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Nordea

PRI reporting framework 2017

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Engagement

Overview

LEA 01. Description of approach to engagement

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

01.1. Indicate whether your organisation has a formal engagement policy.

01.2. Indicate what your engagement policy covers:

01.3. Attach or provide a URL to your engagement policy. [Optional]

URL

Attach document


01.4. Provide a brief overview of your organization’s approach to engagement

Nordea engages with companies violating international norms and with companies where we see significant room for improvement in relation to ESG issues. Nordea initiates engagement dialogues to change behaviour and to enhance business performance by addressing business practices used by the companies we invest in.

Engagements are conducted by in-house specialists, either independently or in cooperation with service provider and/or other investors.

01.5. Additional information [optional]


LEA 02. Reasoning for interaction on ESG issues

02.1. Indicate the method of engagement, giving reasons for the interaction.

Type of engagement

Reason for interaction

Individual/Internal staff engagements

Collaborative engagements

Service provider engagements

02.2. Additional information. [Optional]


Process

Process for engagements run internally

LEA 03. Process for identifying and prioritising engagement activities

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

03.1. Indicate whether your organisation has a formal process for identifying and prioritising engagement activities carried out by internal staff.

03.2. Describe the criteria used to identify and prioritise engagement activities carried out by internal staff.

03.3. Additional information. [Optional]

Nordeas engage with companies:

1. Norm based engagement :violating international norms for human rights, labour rights, environmental protection and anti-corruption. Semi-annually Nordea screen all holdings to identify companies that violate international norms. Nordea's internal Responsible Investments then decided on the level of engagement with the companies identified and the forms of the engagements. The engagement activities are reviewed continuously by the RI team and semi-annually by the RI committee.

2. Materiality based engagement : where we see significant room for improvement in relation to ESG issues. Nordea's internal ESG analyst team is responsible for analyzing companies for our Responsible Investment funds. Within the analysis process we identify companies that have a room for improvement to ESG issues, in a selection of these companies we initiate engagement dialogue

3. Focus area/theme based engagements mainly collaborative


LEA 04. Objectives for engagement activities

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

04.1. Indicate if you define specific objectives for your engagement activities.

04.2. Indicate if you monitor the actions that companies take following your engagements.

04.3. Indicate whether your organisation defines milestones and goals for engagement activities carried out by internal staff.

04.4. Indicate if you do any of the following to monitor and evaluate the progress of your engagement activities carried out by internal staff.

04.5. Additional information. [Optional]


Process for engagements conducted via collaborations

LEA 05. Process for identifying and prioritising collaborative engagement

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

05.1. Indicate whether your organisation has a formal process for identifying and prioritising collaborative engagements

05.2. Describe the criteria used to identify and prioritise collaborative engagements

05.3. Additional information [Optional]

Collaborative engagements is selected based on the relevance to RI's current activities, for example current thematic research, interesting themes, sectors/companies with high risk.


LEA 06. Objectives for engagement activities

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

06.1. Indicate if you define specific objectives for your engagement activities carried out collaboratively.

06.2. Indicate if you monitor the actions companies take following your collaborative engagements.

06.3. Indicate whether your organisation defines milestones and goals related to engagement activities carried out via collaborations.

06.4. Indicate if you do any of the following to monitor and evaluate the progress of your collaborative engagement activities.

06.5. Additional information. [Optional]


General processes for all three groups of engagers

LEA 09. Share insights from engagements with internal/external managers

09.1. Indicate if insights gained from your engagements are shared with your internal or external investment managers.

Type of engagement

Insights shared

Individual/Internal staff engagements

Collaborative engagements

09.2. Additional information. [Optional]


LEA 10. Tracking number of engagements

10.1. Indicate if you track the number of engagements your organisation participates in.

Type of engagement
Tracking engagements

Individual / Internal staff engagements

Collaborative engagements

10.2. Additional information. [OPTIONAL]


Outputs and outcomes

LEA 11. Number of companies engaged with, intensity of engagement and effort

11.1. Indicate the amount of your listed equities portfolio with which your organisation engaged during the reporting year.

Number of companies engaged

(avoid double counting, see explanatory notes)

Proportion (to the nearest 5%)
Specify the basis on which this percentage is calculated

Individual / Internal staff engagements

194 Number of companies engaged
5 Proportion (to the nearest 5%)

Specify the basis on which this percentage is calculated

Collaborative engagements

87
5 Proportion (to the nearest 5%)

Specify the basis on which this percentage is calculated

11.2. Indicate the proportion of engagements that involved multiple, substantive and detailed discussions or interactions with a company during the reporting year relating to ESG issue.

Type of engagement

% Comprehensive engagements

 

 

Individual / Internal staff engagements

 

 

Collaborative engagements

11.3. Indicate the percentage of your collaborative engagements for which you were a leading organisation during the reporting year.

Type of engagement

% Leading role

 

 

Collaborative engagements

11.5. Additional information. [Optional]

Lead on 6 out of 87 collaborative engagements.

 


LEA 12. Engagement methods

12.1. Indicate which of the following your engagement involved.

12.2. Additional information. [Optional]


LEA 13. Engagements on E, S and/or G issues

13.1. Indicate if your engagements in the reporting year covered E, S and/or G issues, providing an estimation of the breakdown.

Individual / Internal staff engagements

14 % Environmental only
0 % Social only
0 % Corporate Governance only
86 % Overlapping ESG issues
Total 100%

Collaborative engagements

30 % Environmental only
62 % Social only
8 % Corporate Governance only
0 % Overlapping ESG issues
Total 100%

13.2. Additional information. [optional]


LEA 14. Companies changing practices / behaviour following engagement

14.1. Indicate whether you track the number of cases during the reporting year where a company changed its practices, or made a formal commitment to do so, following your organisation’s and/or your service provider's engagement activities.

14.2. Indicate the number of companies that changed or committed to change in the reporting year following your organisation’s and/or your service provider's engagement activities.

Number of company changes or commitments to change

Individual / Internal staff engagements

30

Collaborative engagements

4

14.3. Additional information [Optional].


LEA 15. Examples of ESG engagements

15.1. Provide examples of the engagements that your organisation or your service provider carried out during the reporting year.

Topic or ESG issue
          Environment 
Nordea engagement initiative on pharmaceutical supply chain pollution in India.
        
Conducted by
Objectives

Nordea RI Expectations:

  • Leading pharma companies commit to contribute to the protection of water resources in India.
  • A pharma industry position and action plan addressing pharma water pollution in India with emissions reduction targets for suppliers at relevant production sites.
  • The pharma industry adopts a common approach that:
    • builds on the belief that large global companies can have real influence if they cooperate with each other and work with their partners to achieve better industry-wide standards
    • recognizes the need to build the capacity of partners in the supply chain
    • involves engaging with local regulators, authorities and NGOs
Scope and Process

This engagement was initiated as a response to a field visit by Nordea to Hyderabad and Visakhaptanam in April 2015 to investigate pharma pollution. A video of the field visit was communicated to 27 pharma companies we were invested in asking for more information. However, the poor response rate from companies contacted and lack of corporate transparency in regards to this issue area, lead to the decision to commission an independent on-the-ground investigation of a number of pharma suppliers in Hyderabad and Visakhaptanam area in February 2016. 

Again, the evidence showed that the situation on the ground in India is very serious. The investigation identified a number of Indian suppliers and their manufacturing sites and systematic dumping of chemical effluent in rivers, lakes and groundwater by the pharmaceutical sector in Hyderabad and Visakhaptanam.

As part of the engagement we are in dialogue with NGOs and the Medical Products Agency and academic researchers.

Outcomes

The independent investigation resulted in a report published in April 2016 – link - which was communicated to the 27 CEOs together with a letter asking for further confirmation regarding their business relations with suppliers in these areas. The report was also sent to the industry led Pharmaceutical Supply Chain Initiative. The company response rate was significantly higher this time. According to the Chairman of PSCI, our engagement has created influence in the industry and during 2016 pharrma companies Sanofi, Teva, Catalent and DSM joined the PSCI

In April 2016, Nordea was invited to attend the Pharmaceutical Supply Chain Initiative annual meeting to present our expectations. At the PSCI meeting companies agreed that industry level commitment and action in order to achieve structural change is necessary.  A number of companies have already confirmed that they are taking direct action with suppliers and discussions on action on industry level is underway.  We are following up on this with regular meetings with PSCI and companies.

In February 2017 we presented our expectations at a pharma conference in India with international and Indian pharma companies attending. We are following up on this during Q2.

15.2. Additional information. [Optional]


Communication

LEA 16. Disclosure of approach to ESG engagements

16.1. Indicate whether your organisation proactively discloses information on its engagements.

16.2. Indicate if the information disclosed to the public is the same as that disclosed to clients/beneficiaries.

16.3. Indicate what engagement information your organisation proactively discloses to the public.

16.4. Indicate how frequently you typically report engagements information to the public.

16.5. Indicate what engagement information your organisation proactively discloses to clients/beneficiaries.

16.6. Indicate how frequently you typically report engagements information to clients/beneficiaries.

16.7. Describe any other differences in the information being disclosed. [Optional]

16.8. Additional information. [Optional]


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