Our Responsible Investment overlays
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• Tax: We recognise the importance of companies being accountable for and transparent about their tax practices. We expect our portfolio companies to have a tax policy that outlines the company’s approach to taxation and how it aligns with the overall business strategy. We also expect companies to have a robust tax governance and management framework in place, to pay taxes where eco- nomic value is created and to provide country-by-country reporting • Diversity: Diversity and inclusion has been a focus area in our active ownership activities for several years and we address these issues in a number of ways. We expect a board to include a strong presence of independent non- executives members and to be diversified on gender, expe- rience, age and other factors. A board should preferably have at least 40% of either gender. Being a member of a company’s nomination committee has proven to be an effi- cient way to engage our largest Nordic holdings on diver- sity and inclusion. On top of that, we engage with com- panies outside of the Nordic area, both independently as well as together with other investors. We’ve also pushed for better board and management diversity as well as other ESG topics related to initial public offerings (IPOs)
In our good governance focused active ownership activi- ties, we aim to promote sustainable profitability and sound management of ESG risks and other risk types in portfolio companies, in order to protect shareholder value and enhance long-term returns. We believe a sound corporate governance structure is essential for creating long-term shareholder value. The board of directors and senior management are account- able to investors for protecting and generating value over the long term. We expect the board of directors of investee compa- nies to oversee and monitor the effectiveness of the company’s governance of environmental, social and business ethics- related issues and risks and to protect shareholder rights. We engage with investee companies and use our vote on numer- ous issues, including shareholder rights, board composition, remuneration and risk management. As stated in our RI Policy, we expect companies affected by these governance-related risks to ensure that they report on how they manage the risks and impacts adequately: • Corruption: The evidence of a correlation between cor- rupt business practices and negative effects on long-term financial returns is growing. Corruption leads to signifi- cant business-related costs and market inefficiency and hinders economic, political and social development. We expect companies to take a proactive approach towards corruption and responsible payments and ensure that adequate measures are implemented and transparency is being elevated
Engaging on reporting aligned with SASB recommendations
We have been part of SASB Investor Advisory Group (IAG) since 2016, in order to engage and encourage companies to report in line with SASB recommendations and take steps towards a global sustainability reporting standard. We support SASB standards and believe that industry-specific standards, that are framed upon financial materiality, can improve inves- tors’ understanding of company performance on most material ESG issues.
The SASB IAG has set a target that 75% of S&P1200 should report in line with SASB by 2025.
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