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Storebrand ASA

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]

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

Active ownership and engagement is an important part of Storebrand's approach to sustainable investments. During Q4 2016, Storebrand carried out an evaluation of its active ownership and engagement practices in order to align them better with Storebrand group's purpose, "A future to look forward to" and the values that come with it. As a result, our investment policy is being updated to reflect that our main objectives to reduce risk, safeguard and create value on behalf of shareholders also explicetely refer to environmental, social and governance value. Creating financial value for our clients is important but it is also extremely important that the world and planet where our clients retire is a good place to live in. Accordingly, in 2017 we are adapting our engagement strategy from redressing wrongs to actually having a positive impact 

Our former Governance Committee which oversaw the framework and principles for active ownership/engagement and especially controversial cases has become an Engagement committee. Its role is more active since it supervises, selects and prioritizes all engagement cases with special focus on theme proactive engagement. It includes financial analysts as well as ESG analysts and the head of Storebrand Asset Management. It reports to the board.

01.5. Additional information [optional]

Adapting our engagement strategy from redressing wrongs to actually having a positive impact results in a new active ownership/engagement strategy where we prioritize engagements where we think we can have a better opportunity to obtain good results and we have allocated more time and resources to those. This means better quality engagements with fewer companies for longer periods of time and when possible whith other investors for more leverage. This also allows for more proactive engagement since our resources are not used on every controversial case (reactive engagement).

Engagement activities continue to be based on the Norwegian and Swedish Governance Codes, as well as the EU Shareholder Rights Directive. Storebrand is a member of the Norwegian Committee for Corporate Governance which outlines Best Practice for Norwegian companies and provides a solid basis for engagement.Our main form of active ownership is direct dialogue with companies alone or together with other investors, with a focus, but not exlcusively, in Norway and Sweden.

 


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]

Storebrands policy for enagement and active ownership states that resources will be channelled and prioritised to the following companies

- companies where Storebrand's equity share is over 3% in Norway and 0.7% in Sweden

- companies involved in controversial cases, including governance, environmental and social issues

- companies where the equity share of indivdual funds is over 5%

Storebrand will mainly address the following topics: incentive structures, capital utilisation, board composition, board member ownership, corruption and economic crime, human rights and international humanitarian law, severe climate- and environmental degradation.

Activities will be prioritised with respect to significance of ownership, risk and/or relevance to value creation, including positive impact. Activities will normally be decided and conducted by responsible portfolio managers (equity and fixed income) and/or ESG analyst. The Engagement Committee oversees framework and policies in this area in addition to supervise, select and prioritize all engagement cases .There is a special focus on theme proactive engagement. It is also a place where active ownership/engagement best practice is discussed. The commitee includes financial analysts as well as ESG analysts and the head of Storebrand Asset Management.

Policies/procedures specific to ESG analysts: 3500 companies are monitored by a sustaniability data provider  to detect potential violations with the Storebrand Standard. The data provider is also in contact with these companies to include all company measures and corporate behaviour changes regarding all potential violations of the Storebrand standard. Potential violaiton cases where posibilities for changed corporate behaviour are detected are sent by the ESG team to the Engagement Committee for review. The ESG team will also send for review potential theme engagement cases that are detected as opporuntity or risk for an industry during our biannual sustainbility rating analysis of all companies in our investment universe.

 Prior to each engagement process, specific goals are established for the engagement process, in order to ensure clear communication with investees as well as ease the measurement of engagement success. ESG analysts record the level of engagement success in each engagement process. There are four steps, where the fourth level is aligned with the UN PRI definition of success: "The measures taken were all or mostly completed after Storebrand contacted the company". Hence, we can assume our engagement efforts have contributed to the improvement, although it is rarely possible to determine with certainty Storebrand's particular effect on the outcome.

In instances where the engagement process does not lead to the required improvement in reactive engagement porcesses, Storebrand may exclude a company from investments (Storebrand Standard). In case of exclusion, formal reporting procedures are in place to inform both company, portfolio managers, as well as in-house compliance officers.

Excluded companies are reviewed regularly (every six months), in order to request information on any improvements and/orseek to establish a dialogue.


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.

04.5. Additional information. [Optional]

The goals of each engagement have usually been  in the area of measures to remedy any violation of the Storebrand Standard (reactive engagement); measures to reduce the risk of recurrence; as well as reporting on these measures publicly. The specific goals may be adjusted, usually enhanced and/or detailed, as the engagement process proceeds.

Ideally, the measures taken by the company should meet best practice standards. However, a reactive engagement is terminated if the company complies with the initial requirements and the risk of recurrence is considered to be reduced to an acceptable level. Typically, we would expect company to meet industry average level.

Storebrand measures and registers all engagement with companies on the following internal scale.

Level 1: Company contacted (explanation of concerns+ request for company practice improvement); no response

Level 2: Comapny contacted; unsatisfactory response

Level 3: Company contacted: satisfactory response

Level 4: Company contacted: Improved business practice

In 2016 Storebrand's focus has been on increasing the amount of proactive engagements. These engagements can have different goals and a milestone evaluation approach (from basic to advanced practice) might be used; However, so far, we are measuring progress by using the same scale depending on how receptive the company is to achieve those goals.

The progress of engagement is discussed in a monthly meeting in the Sustainable Investment team including minimum requirements, alternative approaches to achieve or improve dialogue, and whether or not to escalate an engagement.

Escalation of  engagement, if the company does not meet our minimum requirements (or communicate such actions), after repeated attempts at dialogue. "Escalate" might be to contact excecutive level staff at domestic offices to obtain contact with headquarter staff, involve Storebrand executives in the dialogue, collaborate with other investors etc. As a last resort, the case will be presented before the Sustainable Investment Committee, to make a final decision on whether or not to exclude the company from investments. If excluded, the company is always informed of the decision, and contacted regularly afterwards to encourage improvement.


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]


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]

Monitoring and evaluation of progress depends on the type of collaborative engagement. For engagements aimed to raise the practice of an industry, we might use a milestone evaluation approach (from basic to advanced practice), and companies are benchmarked against each other. In engagements requiring a specific corporate action (i.e. withdrawing from a territory, cleaning up a polluted area, enforcing a judgment), progress is evaluated by responsiveness of the company/companies and actions taken to meet our demands. The objective is not met until the company/companies actually perform(s) the specific activity.

In most collaborative engagements, we seek to define a specific time period. If there is limited progress, we may decide to escalate the engagement, or, alternatively decide to leave the collaborative engagement and divest (if in breach of the Storebrand Standard).

Collaborative engagements provide an opportunity for industry insights. This information has proven useful when designing KPIs for sector research and/or in the process of selecting top performers and divesting from high risk companies.

 


General processes for all three groups of engagers

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


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]

Engagement is tracked and registered in our internal CRM system.


Outputs and outcomes

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


LEA 12. Engagement methods (Private)


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


LEA 14. Companies changing practices / behaviour following engagement (Private)


LEA 15. Examples of ESG engagements (Private)


Communication

LEA 16. Disclosure of approach to ESG engagements

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

provide URL

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]

Storebrand discloses key examples of engagement processes on the home page with a short description of the case and outcome. However, in 2017 we intend to disclose more examples as well as priorities and specific goals.

16.8. Additional information. [Optional]


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