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Nykredit Realkredit Group

PRI reporting framework 2018

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Investment policy

SG 01. RI policy and coverage

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

01.1. Indicate if you have an investment policy that covers your responsible investment approach.

01.2. Indicate the components/types and coverage of your policy.

Select all that apply

Policy components/types

Coverage by AUM

01.3. Indicate if the investment policy covers any of the following

01.3a CC. Describe how your products or investment strategy might be affected by the transition to a lower-carbon economy.

The Nykredit investment policy has at its core support for international agreements as well as sustainability as a performance driver. The policy specifically mentions the Paris-agreement and has the ambition to keep the investments in line with the Paris-agreement.

The Nykredit view is very much in line with the TCFD-report. Nykredit  has yet to do TCFD-compliant analysis of all of its portfolios. However Nykredit has gathered insights from various ESG-approaches to our different products.

Firstly as ESG is part of our approach specifically in our fundamental products we have identified how climate related KPI's affect risk and alpha in different ways. Naturally the market danymics still apply if for instanse a specific technology receives support or this ends. At Nykrediit we analyse the technologies advantage without subsidies.

Secondly in in managing our fossil free portfolios it is clear to us that the most seriously effected companies are not necessarily the direct producers, but rather the suppliers to these companies. It is also clear that many different sectors, regions and and even countries might be very seriously effected thorugh more indirect exposure.

Thirdly we recognize that eventhough the transition will happen long term the effects in valuation of stocks and fixed income might change seriously in the short term as consensus for the new reality builds. Thus the effects will not necessarily be integrated in the stock valuation gradually in a linear way, but could rather be step wise.

01.3b CC. Describe how climate-related risks and opportunities are factored into your investment strategies or products.

The fossil free products excludes any company with more than 5% revenue from production, distribution or servicing of fossil fuels. Utilities with more than 50% of power deriving from coal is also excluded. More than 1600 companies have been identified as being in conflict with these criteria. The rest of the portfolio selects through ESG which alsom encompasses climate related risk and opportunities.

The fundamental portfolios all use ESG as part of selection and evaluation. The ESG-rating has ESG-related risk and opportunities relevant to the company and its sector. Nykredit own experience in climate related investments is used as part of the final fundamental steps in the selection and evaluation proces.

All portfolios are ESG-analyzed as part our risk process. This is also to capture any specific climate related risks. On top of this the portfolios are annually analyzed thorugh our carbon footprint analytic tool.       

01.4. Describe your organisation’s investment principles and overall investment strategy, and how they consider ESG factors and real economy impact.

Nykredit wants to invest in a roboust, ambitious and responsible way.

Nykredit invests with an ambition to contribute with a positive impact to the world, which we are all a part of. This applies when we invest our own funds as well as the funds of our customers. We wish to invest in companies, which acts in a responsible way towards their customers, employees and the rest of the society. Nykredit believes that companies who size the opportunity to be part of the solution rather than the problem are better investments. 

Nykredit seeks to reach these ambitions in two ways. Firstly we identifiy and engage with companies who acts in conflict with international norms. And secondly we want to incorporate sustainability in our investment decisions and that way contribute not onlu to better risk and returns but also a more sustainable development. 

Nykredit tries to benchmark the impact of these efforts against the Paris-aggrement and the UN Sustainable Development Goals.

01.5. Provide a brief description of the key elements, any variations or exceptions to your investment policy that covers your responsible investment approach. [Optional]

The Nykredit investment policy covers all portfolios and investments. Both active and passive investments. The passive portfolios used in the allocation products are all designed, so they are compliant with the Nykredit policy. 

If an externally managed ETF is needed, which rarely happens, Nykredit will select an ETF that matches our policy. In the very rare case when no alternative exist, there is an excemption. However, this is not in use today, and with the widening of ETF alternatives in the market, we do not expect it will be. 


SG 02. Publicly available RI policy or guidance documents

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

02.1. Indicate which of your investment policy documents (if any) are publicly available. Provide a URL and an attachment of the document.

02.2. Indicate if any of your investment policy components are publicly available. Provide URL and an attachment of the document.

02.3. Indicate if your organisation’s investment principles, and overall investment strategy is publicly available

02.4. Additional information [Optional].

Nykredit has updated its policy and tried to integrate the different elements in one policy that covers both the overarching approach, engagement, voting, climate etc.

Reporting is done on several different levels. In the CSR-report as well as individual mutual fund reports.

CSR report: https://www.nykredit.com/siteassets/ir/files/corporate-responsibility/csr-reports/nykredit_csr-publication_q4_17_2018-02-08_en.pdf  

One of mutual funds Nykredit Invest:

https://www.nykreditinvest.dk/siteassets/pdfer/fonds-rapporter/arsrapporter/nykredit-invest/aarsrapport_2017_investeringsforeningen-nykredit-invest_inkl_beholdnings....pdf


SG 03. Conflicts of interest

03.1. Indicate if your organisation has a policy on managing potential conflicts of interest in the investment process.

03.2. Describe your policy on managing potential conflicts of interest in the investment process.

Nykredit has a publicly available governance policy (www.nykredit.com) as well as relevant procedures regarding investments professionals.

Chinese walls seperate investment decisions from the other activities of the Nykredit Group. The investment decision is purely the responsibility of the individual portfolio manager, provided it is in compliance with the overall investment guidelines. Nykredit's general policy regarding potential conflicts of interest applies in all cases. To avoid potential conflict of interest, Nykredit has a number of procedures and actions:

  • Procedures regarding privacy to ensure that confidential information is only accessible to employees with a legitimate need. All employees of Nykredit are covered by these rules and procedures on handling confidential information in order to respect the privacy of our customers and to avoid insider trading or manipulation. Therefore, there are limits to who can obtain confidential information.
  • Physical and organizational limits to IT-systems between departments where conflicts of interest can potentially occur.
  • Key employees are forbidden to do speculative trading.
  • Group compliance checks the day to day compliance with this policy.

03.3. Additional information. [Optional]


SG 04. Identifying incidents occurring within portfolios

04.1. Indicate if your organisation has a process for identifying and managing incidents that occur within portfolio companies.

04.2. Describe your process on managing incidents

          All listed companies are screened quarterly for any incident. The governance structure it self is evaluated as part of ESG-approach, by another third party before casting votes and by our selves when in direct dialogue with the company. Unlisted companies are surveyed thorugh our external managers and our dialogue with them.
        

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