Active Ownership Report: H1 2021 Danske Bank Asset Management August 2021 Active Ownership Report
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Active Ownership Report: H1 2021 Danske Bank Asset Management August 2021 Active Ownership Report When customers entrust us with their assets and savings, it is our duty to serve their interests by providing investment solutions with the goal to deliver competitive and long-term performance. Our firm commitment to Responsible Investment is an integral part of this duty. It is about making better-informed investment decisions – addressing issues of risk, problems, and dilemmas, and influencing portfolio companies through active ownership to contribute to a positive outcome. Active ownership – through direct dialogue, collaborative engagement and voting at the annual general meetings – is an important part of our ability to create long-term value to the companies we invest in and to our investors. We believe it is more responsible to address material sustainability matters as investors rather than refraining from investing when issues of concern arise, leaving the problem to someone else to solve. Our investment teams are the change agents who can impact companies to manage risks and opportunities. The aim of our Active Ownership Report covering three parts ‘Engagements’, ‘Collaborative Engagements’ and ‘Voting’ is to provide our customers and stakeholders with regular updates on our progress and results. The three parts of the report Part 1: Engagements Part 2: Voting Part 3: Collaborative Engagements 2 Where to get additional information Responsible Investment Policy Our Responsible Investment Journey click here click here Active Ownership Instruction Investment Approach on Climate click here click here Investment Restrictions ProxyProxy VotingVoting DashboardDashboard click here clickclick herehere Voting Guidelines Principal Adverse Impact Statement click here click here 3 Active Ownership Report, Part 1 Engagements This presentation is intended to be used as marketing material as defined by the European Directive 2014/65/EU dated 15 May 2014 (MiFID II) in Austria, Belgium, Denmark, Finland, France, Germany, Luxembourg, the Netherlands, Norway, Sweden, Switzerland and the United Kingdom. Engagements introduction We believe that fund-manager-driven dialogue with companies is the most effective as the investment teams are the experts of their respective strategies and portfolios, and tasked with the buy/sell decision. Our investment teams engage on a regular basis with companies on material sustainability matters to understand their risks and opportunities, and to support their growth and development. We log and monitor company dialogue and progress to ensure a structured engagement process. 5 In H1 2021, we have had the following engagement activities Companies 347 Country domiciles 32 ESG engagement subjects 91 Interactions 436 6 Companies 347 Top 10 industries most engaged with Number of companies per industry (Sector in bracket) Banks (Financial) 38 Pharmaceuticals (Consumer, Non-cyclical) 24 Software (Technology) 19 Food (Consumer, Non-cyclical) 19 Chemicals (Basic Materials) 15 Electric (Utilities) 15 Healthcare-Products (Consumer, Non-cyclical) 15 Oil&Gas (Energy) 13 Mining (Basic Materials) 12 Commercial Services (Consumer, Non-cyclical) 12 Note: The Bloomberg Industry Classification Systems (BICS) is used for sector classification 7 Country domiciles 32 Engagement with companies domiciled across the world 8 ESG engagement subjects 91 Split between ESG engagement themes E S G Governance 32% Environmental 47% Social 21% 9 ESG engagement subjects 91 Split between ESG engagement themes across regions E S G 37% 46% 17% 27% 45% Nordics 28% 29% 59% Rest of the world 27% 48% 12% Eastern Europe 25% Western & Southern Europe 10 ESG engagement subjects 91 ESG engagements subjects discussed E S G Customer Privacy Physical Impacts Of Climate Change Research & Development Board Compensation Decent Work & Economic Growth Air Quality Political Risk Customer Education Military Sales Process Sustainable Transports Food Safety Overboarding Environmental Incidents Systemic Risk Management Environmental Issues Critical Incident Risk Management Circular Economy Ownership Structure Labor Standards/Practices Sustainability Certificates Share Buybacks Tax Issues Indigenous Rights Board Leadership Environmental Regulation SDGs Corporate Governance Energy Efficiency Product Design & Lifecycle Management Water & Wastewater Management M&A Sustainability Strategy Employee Engagement, Diversity & Inclusion Management of The Legal & Regulatory Environment Anti-Trust Issues & Competitive Behavior SDGs Environmental Supply Chain Sustainability Integration & Reporting Ecological Impacts Data Security Biodiversity Human Rights & Community Relations Anti-Corruption Issues & Handling Plastic/Recycling Products Selling Practices & Product Labeling Profit Warning Agriculture Materials Sourcing & Efficiency ESG Issues In Fish Farming Business Ethics Sustainable Shipping Corporate Disclosure Product Quality & Safety Future Fit Energy Transformation ESG funding Employee Retention Automation Compliance Procedures Customer Welfare Energy Consumption Business Model Resilience Bond redemption Employee Health & Safety Sustainable Products Product Development Quality Management Digitalisation Regulatory Compliance Green Buildings Energy Management Executive Compensation Access & Affordability AML Issues & Handling EU Taxonomy Restructuring Digitalisation Incentive Programs Competence Accounting Climate Neutrality Board Composition Corporate Behavior Green Financing Technology Disruption Supply Chain Management Sustainability Targets Waste & Hazardous Materials Management Capital Structure Circular Economy ESG Integration Regulations GHG Emissions Dividends 11 ESG engagement subjects 91 Top 7 ESG engagement subjects discussed across themes E S G E S G Rank Subject Count Rank Subject Count Rank Subject Count 11 GHG Emissions 103 11 Access & Affordability 72 11 ESG Integration 72 Employee Health & 22 Circular Economy 68 22 16 22 M&A 46 2 Safety Business Model 33 Energy Efficiency 43 33 13 33 Capital Structure 33 Resilience 44 Energy Transformation 42 4 Product Development 13 44 Dividends 27 Employee Engagement, Sustainability Integration 55 Green Financing 36 5 11 55 13 Diversity & Inclusion & Reporting Selling Practices & 66 Climate Neutrality 24 6 11 66 Regulations 11 Product Labeling Water & Wastewater Human Rights & 77 16 7 11 77 Corporate Governance 9 Management Community Relations 12 Interactions 436 Most frequent ESG engagement subjects discussed E S G 103 70 72 72 46 42 43 36 33 27 24 20 16 Employee Digitalisation Climate Dividends Capital Green Financing Energy Energy M&A Circular Access & ESG Integration GHG Emissions Health & Safety Neutrality Structure Transformation Efficiency Economy Affordability 13 Interactions 436 Top 10 and interactions distribution across Nordic countries & regions Rank Country Count 1 Norway 68 2 Sweden 65 3 Denmark 53 4 United States 49 5 United Kingdom 32 20 6 France 24 68 7 Russian Federation 24 8 Switzerland 22 65 Region Count 9 Finland 20 Nordics 210 Western & Southern Europe 138 10 Germany 20 53 Rest of the world 61 Eastern Europe 27 14 Interactions 436 Most commonly addressed ESG engagement subjects across geography ESG Issues In Fish Farming GHG Emissions Dividends M&A ESG GHG Emissions Integration GHG GHG Emissions Emissions ESG Integration GHG Emissions GHG Access & Emissions Affordability Dividends ESG Integration Sustainable Products Access & Employee Health Affordability & Safety GHG Emissions GHG Emissions Regulations 15 Interactions 436 Company interactions by meeting type and participants Share of meeting types Share of meetings by participants 49,1% With other investors 49% One-to- 20,9% one 16,1% 51% 7,3% 3,7% 1,1% 1,1% 0,7% CEO CFO IR Executive Corporate Other Board of Treasury Vice Sustainability directors President 16 Top 3 ESG engagement subjects GHG Emissions st is the 1 most common Sector: Consumer, Cyclical subject for our portfolio managers to engage “Discussed GHG reduction targets.” with companies on. 103 Sector: Industrial engagements “Discussion about decarbonisation of among the total of business though expansion of renewable 436 power.” GHG Emissions are emissions into Sector: Utilities earth’s atmosphere of “Discussion of general ESG issues, especially any type of various CO2 emission targets.” gases contributing to the greenhouse effect. GHG Emissions addressed 17 Top 3 ESG engagement subjects ESG Integration is the 2nd most common Sector: Financial subject for our portfolio “ESG integration in management of assets and managers to engage liabilities.” with companies on. 72 engagements Sector: Basic Materials among the total of “Focus on ESG implementation across the 436 organization.” ESG Integration is the analysis of all material factors in Sector: Financial investment analysis “Discussed about newly announced ESG and decisions, including targets.” ESG factors. ESG Integration addressed 18 Top 3 ESG engagement subjects Access & Affordability Sector: Consumer, Non-cyclical is the 3rd most common subject for our portfolio “Discussed new products launched by the managers to engage company, that aims at provides better with companies on. access.” 72 engagements Sector: Consumer, Non-cyclical among the total of “Focus on healthcare spending by various 436 governments on the back of the health crisis caused by COVID-19.” Access & Affordability is company's ability to Sector: Diversified ensure broad access to “Discussed about pricing practices and its products and regulatory risks related to.”