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Carve Capital AB

PRI reporting framework 2017

You are in Strategy and Governance » Implementation not in other modules

Implementation not in other modules

SG 12. ESG issues in strategic asset allocation

New selection options have been added to this indicator. Please review your prefilled responses carefully.

12.1. Indicate if your organisation executes scenario analysis and/or modelling in which the risk profile of future ESG trends at portfolio level is calculated.

12.2. Indicate if your organisation considers ESG issues in strategic asset allocation and/or allocation of assets between sectors or geographic markets.

12.3. Additional information. [OPTIONAL]

SG 13. Long term investment risks and opportunity (Private)

SG 14. Allocation of assets to environmental and social themed areas (Private)

SG 15. ESG issues for internally managed assets not reported in framework

15.1. Describe how you address ESG issues for internally managed assets for which a specific PRI asset class module has yet to be developed or for which you are not required to report because your assets are below the minimum threshold.

Asset Class

Describe what processes are in place and the outputs or outcomes achieved

Hedge funds

The positions taken by the fund are based on fundamental equity research (bottom-up) coupled with macroeconomic research (top-down) and a time horizon of 12 months or more. This research includes ESG analysis of potential investments alongside traditional indicators of risk and opportunity.

An important part of the research process is the opportunity to meet with company representatives. Carve not only holds frequent meetings prior to initial investments are made but also over the period it is invested. When interacting with companies Carve is explicit in that it sees ESG-factors as important value drivers and as a key determinant of a comany's fundamental value. ESG issues identified could form the basis of a decision to short a certain stock.

Most meetings take place in Scandinavia where Carve has greatest influence and opportunity to engage in dialogue.

Examples of where ESG factors have influenced the fund's investment decisions and prevented it from going long and/or made it short a stock are:

- Deforestation in China

- The risk of child labour in Pakistan

- Large remuneration packages for management

- Not allowing staff to organise/prohibiting labour unions

 - Inappropriate governance practices

15.2. Additional information [Optional].

Carve has chosen to exclude direct investments in companies directly involved in the development, production, maintenance or sale of weapons that are illegal—as their production and use is prohibited by international legal instruments—or deemed particularly controversial because of their indiscriminate effects and the disproportionate harm they cause. Carve has also decided to exclude investments into companies on the Swedish national pensions funds’, the AP-funds’ Ethical Council’s recommended exclusion list.

Carve engages in dialogue with companies where ESG issues are identified and where we deem we can make a difference.

Carve takes the UN Global Compact’s Ten Principles on human rights, labour rights, environment and anti-corruption into account in its investment activities. However, Carve may decide to go either long or short in a company in breach of the principles. Our mandate is to generate long term, competitive risk-adjusted returns and in doing so we aim to consider all relevant ESG risks and opportunities in order to make well informed investment decisions. We may come to the conclusion that a long exposure in a company in breach of the principles is justified, for example if the company in question has taken actions to improve the situation and we believe such actions will lead to an increase in that company’s value. Also, companies facing ESG-issues, for example governance issues, are typical short cases for the fund.

SG 16. ESG issues for externally managed assets not reported in framework (Not Applicable)