NORDEA ASSET MANAGEMENT
Engagement guided by SASB Materiality Map
competitive advantage, increasing the likelihood of the companies being successful in the long run – benefitting companies, clients and society at large. Engaging with our investee companies enables us to address material sustainability risks and opportunities and provides us with the possibility to contribute to real world impact. The dialogue allows us to put forward our expectations on corporate behaviour and to support companies in enhancing their sustainability performance. During the engagement period, we conduct regular meetings with the company and track progress against our pre-defined engagement objectives. As the engagement is conducted as a collaboration between the RI team and investment team, the outcomes have direct impact on the invest- ment decision. Progress reports and outcomes of the engagement are also communicated to clients. One of the companies we are engaging with in the Emerging Stars Equity Strategy is Samsung SDI. Introduction to Samsung SDI Samsung SDI is a South Korean company which spe- cializes in developing lithium ion battery technology. The company produces liquid crystal display (LCD) compo- nents and rechargeable batteries for cellular phones, electric vehicles, energy storage systems and solar panels. The company is well positioned to contribute to and benefit from decarbonisation, which is needed to combat climate change and the transition to a low carbon society. Samsung SDI is not only part of the electrification of the global car fleet, but can also help address one of the fundamental challenges with renewable energy: storage. Wind and solar energy creation is not always timed with the demand for energy. Samsung SDI’s energy storage systems can ensure that renewable energy is available when there is a demand for energy. Samsung SDI has an investible ESG score and NAM has engaged with the company since 2017. The engagement has been guided by the SASB Materiality Map, while we have used our knowledge of the company to focus on topics that we believe are most relevant for this specific company.
The following section gives a brief overview of the issues that the SASB Materiality Map identifies to be the most material for Samsung SDI’s industry. The company’s sus- tainability reporting is aligned with the recommendations set by the SASB Standards, which allows an easy review of the company’s performance. The issues identified by the SASB Materiality Map give a good direction for our engagements, but are not the sole drivers of our engage- ment topics. We use our knowledge about each company to tilt the engagement to aspects which we view as the most material for the specific company in question – while still keeping an alignment with the material issues identified by SASB. Samsung SDI published an index mapping the SASB Materiality Map to its 2020 Sustainability Report, which allows investors to easily assess its performance according to the Materiality Map. Product Security The SASB Materiality Map’s focus on the product secu- rity topic is mainly related to data security, as hardware products and related software offered by companies in the hardware industry can have vulnerabilities that expose consumers to data security threats. However, when we look at issues around Samsung’s products, our greater concern is product quality, so this is where NAM has specifically focused the product-related engagement with Samsung SDI. ISSUE: Quality control is a process where companies review the design and manufacturing of their products to ensure that the product quality is maintained or improved. In 2016, Samsung SDI delivered batteries for the Samsung Galaxy Note 7 phone which had a design fault that resulted in the phones overheating and com- busting. The incident ended up costing the client around USD 5bn in losses and lost sales. PERFORMANCE: In 2016, Samsung SDI enhanced its quality management by establishing a Quality Assurance department. Samsung SDI has now implemented a comprehensive quality management system which is certified in accordance with ISO9001 and IATF 16949.
4 | SASB STANDARDS INTEGRATION CASE STUDY
SASB.ORG/INVESTOR-USE
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