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Nordea

PRI reporting framework 2017

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ESG incorporation in actively managed fixed income

Implementation processes

FI 04. Incorporation strategies applied

04.1. Indicate 1) Which ESG incorporation strategy and/or combination of strategies you apply to your actively managed fixed income investments; and 2) The proportion (+/- 5%) of your total actively managed fixed income investments each strategy applies to.

SSA
0 Screening alone
0 Thematic alone
0 Integration alone
100 Screening + integration strategies
0 Thematic + integration strategies
0 Screening + thematic strategies
0 All three strategies combined
0 No incorporation strategies applied
100%
Corporate (financial)
0 Screening alone
0 Thematic alone
0 Integration alone
100 Screening + integration strategies
0 Thematic + integration strategies
0 Screening + thematic strategies
0 All three strategies combined
0 No incorporation strategies applied
100%

04.2. Describe your reasons for choosing a particular ESG incorporation strategy and how combinations of strategies are used.

Norm screening strategy: Nordea want to ensure that we do not invest in companies involved in thermal coal mining or producing illegal weapons or nuclear weapons. In order to do so, we need to screen our funds to identify which companies we need to exclude.

ESG-integration strategy: Further, we believe in the means of ESG-integration. Not at least is this also an important principle in the PRI. We have therefore made ESG comapny specific information available to all our portfolio managers. We see this as an important part of being a responsible investor, delivering returns with responisibility, being compliant with the PRI principles and being a role model for peers within RI. Further, we believe that ESG information can make the PMs take better investment decisions, i.e improve return or not at least reduce risk.

04.3. Additional information [Optional].


FI 05. ESG issues and issuer research

05.1. Indicate which ESG factors you systematically research as part of your analysis on issuers.

Select all that apply
SSA
Corporate (financial)
Environmental data
Social data
Governance data

05.2. Indicate what format your ESG information comes in and where you typically source it

Indicate who provides this information  

Indicate who provides this information  

Indicate who provides this information  

Indicate who provides this information  

05.3. Provide a brief description of the ESG information used, highlighting any differences in sources of information across your ESG incorporation strategies.

We use our external service provider Ethix for screening. We further use MSCI, Oekom, Reprisk, Bloomberg, Data Stream, CDP and Solaron among others for ESG research, also to support our internal analysis.

05.4. Additional information. [Optional]


FI 06. Processes to ensure analysis is robust

06.1. Indicate how you ensure that your ESG research process is robust:

06.2. Describe how your ESG information or analysis is shared among your investment team.

06.3. Additional information. [Optional]


(A) Implementation: Screening

FI 07. Types of screening applied

07.1. Indicate the type of screening you conduct.

Select all that apply
SSA
Corporate (financial)
Negative/exclusionary screening
Positive/best-in-class screening
Norms-based screening

07.2. Describe your approach to screening for internally managed active fixed income

Norm based and sector based screening.

07.3. Additional information. [Optional]


FI 08. Negative screening - overview and rationale

08.1. Indicate why you conduct negative screening.

SSA

SSA

Corporate (financial)

Corporate (fin)

08.2. Describe your approach to ESG-based negative screening of issuers from your investable universe.

Ethix screens all of our actively managed funds.

Legal reasons are for example financial sanctions that may impact in different financial instruments.

08.3. Additional information. [Optional]


FI 09. Examples of ESG factors in screening process

09.1. Provide examples of how ESG factors are included in your screening criteria.

Type of fixed income

ESG factors

Screening

Description of how ESG factors are used as the screening criteria

Products and Sectors

Negative screening and exclusion of companies involved in thermal mining with 75% of revenues derived from sales of coal products, illegal weapons such as cluster munitions or companies involved in the development or production phase of nuclear weapon programmes are excluded from all funds. Further, several of Nordeas funds and mandates apply addition screening filters and exclude companies that have more than 5% of their revenues from tobacco, alcohol, gambling, pornography or other military equipment.

Activity

Nordea excludes companies violating international norms on human rights, labour rights, corruption and the environment if an engagement engagement does not lead to progress, or the company is unwilling to change. This is then done for all Nordeas funds (internally managed and WL). Further, several of Nordeas funds and mandates apply a norm exclusion screening filter rather than the engagement strategy for all other funds. This means that the fund will exclude all companies that can be identified to violate international norms instead of initiating engagement.

09.2. Additional information.


FI 10. Screening - ensuring criteria are met

10.1. Indicate which systems your organisation has to ensure that fund screening criteria are not breached in fixed income investments.

Type of screening
Checks
Negative/exclusionary screening?
Norms-based screening

10.2. Additional information. [Optional]


(C) Implementation: Integration

FI 14. Integration overview

14.1. Describe your approach to integrating ESG into traditional financial analysis.

Not integrated at the moment.

14.2. Describe how your ESG integration approach is adapted to each of the different types of fixed income you invest in.

SSA

The approach is limited to screening.

Corporate (financial)

The approach is limited to screening.

14.3. Additional information [OPTIONAL]


FI 15. Integration - ESG information in investment processes

15.1. Indicate how ESG information is typically used as part of your investment process.

Select all that apply
SSA
Corporate (financial)
ESG analysis is integrated into fundamental analysis
ESG analysis is integrated into security weighting decisions
ESG analysis is integrated into portfolio construction decisions
ESG analysis is a standard part of internal credit ratings or assessment
ESG analysis for issuers is a standard agenda item at investment committee meetings
ESG analysis is regularly featured in internal research notes or similar
ESG analysis is a standard feature of ongoing portfolio monitoring
ESG analysis features in all internal issuer summaries or similar documents
Other, specify

15.2. Additional information [OPTIONAL]


FI 16. Integration - E,S and G issues reviewed

16.1. Indicate the extent to which ESG issues are reviewed in your integration process.

Environment
Social
Governance
SSA

Environmental

Social

Governance

Corporate (financial)

Environmental

Social

Governance

16.2. Please provide more detail on how you review E, S and G factors in your integration process.

SSA

Not in place yet.

Corporate (financial)

Not in place yet.

16.3. Additional information.[OPTIONAL]


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