The year in review
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ESG highlights of the year
2021 was yet another year heavily impacted by the COVID-19 pandemic, but also a year highlighting the importance of addressing global social and environmental issues. While the world has been witnessing record flows into ESG funds, we at NAM have continued building on our long experience in Responsible Investment (RI) by further strengthening our ESG framework and offering.
A lot has happened in the world of ESG, and it has had an industry wide impact – affecting all asset managers including NAM. We see that our long experience in this space has given us a head start to tackle many of the ESG related issues, and as ESG remains as our strategic area of expertise and focus, our year has been filled with developments and recognition in this field. Regulation around ESG has been a hot topic during 2021, espe- cially for us in Europe who witnessed the Sustainable Finance Disclosure Regulation (SFDR) coming into force, bringing new disclosure requirements requiring asset managers to classify funds according to their ESG status. At NAM, we’ve taken a careful approach to the fund classification, building it on our long-standing RI Policy and Framework. Today we have around 230 funds that are classified as either Article 8 or 9 as per SFDR. While we soft closed our pioneering Global Climate and Envi- ronment Strategy due to its great success (largest Article 9 fund in Europe) 9 , we enhanced our ESG Thematic range with two new strategies; The Global Climate and Social Impact Strategy which aims to provide meaningful solutions to meet pressing social and environmental needs, and the Global Green Bond Strategy, becoming the first fixed income strategy within our ESG Thematic universe. Active ownership continues being a strong focus point for us. In early 2021 we launched an internal cross-departmental project to massively increase voting, with the goal to reach close to full coverage within a few years. Already at the closing of 2021 voting season, we reached above 90% coverage on all votable meetings, voting on more than 4200 General Meetings. Our focus on climate topics is also visible in our voting activities. In the ShareAction’s Voting Matters 2021 report, NAM was in shared first place on supporting climate resolutions, among Asset Managers that were members of NZAM and Climate Action 100+ initiatives 10 . Naturally, another important aspect of our active ownership activities is engagement with companies. Last year we had over one thousand engagements, covering wide array of topics across Environmental, Social and Gover- nance matters.
actively part in investor initiatives. We are currently participat- ing in 36 initiatives, including some of new additions such as the Finance for Biodiversity Pledge. Biodiversity is one of the key focus themes for us, and being part of this initiative, will enable us to work together with other investors and financial industry participants to set standards for this increasingly important topic. Participation to initiatives is also a way for us to enhance, develop, and benchmark our approach to ESG topics. We’ve been a founding member of the Net Zero Asset Managers (NZAM) initiative since 2020, when we also pub- lished our first Net Zero commitments. In 2021, one of the big- gest climate related efforts was to set detailed portfolio level decarbonisation targets that were published in the NZAM progress report. Significant efforts were put into defining the right methods and metrics in order to present credible and robust targets, and currently portfolios corresponding to just under 60% of our equity AuM are specifically managed in line with net-zero in 2050. This work will continue during 2022, and we have committed to doubling the AuM covered by fund level targets by 2025.
Our dedication and expertise in ESG has not gone unnoticed. In 2021, NAM was recognised by multiple international awards, both for our product specific ESG approaches as well as for our general ESG work. We were honoured to be named among the finalists in the prestigious PRI Awards with our Vung Ang 2 engagement initiative, as well as for being recognised for the same engagement by the Asset Management Awards as the best ESG initiative of the year. The collaborative engagement against the construction of Vung Ang 2 coal power plant was initiated and led by NAM’s own inhouse Responsible Invest- ments team, the team which was also awarded with the title of Best ESG Team in Europe by CFI.co. We are pleased to see that our work is recognised internationally, and we hope it inspires investors and companies into sustainable decision making.
Besides being an active owner, another way for us to create real world change and promote the best practices is to take
9) Source: Morningstar Manager Research, 4 February 2022: SFDR Article 8 and Article 9 Funds: 2021 in Review. 10) Source: ShareAction Voting Matters 2021: Are asset managers using their proxy votes for action on environmental and social issues?
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