Our Responsible Investment approach
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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".
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