Appendixes
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Additional information
How we handle conflict of interest In all our activities, we act in the best interests of our clients and we act honestly, fairly and professionally. We have a docu- mented Conflict of Interest policy, covering situations that may arise in the normal course of business, to which all employees are expected to adhere, on which they receive training and which is reviewed annually. The policy sets forth the organi- zational and administrative procedures to identify, prevent and manage Conflicts of Interest in order to ensure that the clients’ best interest is always considered and to prevent that clients’ interests are damaged by Conflict of Interest. A review of all identified potential Conflicts of Interests are conducted, at least, on a yearly basis to ensure that preventative measures are deemed sufficient to ensure clients’ best interest is not damaged. Where a conflict of interest is identified, it is record- ed in writing. Nordea also has internal rules and controls that prohibit employees from having external engagements that interfere with their ability to perform their duties and functions or undermine trust and confidence in Nordea. Third-party providers NIM provides proxy voting to clients who have authorized NIM to vote on their behalf as part of NIM’s portfolio management services subject to individually negotiated agreements with the clients. Corporate Governance: Use of proxy advisor For Nordea’s products we receive proxy-advisor research from both the Nordic Investor Service and the ISS for upcoming general meetings. This is, however, only one component of our voting decisions. We will also be informed by company report- ing, company engagements, engagements with stakeholders and the views of portfolio managers and analysts. It is impor- tant to stress that our own research is also integral to our final voting decision; this will be conducted by both our financial and ESG analysts. All voting decisions are made by Nordea; our external advisors only provide input and second opinions, when prompted. The ISS technical platform is used for execu- tion of proxy votes. We continually monitor our voting and make sure our voting record is updated on the Voting Portal. RI Team: External data providers The RI Team uses external providers for a number of purposes. All of Nordea’s products undergo annual portfolio screenings by ISS-ESG to identify companies that are in violation of inter- national norms regarding environmental protection, human rights, labour standards and business ethics. The RI team veri-
fies and evaluates all screening data provided by ISS-ESG. For market data and ESG ratings, we use Bloomberg, MSCI ESG/Carbon Delta, ISS ESG and Truevalue Labs. We source data from the following providers into our ESG platform: CDP, Impact-cubed, Verisk Maplecroft, RepRisk, as well as the SASB’s Industry Classification System. All of these sources provide complementary additional information for our ESG research process. Asset Management: Third-party managers All third-party asset managers who manage Nordea products must be PRI Signatories. In addition, the products they manage for Nordea must adhere to Nordea’s exclusion list. ESG-related questions are incorporated within the Request for Information (RFI) which is sent to all short-listed candidates as part of an external manager search. Our selection managers comment on ESG aspects for all short-listed candidates, and finally send a dedicated ESG questionnaire to the preferred candidate. We evaluate the completed questionnaire and give the candidates an ESG score (on a scale A-E). This score is reviewed annually as part of our standard process, but can also be done on an adhoc basis if we see a need for it.
Review and assurance of policies and procedures The RI policy and procedures are reviewed at least annually.
The regulatory requirements and the compliance risk related to “active ownership” are included in the compliance risk assess- ment performed annually and updated continuously. The out- come of the risk assessment forms the basis for the risk-based compliance monitoring program. Activities in the monitoring program are prioritized to ensure comprehensive monitoring of the compliance risk. Internal Audit prepares a risk-based audit plan that covers all activities and functions of NAM over a multi-year period (typi- cally three years), taking into account both the risks of a given activity or function of NAM, including its Branches and Sub- sidiaries, and the effectiveness of the organisation and internal control in place for that activity or function. In addition, PRI are performing an annual assessment on our fulfilment of the six principles of responsible investing. During 2021 our ESG STARS fund process was audited to receive the ESG4Real certification by the external organisation “RICERT International”. RICERT International will perform peri- odic audit on the processes and products to ensure compliance with the certification.
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