being taken to reduce methane emissions and to share the cost/benefit analysis of those actions. Many of the compa- nies are now taking action to reduce methane emissions and are in dialogue with the OGMP 2.0 about membership. Our engagement was noticed by the industry and Environmental Finance Awards recognized us with the Global pollution reduc- tion initiative of the year. Last year, we conducted 1179 engagements on topics ranging from climate action to better sustainability reporting practices. At the end of the year, we considered more than 13.5% of these engagements to be resolved as companies met our expecta- tions. We also voted in 3700 general meetings. We were recognized by the industry Our commitment to ESG and the UN Sustainable Development Goals has brought recognition from across the industry. Funds Europe gave us the esteemed European ESG Manager of the Year award, Pensions Age recognized us as Active Manager of the Year, and ESG Investment Leader Awards gave us ESG Fund Manager of the Year, to name just a few.

We expanded our diversity parameters In 2023, we decided to expand the scope of our Global Diver- sity Engagement Strategy to reflect evolving changes in D & I (diversity and inclusion) that go beyond gender representation. Enhancing the investment focus translates into broader impact and allows us to place stronger emphasis on engagement with the aim of driving both alpha and social change. In 2023, NAM also committed to a new chapter of Diversity Project Europe (DPE), covering a larger geographical scope which will enable cross-border collaboration to help promote a diverse and inclusive European asset management industry. Kasper Elmgreen, CIO of Fixed Income & Equities, has taken a seat in the advisory council, a group responsible for defining the DPE’s strategy. We’re moving forward As the climate crisis continues, investors are hearing more buzzwords like climate metrics, temperature footprints, adaptation, Paris-alignment, etc. But it comes down to one thing: reducing emissions. Governments, the private sector and us as investors must reduce emissions. As an active manager, we set serious net zero targets to do that. We are committed to investing in companies with similar net zero targets and strive to provide solutions that investors are looking for. I invite you to read our RI Annual Report to find out more about our ongoing developments in Responsible Investment.

Nils Bolmstrand, CEO of Nordea Asset Management

ESG highlights


2023 at a glance

ESG Offering

Assets under Management


New reports in 2023

€ 251 bn total AuM 59% In RI solutions

249 Art. 8 funds 5 11 Art. 9 funds 5

2 Impact Reports 17 ESG Reports

ESG Capabilities

RIT & CGT resources



2 Corporate Governance Specialists 21 Dedicated ESG analysts 6

1179 Engagements

~3700 General meetings in 2023

49% E 23% S 28% G

ESG Leadership


Awards 7

Labels 9

37 International investor initiatives

15 ESG Awards won 24 ESG Awards shortlisted8

2 European ESG labels

Net Zero Targets

By 2025

By 2030

By 2050

80% of Top 200 constributors to

100% of Top 200 constributors to financed emissions to be Paris-aligned or engaged to become so 50% reduction of WACI 10 across listed aquity and corporate bonds

Net zero emissions across all assets under management

financed emissions to be Paris- aligned or engaged to become so Phase out investments in coal- related companies without plans to achieve a full exit from coal by 2040

5) According to European SFDR classification. 6) Data as of 31.03.2022. 7) More information on ESG awards on pages 5 – 6. 8)Nominated in 24 categories, excluding categories won. 9) More information on labels on page 19. 10) Weighted Average Carbon Intensity (tCO2e/USD million) measures a portfolio’s exposure to carbon intensive companies.

ESG highlights


ESG highlights of the year

In 2023, we remained focused on reinforcing our ESG credentials and capabilities. We ramped up our engagement activities by adhering to new collaborative initiatives and starting new campaigns. We continued to push forward real-world decarbonisation with our Global Climate Engagement Strategy and by developing new tools to support our research.

Playing our part in real world decarbonisation Investors are increasingly recognising that climate change is a global crisis that threatens the environment, and with it the future of our society and economy. In this sense, the last few years have seen important steps towards adopting climate policies that have a positive impact, with a view to achieving net zero emissions targets by 2050. At Nordea Asset Management, we do not believe we can achieve net zero purely by avoidance and exclusion. Climate change has been a strategic focus for us since becoming a sig- natory to the UN-supported Principles for Responsible Invest- ment (PRI) in 2007. 2022 was a landmark year for us, with the launch of the Nordea Global Climate Engagement Strategy, and in 2023, we continued our decarbonisation efforts. Expanding our capabilities The challenges of ESG did not deter our Responsible Invest- ment team, and in 2023, we worked to expand and develop our ESG tools for three asset classes: covered bonds, government bonds and labelled bonds. Our new methodology to assess sustainability among covered bonds allows us to bridge a gap in our clients’ needs, covered bonds being NAM’s largest asset pool, but also in the industry, as the sustainability assessment of these instruments is still at its early stages. Our Responsible Investment Team has also worked on meth- odologies to assess the sustainability of government bonds and labelled bonds.

Beyond this, in 2023, we made extensive progress in develop- ing a Forward Decarbonization tool that provides our invest- ment boutiques with a forward-looking view of the potential decarbonisation trajectory of any company in our investment universe. The aim of the tool is to inform the portfolio man- ager’s decision on whether further engagement or allocation actions need to be taken to meet the decarbonisation objec- tives of the strategy. Maintaining our ESG credentials We have over 35 years of experience in sustainable investing, and our expertise does not go unnoticed. In 2023 we renewed the PRI bi-annual assessment, and we are proud that we received the highest possible score of 5 stars in the Policy, Governance and Strategy (PGS) module. We are also proud to share that Nordea Asset Management is ranked 2nd among European brands in Social Responsibility and Sustainability11 and our Fundamental Equities Team has been awarded the highest possible overall rating of AAA by Scope Analysis. Our Responsible Investment Team and ESG products also received numerous awards, further highlighting our dedication to sus- tainability in our solutions12.

11) Broadridge, Fund Brand 50 2023, March 2023. 12) For more information, please refer ESG Awards.

ESG highlights


ESG Awards

Nordea Asset Management Awards

Active Manager of the Year in the Pensions Age Awards 2023. ESG Complete Product Range in the Scope Award 2023. ESG Fund Manager of the Year in the ESG Investment Leader Awards 2023. Best ESG Team Europe 2021 – 2023 in the Cfi.co Awards for our RI Team. Global pollution reduction initiative of the year in the Environmental Finance Sustainable Company Awards 2023 for our Methane Engagement Campaign.

ESG Products Awards ESG STARS Funds

For the Nordea 1 – Emerging Stars Bond Fund, Best ESG Investment Fund: Emerging Markets Debt in the ESG Investing Awards 2023 and Best ESG Investment Fund: Fixed Income in the ESG Investment Leader Awards 2023. In the Mountain View Fund Awards 2023, Equity Funds Sustainability Europe for the Nordea 1 – European Stars Equity Fund and Equity Funds Sustainability North America for the Nordea 1 – North American Stars Equity Fund.

For the Nordea 1 – Global Climate and Environment Fund, Equity Funds Sustainability Climate in the Mountain View Fund Awards 2023 and Best Impact Fund in the ESG Clarity Awards 2023. Best Sustainable Fund Launch in the Invest- ment Week Sustainable Investment Awards 2023 for the Nordea 1 – Global Climate Engagement Fund. Best ESG Invest- ment Fund: Green, Social & Sustainability Bonds in the ESG Investing Awards 2023 for the Nordea 1 – Global Green Bond Fund. In the Environmental Finance Sustainable Investment Awards 2023, Social Fund of the Year for the Nordea 1 – Glob- al Impact Fund and Infrastructure Fund of the Year for the Nordea 1 – Global Sustainable Listed Real Assets Fund. Sustainable Thematic Funds

ESG highlights


Active in the global RI community

Contributing actively to industry-wide responsible investment discussions and promoting best practices across the investment community are key components of our ESG work.

Collaborative engagements We believe that joining forces with other investors in engag- ing with companies is an effective way to achieve successful engagement outcomes. While we also engage individually, we see collaborative engagements as an important part of our active ownership work. Engaging in this way allows us to share views with other industry players, and to scale up the impact of our engagements. In 2023, we participated in 588 collab- orative engagements, leading 88 of those. The most common collaborations were related to Climate Action 100+, Corporate Human Rights Benchmark, and Oil & Gas Methane Partner- ship 2.0 (OGMP). 2023 was a good year for our collaborative engagements. We continued our Methane Engagement campaign, which we launched in 2022 and have been leading since then, have joined the steering committee of the Investor Initiative on Haz- ardous Chemicals (IIHC), and are leading three engagements related to PFAS use13.

Participating in investor initiatives is a way for us to exchange knowledge, shape the sustainable finance industry and to benchmark and develop our own ESG approach and frame- work. During 2023, we were active in 35 investor initiatives across a broad range of ESG topics. We were also active in several Sustainable Investment Forums (SIFs) around Europe, and participated in numerous engagements in collaboration with other investors. While these initiatives and collaborative actions are an extremely important part of our work, we see that our role and responsibility in the RI community extends beyond these initia- tives. We wish to engage with our stakeholders, to educate and to learn. We do this by participating in events and discussions, contributing to publications, engaging with our clients, and through academic collaboration. Academic Collaboration During 2023, the RI team has collaborated with Copenhagen Business School. Together with students of sustainability, our ESG experts worked on research within sustainable aviation fuel, CCUS technologies as well as debt-for-nature swaps. The work is part of an ongoing partnership with the university and includes guest lectures hosted held by selected RI team members. Policy support ESG regulations were a hot topic in 2023 and Nordea Asset Management contributed to several consultations. At the European level, we participated in the EU Commission’s dis- cussion on the ban of Per- and Polyfluorinated Substances (PFAS) and the discussions surrounding the latest develop- ments of the Taskforce on Nature-related Financial Disclo- sures (TNFD).

13) For more information on our Methane and PFAS engagements, please see our section on Engagements.

ESG highlights


New investor initiatives 2023

As a responsible investor, we actively participate in investor initiatives on various ESG topics. We are currently part of 37 initiatives, including 5 new initiatives that we joined during 2023.

New RI Initiatives Canada Climate Engagement (CEC) CDP Green Finance Accelerator (GFA) Diversity Project Europe Investor Initiative on Hazardous Chemicals (IIHC) Nature Action 100 Investor Statements Global Financial Institutions Statement to Governments on Deep Seabed Mining Comment letter to the United States Environmental Protection Authority Letter to the UK Prime Minister from the CEOs of IIGCC, PRI and UKSIF

Canada Climate Engagement (CEC) Climate Engagement Canada (CEC) is a collaborative engage- ment initiative targeting the country's heaviest emitters. It is co- ordinated by Canada's Responsible Investment Association, the Shareholder Association for Research and Education (Share) and Ceres. Nordea Asset Management joined CEC in 2023 as the first international supporter. CDP Green Finance Accelerator (GFA) NAM is a signatory for the CDP Green Finance Accelerator, an initiative designed to drive greater climate and environment- related data reporting from companies. The greater transpar- ency that results will assist investors in focusing their invest- ments and meeting the reporting requirements of the EU’s ESG regulations, which are ultimately aimed at directing capital towards greener investment. Diversity Project Europe Since 2021 NAM has been a part of Diversity Project UK which is a cross-company initiative championing a truly diverse, equitable and inclusive UK investment and savings industry. In 2023, NAM has committed to a new chapter of the project, Diversity Project Europe, which has a larger geographical scope to enable cross-border collaboration and to help pro- mote a diverse and inclusive European asset management industry. The project is a non-profit organisation structured

with a board, advisory council and steering group. Kasper Elmgreen, CIO of Fixed Income & Equities, has taken a seat in the advisory council, the group responsible for defining and setting out the strategy of the project.

Investor Initiative on Hazardous Chemicals (IIHC) In 2023 NAM joined the Investor Initiative on Hazardous Chemicals (IIHC), an investor-led initiative that encourages chemical companies to increase transparency and stop the production of persistent chemicals. The aim of the IIHC is to reduce adverse impacts from hazardous chemicals and there- by exposure to the financial risks to which they are linked. Cecilia Fryklöf, our Active Ownership head, is member of the Steering Committee of the Investor Initiative on Hazardous Chemicals (IIHC – supported by ChemSec). Nature Action 100 In 2023, NAM joined more than 200 institutional investors – representing USD 26.6 trillion in assets under management – in Nature Action 100, a-n investor group focusing on compa- nies “systematically important” to reverse nature and biodiver- sity loss. The initiative has entered its engagement phase, and we participated in the letter that was sent to 100 companies that have been identified as critical for biodiversity protection and restoration.

ESG highlights


A few investor statements signed in 2023

Letter to the UK Prime Minister from the CEOs of IIGCC, PRI and UKSIF CEOs of IIGCC, Principles for Responsible Investment, and UK Sustainable Investment and Finance Association, sent a letter to UK Prime Minister, Rishi Sunak, following his announce- ment that the British government would water down key net zero policies. The letter signals deep concern with the recent proposals to ‘backtrack on vital policy measures that support the UK’s transition to net zero’. The letter was supported by 32 investors and financial institutions.

Global Financial Institutions Statement to Governments on Deep Seabed Mining

This letter, signed by 36 signatories of the Finance for Biodi- versity Pledge representing over EUR 3.3 trillion of combined assets, urges governments to halt negotiations underway at the International Seabed Authority that could lead to a poten- tial start of deep seabed mining (DSM) in international waters. Comment letter to the United States Environmental Protection Authority The letter supported the Environmental Protection Agency’s (EPA’s) updated methane regulation for the oil and gas indus- try, the largest source of industrial methane emissions in the United States. The letter called for expanded leak monitoring, a phase out of polluting pneumatic devices, and additional restrictions on routine flaring. The final, strengthened regula- tion was published in December 2023.

Sustainability at Nordea


Sustainability at Nordea

Nordic values are an essential part of Nordea Asset Management’s business culture, guiding us in everything we do.

established objectives to reduce emissions across both our lending and investment portfolios as well as our internal opera- tions by the end of 2030. Nordea Group’s sustainability work is led by the Group Sustain- ability team. This includes everything from setting and meeting our internal sustainability targets, from resource usage to diversity, and also integrating sustainable considerations into the products and services across the Group. At NAM level, the Responsible Investment (RI) team carries out research on the integration of environmental, social, and governance (ESG) aspects into our investments. The two boxes below summarise some of our key sustainability metrics. More information about Nordea Group’s sustainability efforts can be found in Nordea’s Annual Report 2023.

Sustainability is embedded across Nordea’s business strategy, backed by measurable targets, strong governance, and a broad sustainability offering. Nordea Group has a long and solid experience within Sustainable Finance and we are fully com- mitted to – and actively working on – making the financial sec- tor more sustainable. As a leading Nordic bank, we have the capacity to support the transition to net zero – via our customer offerings, through our lending and investment decisions and by reducing the emis- sions from our internal operations and supply chain. Therefore our business objective is to achieve net-zero emissions across our value chain in terms of scope 1, 2 and 3 emissions by the end of 2050 at the latest. In addition to our net-zero commit- ment for 2050, we see interim targets as essential components of the global effort to limit warming to 1.5°C. We have therefore

Diversity and inclusion Age distribution in the total workforce

Carbon footprint from internal operations (2023) Nordea has committed to achieving net-zero carbon emissions by 2050 across investment portfolios and internal operations

Gender balance



Board of directors




Group Leadership Team




People leaders

CO2e emission intensity:

20372 Total CO2e emissions: tonnes



below 30 years old 30–50 years old above 50 years old


Total workforce



Nordea Asset Management

tonnes/EURm of total operating income



Source: Nordea Annual Report 2023, Nordea Investment Management AB.

Our Responsible Investment approach


Our Responsible Investment approach

ESG Governance and Teams

Responsible Investments team Our award-winning Responsible Investments (RI) team was established in 2009, and comprises 21 dedicated ESG analysts with a wide range of experience from academia, independent RI organisations and investment management. Besides work- ing closely with the investment boutiques managing ESG products and setting the framework for the development of new quantitative tools and data sources, The team carries out ESG research, active ownership activities, and represents NAM in international RI initiatives. We are continuously developing our RI approach in line with the increasing complexity, depth and scope of application of ESG methods, in order to maintain NAM’s leadership in the area. The team provides a broad RI coverage with a particular focus on our ESG STARS and the- matic strategies, working closely with their respective portfolio management teams. The RI team often participates in client meetings and ESG conferences to share its latest insights and findings. It also leads ESG training (e.g. climate workshops) both internally and for clients.

The RI team’s various functions and main responsibilities can be divided into four areas:

• The Active Ownership cluster is responsible for NAM’s engagement activities, as well as for driving the Respon- sible Investment Committee agenda and the RI Policy development. This group also works with the Corporate Governance team on proxy voting • The Climate cluster maintains focused expertise and analysis on climate change factors and policies, imple- mentation and reporting on TCFD recommendations • The ESG Products & Research cluster carries out com- pany specific ESG research and engagement for NAM’s ESG funds, as well as ESG product development • The ESG Quant cluster develops and maintains NAM’s proprietary ESG scoring tool, as well as other advanced applications of ESG data

Responsible Investments (RI) team

Head of RI Eric Pedersen

ESG Products & Research

ESG Quant


Active Ownership

Cecilia Fryklöf Head of Active Ownership

Rikke Berg Jacobsen Head of ESG Products and Research

Eric Pedersen Head of ESG Quant and Climate

Our Responsible Investment approach


ESG and Responsible Investment Committees Under the guidance of our ESG and Responsible Investment Committees, both chaired by NAM’s CEO, we have developed policies, procedures and investment products based on our RI beliefs. To support ESG investment guidelines, the ESG Committee owns and approves NAM’s Responsible Investment Policy (RI Policy), which also details the international conventions we sub- scribe to and what we require of the companies we invest in. The Responsible Investment Committee decides the appro­ priate action when a company is found to be in breach of our guidelines, which may be to exclude, quarantine and/or engage with the company, depending on the type of violation and our ability to influence the company.

Corporate Governance team Our Corporate Governance team actively engages with com­ panies in which the funds have significant ownership by voting at annual general meetings in accordance with the Corporate Governance Principles. The Corporate Governance team works in close collaboration with the RI team and our portfolio man­ agers to align the stewardship work especially on important ESG resolutions.

Katarina Hammar Head of Corporate Governance

Richard Torgerson Director of Corporate Governance

Responsible Investments Committee

• •

Quarterly meetings

Chair Asset Management CEO Nils Bolmstrand

Nordea Group Representatives

Urgent decisions (reacting to incidents and/or breaches) can be taken on same-day basis

Head of Institutional & Wholesale Distribution

Head of Responsible Investments

Head of Active Ownership

Head of Product Office

Communication & Media

Head of Equities & Fixed Income

Our Responsible Investment approach


Responsible Investment framework

At NAM, we believe it is our fiduciary duty to deliver returns with responsibility. Our commitment to be a responsible asset manager is not new. We launched our first sector-screened fund in 1988 and we were an early adopter of Responsible Investment (RI), signing the UN Principles for Responsible Investment (PRI) back in 2007. Responsible Investment Solutions now comprise over 70% of NAM’s AUM.

NAM has developed policies and procedures to ensure that the companies we invest in meet our expectations related to ESG performance, and that ESG and sustainability risks are managed in all our investment processes. These include both corporate-level RI approaches ("overlays") and product-specific approaches. NAM’s RI Policy defines our position on sectors that are linked to material ESG issues, going beyond the inter- national norms and conventions. This helps to ensure that the companies we are invested in meet our expectations of sound ESG performance. The policy describes the stance we take on

a number of areas within human rights, climate change, bio- diversity and good governance. Depending on the nature and gravity of individual cases, breaches can trigger engagement or exclusion. The RI Policy is publicly available on our website. Our corporate-level RI overlays include norms-based screening, active ownership activities and NAM-wide exclusions, as well as Sustainability Risk Integration. We also have product specific RI approaches that take a step further into enhancing ESG integration.

A comprehensive RI Framework including various forms of RI

NAM total AUM € 251.0 bn

Nordea Asset Management corporate level RI “overlays” applicable to all funds

All actively managed funds € 203.69 bn

Sustainability Risk Integration 15

Norms-based screening

Active Ownership

Corporate-level Exclusion List 14

ESG products Article 8 and 9 funds – according to SFDR classification

~ 59% of total AUM € 149.28 bn

ESG STARS strategies € 17.49 bn

Our Flagship ESG strategies

ESG thematic € 10.38 bn

23 ESG STARS Strategies16

9 ESG Thematic Strategies

Source: Nordea Investment Management AB. Data as at 29.12.2023. 14) Over 260 companies. NAM’s Exclusion List available here. 15) Integration of Sustainability Risks in the respective funds decision-making process. Every investment boutique has access to NAM's proprietary ESG Model and ESG analysis from the RI team and ESG data from external providers via our proprietary ESG data platform. 16) As of 10.10.2023.

Our Responsible Investment approach


Responsible Investment Strategies at NAM

NAM’s Responsible Investment flagship solutions include both our ESG STARS family and our ESG Thematic range. The ESG STARS strategies are about positive selection of quality companies with well managed ESG profiles that could generate long-term financial value, while the ESG Thematic strategies offer investors a focus on specific aspects of sustainability.

ESG STARS strategies – Tomorrow’s winners Our ESG STARS range is built on the belief that companies and issuers that integrate both ESG and financial metrics into their strategic decisions will be tomorrow’s winners. In these strategies, we aim to beat the benchmark through investing in companies or bonds that meet NAM’s ESG standards20. Every investment in our ESG STARS strategies is examined through both an ESG and a financial lens. Our ESG analysts work close- ly with the investment teams to identify material sustainability risks and opportunities relating to the companies’ medium- to long-term operational performance and market positioning, and the results of their analysis feed into proprietary ESG tools that are integrated into the investment process. Active ownership and engagement are an important part of the ESG STARS’ investment approach. Our RI team and investment boutiques operate in close collaboration to engage in produc-

Today we have around 250 funds that have additional ESG fil- ters and policies that go beyond our corporate overlays. These funds are classified as either Article 8 or 9 as per European Sustainable Finance Disclosure Regulation (SFDR). All our Article 8 and 9 funds consider PAI on sustainability factors as part of their investment processes. As a result, they are all eli- gible under MiFID II to be selected for clients with sustainability preferences. Going a step further, we have special ESG flagship strategies in the ESG STARS family and our ESG Thematic range. The ESG STARS funds follow an approach of full ESG integra- tion and positive selection, while the ESG Thematic strategies seek solutions to specific sustainability challenges, such as our Global Climate and Environment Strategy, one of the largest article 9 funds in Europe. Our credentials extend to international ESG labels such as LuxFLAG ESG Label17, Label ISR18 and the Towards Sustainability Label19.

17) LuxFLAG is an international and independent non-profit association and labelling agency. To promote sustainable investing in the financial industry, LuxFLAG awards an independent and transparent label to eligible investment vehicles in Microfinance, Environment, ESG (Environment, Social, Governance), Climate Finance and Green Bonds. The objective is to reassure investors that the labelled invest- ment vehicle invests in a responsible manner. The LuxFLAG ESG Label is valid for one year. Investors must not rely on LuxFLAG or the LuxFLAG Label with regard to investor protection issues and LuxFLAG cannot incur any liability related to financial performance or default. 18) Label ISR is created and supported by the French Finance Ministry. The label’s goal is to increase the visibility of SRI prod- ucts among savers in France and Europe. For more information on the Label ISR, visit www.lelabelisr.fr/en/what-sri-label/. 19) We have received recognition from the Belgian Central Labelling Agency in the form of “Towards Sustainability” label. The label was launched in 2019 and it aims to install trust and reassure potential investors that the financial product is managed with sustainability in mind and is not exposed to very unsustainable practices, without requiring of investors to do a detailed analysis themselves. For more information on the “Towards Sustainability” label, visit www.towardssustainability.be. 20) There can be no warranty that an investment objective, tar- geted returns and results of an investment structure is achieved. The value of your investment can go up and down, and you could lose some or all of your invested money.

Our Responsible Investment approach


The climate crisis is one of the greatest challenges of our time. But climate change has many faces, and it cannot be separated from social problems, which are often drivers of environmental issues. Significant economic, societal and institutional changes are needed to combat these challenges.

tive dialogues with many of our ESG STARS holdings. The ESG STARS range covers a wide scope of regions and asset classes. In 2023, we’ve extended the ESG STARS range with the Global High Yield Stars Bond Strategy. Sustainable Thematic solutions – Building a better future In addition to our ESG STARS family, we also offer investors strategies that focus on specific sustainability themes and align with the UN’s Sustainable Development Goals (SDGs), as a means to tackle the most pressing social and environmental challenges.

Our solutions aim to cover the whole-facets of these challenges:

Thematic Equity Solutions

Climate and Environment


Climate Engagement

Climate and Environment

Global Impact

Sustainable Listed Real Assets

Diversity Engagement

Social Empowerment

Social Solutions

Our Responsible Investment approach


Focus on NAM’s Engagement Strategies

In addition, the companies with better D&I practice have ac- cess to a wider talent pool and tend to make good use of it by increasing talent retention and lowering collective employee turnover. Subsequently, they are also able to enhance customer centricity which drives innovation throughout its business cycle. The Nordea Global Diversity Engagement Strategy is not lim- ited to investing only in the best-in-class companies in terms of D&I practices, but also seeks companies that are willing to improve. By engaging to generate the best “real” outcomes, we aim to maximise the potential of these D&I improvers. Our engagements are based on clear objectives and imple- ment different methodologies according to the upside poten- tial, which helps us to better guide and monitor the progress made by the companies.

During 2023, we formalised a new fund family: the Engage- ment strategies. This new angle to our RI activities is the product of a deep reflection on how we seek to maximise real world impact. We truly believe that engagement can sup- port companies transitioning to more sustainable business models. At the moment, our Engagement Family comprises of two strategies: the Nordea Global Climate Engage- ment Strategy , which supports higher-emitting companies in crucial industries on their sustainable transition, and the Nordea Global Diversity Engagement Strategy 21, which guides diversity laggards to become tomorrow’s diversity leaders. Widening our horizons: Nordea Global Diversity Engagement Strategy The Nordea Global Diversity Engagement Strategy is the new form of the Nordea Global Gender Diversity Strategy, which was launched in 2019. We initially focused on gender diver- sity as the UN’s Sustainable Development Goals (SDGs) have identified it as a foundation stone building a sustainable and prosperous world and we believe it brings positive externalities on other sustainability challenges defined by SDGs. In addition, its positive correlation to financial performance is backed by extensive research. (For instance, companies with at least 30% women in executive teams in US and UK have 48% more likeli- hood of financial outperformance22.) In 2023, we decided to broaden our focus to reflect Diversity and Inclusion (D&I), as this wider scope enhances positive im- pacts of gender diversity, whilst remaining loyal to our invest- ment process. Embracing D&I in business model broadens per- spectives that helps to reduce ‘group think’ and leads to better decision-making. In our view, the business case that illustrates positive correlation between companies with strong D&I prac- tices and financial performance remain strong. D&I is correlated with business performance • +36% likelihood of greater EBIT margin for top quartile companies in terms of executive team diversity23 • +38% share of revenue from innovative products and services24

Clear and differentiated themes to drive D&I improvements

Data Disclosures: gender and minorities, and inclusion metrics. Diversity in senior leadership: diversity in manage- ment, promotion and career development. Inclusion and gender pay gap: inclusive HR policies, elimination of pay gaps.

Nordea Global Climate Engagement Strategy: the year-update In 2022, Nordea’s ESG Thematic range was enhanced with the Global Climate Engagement Strategy. The strategy leverages the same successful and robust investment process and risk management framework as other strategies managed by the Fundamental Equities Team since 2008, while taking on cli- mate issues in a new investment universe. This strategy focuses on companies in sectors typically ne- glected by the market because of their less ‘good’ carbon emission profile, but which can play a crucial role in energy transition and where NAM’s team sees opportunities for real world decarbonization through a structured engagement ap- proach. Often they just need the right impetus and know-how to realize their ecological potential, to unlock hidden value potential and to attract investments.

21) With effect as of 31.08.2023 the sub-fund was renamed from Nordea 1 – Global Gender Diversity Fund to Nordea 1 – Global Diversity Engagement Fund. 22) McKinsey Company, Company,“Diversity Wins, How Inclusion Matters”. 23) McKinsey Company, Company, “Diver- sity Wins, How Inclusion Matters”. 24) BCG "The Mix That Matters: Innovation Through Diversity".

Our Responsible Investment approach


Overview of engagement activities 2023 (in terms of number of meetings)

Since the launch of the Nordea Global Climate Engagement Strategy in April 2022, we have engaged with all the portfolio companies, living up to the commitment that underlies our strategy. In 2023, this amounted to over 140 interactions with the companies. • Engaging to drive forward the necessary strategic and operational changes that will unlock companies’ potential • Generating alpha potential and curb real-world emissions Our goals with the Nordea Global Climate Engagement Strategy • Assessing companies with climate ambitions but facing meaningful fundamental risks in the transition to a sustainable economy • Investing in underappreciated opportunities which have an attractive valuation and the potential to become relevant in the low carbon future



Air and GHG emissions Natural resource management Sustainable business Model Environmental pollution Energy management




Source: Nordea Investment Management AB. Date: 29.12.2023.

Progress towards Net Zero-alignment (number of companies in each category)



Committed to aligning

Not aligned








Dec 23 Dec 22

Source: Nordea Investment Management AB. Date: 29.12.2023.

Our Responsible Investment approach


ESG STARS equity funds

Towards Sustainability Label25

Label ISR26

Nordea 1 – Asian Stars Equity Fund LU2152927971 (BP-USD) / LU2152928607 (BI-USD) Nordea 1 – Emerging Stars Equity Fund LU0602539602 (BP-USD) / LU0602539354 (BI-USD) Nordea 1 – Emerging Stars ex China Equity Fund LU2528868008 (BP-USD) / LU2528868263 (BI-USD) Nordea 1 – European Small and Mid Cap Stars Equity Fund

LU0417818407 (BP-EUR) / LU0417818316 (BI-EUR) Nordea 1 – European Stars Equity Fund LU1706106447 (BP-EUR) / LU1706108732 (BI-EUR) Nordea 1 – Global Stars Equity Fund LU0985320562 (BP-USD) / LU0985319804 (BI-USD) Nordea 1 – Nordic Stars Equity Fund LU1079987720 (BP-EUR) / LU1079987134 (BI-EUR) Nordea 1 – North American Stars Equity Fund LU0772958525 (BP-USD) / LU0772957808 (BI-USD)

ESG STARS fixed income funds

Nordea 1 – Emerging Stars Bond Fund LU1915689316 (BP-USD) / LU1915689829 (BI-USD) Nordea 1 – Emerging Stars Corporate Bond Fund LU2500359935 (BP-USD) / LU2500360271 (BI-USD) Nordea 1 – Emerging Stars Local Bond Fund LU1160612526 (BP-USD) / LU1160610405 (BI-USD) Nordea 1 – European Corporate Stars Bond Fund LU1927797156 (BP-EUR) / LU1927797586 (BI-EUR) Nordea 1 – European High Yield Stars Bond Fund LU1927798717 (BP-EUR) / LU1927799012 (BI-EUR) Nordea 1 – North American High Yield Stars Bond Fund

LU1937720214 (BP-USD) / LU1937720487 (BI-USD) Nordea 1 – US Corporate Stars Bond Fund LU1933824283 (BP-USD) / LU1933824366 (BI-USD)

ESG Thematic funds

Nordea 1 – Global Climate and Environment Fund LU0348926287 (BP-EUR) / LU0348927095 (BI-EUR) Nordea 1 – Global Impact Fund LU2355697216 (BI-USD) / LU2355687059 (BP-USD) Nordea 1 – Global Climate Engagement Fund LU2463526074 (BP-USD) / LU2463525423 (BI-USD) Nordea 1 – Global Diversity Engagement Fund LU1939215403 (BI-USD) / LU1939214778 (BP-USD) Nordea 1 – Green Bond Fund LU232791321 (BI-EUR) / LU2327920356 (BP-EUR) Nordea 1 – Social Bond Fund LU2555222723 (BI-EUR) / LU2555222566 (BP-EUR) Nordea 1 – Global Social Empowerment Fund LU2257592514 (BP-USD) / LU 2257592787 (BI-USD) Nordea 1 – Global Social Solutions Fund LU2527453273 (BP-EUR) / LU2527453430 (BI-EUR) Nordea 1 – Global Sustainable Listed Real Assets Fund LU2500361329 (BP-USD) / LU2500361675 (BI-USD)

25) We have received recognition from the Belgian Central Labelling Agency in the form of “Towards Sustainability” label. The label was launched in 2019 and it aims to install trust and reassure potential investors that the financial product is managed with sustainability in mind and is not exposed to very unsustainable practices, without requiring of investors to do a detailed analysis themselves. For more information on the “Towards Sustainability” label, visit www.towardssustainability.be. 26) Label ISR is created and supported by the French Finance Ministry. The label’s goal is to increase the visibility of SRI products among savers in France and Europe. For more infor- mation on the Label ISR, visit https://www.lelabelisr.fr/en/what-sri-label/.

Active Ownership


Active Ownership

Being an active owner is central to the integration of ESG in our Responsible Investment approach. Our active ownership activities span all of our products.

We believe that active ownership is a powerful way to protect shareholder value, enhance long-term returns and foster posi- tive change27. We are convinced that ensuring good ESG prac- tices in our funds’ holdings is an important part of safeguard- ing the long-term interests of shareholders and society. When we want to improve a company’s management of its ESG risks, we exercise our ownership right to support and influence the company.

Whist we are prepared to exclude companies when deemed necessary, our experience proves that active ownership is often a more effective tool to improve ESG performance, manage risk and identify opportunities. Our active ownership efforts include engagement, proxy voting, attending annual general meetings and contributing to the development of industry environmental, social and governance (ESG) standards.

27) There can be no warranty that an investment objective, targeted returns and results of an investment structure is achieved. The value of your investment can go up and down, and you could lose some or all of your invested money.

Active Ownership



We believe that improved management of sustainability risks and opportunities is vital to creating returns with responsibility, and that engagement can result in competitive advantage, increasing the likelihood of companies being successful in the long run – benefitting companies, clients and society at large.28

Engaging with our investee companies enables us to address material sustainability risks and opportunities.

international norms or conventions or those involved in ESG- related incidents. Significant deviation from the relevant peer universe on PAI metrics may also trigger engagement. 3. Thematic engagement This type of engagement is initiated for investee companies with the most material exposure to one or several of our four focus areas: • Biodiversity • Climate • Good governance • Human rights 4. Political engagement We may participate in activities that can be considered as political engagement, including public policy dialogues with governments as well as public authorities on specific ESG issues, through feedback on regulations and expressing support to policy makers through public endorsement in investor statements. These type of activities are subject to careful consideration and diligence. We always assess the appropriateness of an activity that could be considered as political, before we decide to enter into it, and always assess the potential impact of such activity. Our activities focus solely on ESG issues, and do not intend to favour any specific political party or ideology. We believe that our participation in politi- cal activities can contribute to long-term value creation and have a positive impact on society. Each theme is closely aligned with the SDGs and relevant ESG risks and has been selected and defined through close collabo- ration between ESG specialists, portfolio managers, financial analysts and clients. In addition to engagements with compa- nies, we are increasing our work in the sovereign engagement sphere. All of our engagements are tracked in our in-house database and reviewed by the RI team to monitor progress.

Our engagement activities combine the perspectives of portfo- lio managers, financial analysts and ESG specialists to form a holistic opinion and establish coherent engagement objectives. Portfolio managers actively participate in engagement activi- ties together with our ESG analysts. Engagements often run over several years and are carried out either by NAM alone or in collaboration with other institutional investors. During the engagement period, we conduct regular meetings with the company and track progress against pre-defined engagement objectives. Engagement may entail a dialogue with the companies’ executive bodies, influence on board composition, cooperation with other investors on joint voting at annual general meetings, and generally keeping a strict eye on the company. The dialogue allows us to put forward our expec- tations on corporate behaviour and to support companies in enhancing their sustainability performance. Progress reports and outcomes of the engagement are communicated to port- folio managers and financial analysts, allowing the information to be considered in investment decisions. In cases where an engagement relates to critical issues for the specific investment case or the general investibility of a company, failure to meet expectations will entail escalation of the issue through other stewardship activities, such as voting, and ultimately the con- sideration of quarantine or divestment.

Our engagement activities typically fall into one or more of four categories:

1. Investment-led engagement This relates to material ESG-related risks or opportunities identified by portfolio managers, financial analysts and ESG analysts via our company assessments.

2. Norms- and incident-based engagement (including PAI): These engagements cover companies that are in breach of

NAM’s engagement activities are carried out on behalf of all our funds, and follow this process:

Research and engagement dialogues/meetings

Engagement selection

Engagement plan with objective

Report progress or escalate

28) There can be no warranty that an investment objective, targeted returns and results of an investment structure is achieved. The value of your investment can go up and down, and you could lose some or all of your invested money.

Page 1 Page 2 Page 3 Page 4 Page 5 Page 6 Page 7 Page 8 Page 9 Page 10 Page 11 Page 12 Page 13 Page 14 Page 15 Page 16 Page 17 Page 18 Page 19 Page 20 Page 21 Page 22 Page 23 Page 24 Page 25 Page 26 Page 27 Page 28 Page 29 Page 30 Page 31 Page 32 Page 33 Page 34 Page 35 Page 36 Page 37 Page 38 Page 39 Page 40 Page 41 Page 42 Page 43 Page 44 Page 45 Page 46

Made with FlippingBook interactive PDF creator