The responsibility analysis is used to assess the level of responsibility of investment objects in terms of the different ESG criteria, and this information can then be used to either favour or avoid the companies in question. The working methods used in the responsibility analysis vary according to the investment fund in question. The following are a few examples of different methods:
- Norm-based screening
The investor assesses the responsibility level of specific companies through their compliance with the UN and OECD international norms. These norms deal with, among other areas, UN agreements on human rights, labour laws, corruption and environmental protection. The Pension Fund regularly carries out a norm-based screening of its portfolio. If any violations are discovered, an engagement process is initiated.
- ESG integration
The investor integrates ESG issues into the investment analyses along with traditional economic indicators. The Pension Fund favours asset managers that actively monitor the ESG issues in companies as part of their investment activities and strive to understand the impacts of ESG issues on a company’s potential profits and risks.
- Thematic investing
The investor favours companies within a specific sector or companies that offer products or services that support sustainable development. The Pension Fund focuses on sustainable development themes that include climate change, forests, renewable forms of energy and changes brought on by demographic change in society.
- Exclusion of companies
The investor excludes from the investment universe any companies that provide products and services that are determined to be controversial or unethical in nature. The Pension Fund avoids direct investments in companies that manufacture alcohol, tobacco or weapons or provide gambling services, adult entertainment or fossil fuels.