Social Responsibility and
Sydinvest expresses its social responsibility primarily by the way in which assets are managed in the various funds. When planning the management of assets in Sydinvest’s funds, we attach importance to the fact that they comply with the UN’s principles for responsible investment, PRI. This entails for instance:
- that environmental, social and corporate governance (ESG) issues are incorporated in investment decisions
- that we apply a commitment approach in relation to influencing companies in which we invest that do not fully live up to our expectations regarding ESG issues.
UN Principles for Responsible Investment (PRI)
- We will incorporate ESG issues into investment analysis and decision-making processes.
- We will be active owners and incorporate ESG issues into our ownership policies and practices.
- We will seek appropriate disclosure on ESG issues by the entities in which we invest.
- We will promote acceptance and implementation of the Principles within the investment industry.
- We will work together to enhance our effectiveness in implementing the Principles.
- We will each report on our activities and progress towards implementing the Principles.
Moreover Sydinvest works to promote the remaining principles for responsible investment by urging companies in which we invest and with which we collaborate to disclose ESG issues and to implement the principles. Finally our efforts to implement the principles within Sydinvest will be described in our annual reports.
In this way we strive to influence companies in which we have invested to increase their efforts towards a globally sustainable development and greater social responsibility. In April 2010 Sydinvest signed UNPRI and has thus made a commitment to include ESG issues in its choice of equities and corporate bonds for our various funds.
In line with its core values, Sydinvest does not wish to invest in companies that violate widely accepted international conventions and norms as formulated in for instance the UN Global Compact concerning businesses’ position on human rights, labour, the environment and anti-corruption.
UN Global Compact
- Businesses should support and respect the protection of internationally proclaimed human rights.
- Businesses should make sure that they are not complicit in human rights abuses.
- Businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining.
- Businesses should support the elimination of all forms of compulsory labour.
- Businesses should support the effective abolition of child labour.
- Businesses should support the elimination of discrimination in respect of employment and occupation.
- Businesses should support a precautionary approach to environmental challenges.
- Businesses should undertake initiatives to promote greater environmental responsibility.
- Businesses should encourage the development and diffusion of environmentally friendly technologies.
- Businesses should work against corruption in all its forms, including extortion and bribery.
To ensure that investments made by Sydinvest comply with the principles for responsible investment and incorporate ESG issues, Sydinvest has engaged the services of Sustainalytics.
- Twice a year Sustainalytics screens investments in the funds that invest in equities and corporate bonds from mature markets in order to identify the companies that do not comply with the stipulated norms.
- In addition to a screening of investments as described above for mature markets, twice a year Sustainalytics performs an extended analysis as regards the funds that invest in emerging market equities comprising a rating of businesses’ exposure to ESG issues and a rating of their readiness to tackle problems in relation thereto.
- Sustainalytics makes available facilities for dialogue with and active ownership of companies that do not comply with the stipulated norms.
- With respect to emerging markets, Sustainalytics has an intensive readiness and commitment programme as regards companies where it is assessed that their readiness in relation to ESG issues is not commensurate with the potential risks identified.
Our activities concerning responsible investment are based on influencing companies through dialogue. However this may mean that we will exclude companies from the investment universe within which Sydinvest's funds may invest. This may occur if:
- a company’s business concept contravenes the stipulated norms and it is judged that this cannot be changed – examples of this are companies that violate international conventions such as the production of cluster bombs and land mines
- a company that does not comply with the stipulated norms does not wish to initiate a dialogue
- there is no indication of sufficient progress in concrete initiatives by companies that do not comply with the stipulated norms and with which dialogue has been initiated.
Sydinvest has set up a committee to decide which companies will be excluded from the investment universe.
Active Ownership Policy
This policy applies to the activities carried out by Syd Fund Management A/S on behalf of the Funds in relation to active ownership.
The object of exercising active ownership is to increase or preserve the value of assets in which the Funds have invested. The background for the policy is that active engagement with companies, in con-trast to exclusion, makes it possible to trigger a price potential in the companies as problems are solved.
Together with more than 2,000 global institutional investors and service providers, Syd Fund Management has signed the UN Principles for Responsible Investment (PRI), which consist of six principles for responsible investment. The second principle obliges Syd Fund Management on behalf of the Funds to work for active ownership.
In November 2016 the Committee on Corporate Governance issued a “Stewardship Code”. The purpose of the code is to promote Danish companies’ long-term value creation and as a result investors’ long-term returns. The Funds will seek to comply with the code’s recommendations.
By active ownership is meant various types of engagement with a company’s management with a view to changing corporate behaviour. The engagement will mainly concern environmental, social and corporate governance (ESG) issues.
Execution Policy (Best Execution Policy)
Object and statutory basis
The object of this execution policy is to ensure that Syd Fund Management A/S acts in the interest of the entities managed when in the course of the company’s management of the entities’ portfolios, it executes decisions on trading financial instruments.
Moreover the policy must ensure that Syd Fund Management A/S acts in the interest of the entities managed when in the course of the company's management, it transmits trade orders to other entities trading on behalf of the funds managed.
Statutory basis: Chapter 12 of Danish executive order no 865/2014 on the management, control and administration of Danish UCITS (the Danish executive order on management) and Articles 27-28 of Reg-ulation 231/2013 (implementing AIFM regulation).