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KLP

PRI reporting framework 2019

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Engagement

LEA 02. Reasoning for interaction on ESG issues

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. Indicate whether your organisation plays a role in the engagement process that your service provider conducts.

02.3. Indicate the role(s) you play in engagements that your service provider conducts on your behalf.

02.4. Additional information. [Optional]

KLP regularly plays all of the above roles in engagements. In some cases, KLP participates in service provider engagements on a more limited basis. KLP is invested in over 6000 companies and we are therefore reliant on a service provider to help us with engagement. In some cases KLP follows the dialogue by service provider more closely, this might be due to severity or because the topic is of special interest to us, in those cases we will discuss the engagement and engagement strategy with the service provider.  

KLP is also part of the Nordic Engagment Coopertion (NEC). this is a cooperation between KLP, Folksam, PFA and Illmarinen. A service provider facilitiates and helps with engagement. In this cooperation it is part of the discussion together with service providers which companies we engage with on what topics.


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 engagements.

Indicate the criteria used to identify and prioritise engagements for each type of engagement.
Type of engagement
Criteria used to identify/prioritise engagements
Individual / Internal engagements

Internal / Individual engagements

Collaborative engagements

Collaborative engagements

Service Provider engagements

Service Provider engagements

03.3. Additional information. [Optional]

KLP conducts internal engagement, and collaborative engagement through PRI or the Nordic Engagement Cooperation (a cooperation between KLP, Folksam, Illmarinen and PFA) and engagement thorugh service provider  based on breaches of international norms and other thematic engagements. 


LEA 04. Objectives for engagement activities

New selection options have been added to this indicator. Please review your prefilled responses carefully.
Indicate whether you define specific objectives for your organisation’s engagement activities.
Individual / Internal engagements
Collaborative engagements
Service provider engagements

04.2. Additional information. [Optional]

For the Norwegian market, KLP engages in proactive engagements to improve ESG performance (e.g. encouraging reporting to CDP or membership in RE100). KLP also engages with Norwegian companies on the basis of controversies  - often reported on more extensively in the Norwegian media than through service provider platforms. For these engagement, KLP defines the goals and process in conjunction with the relevant portfolio managers. KLP is a long-term investor in the Norwegian market, and as such, can engage with a single firm over many years.

 

For portfolio companies outside the Norwegian market, KLP primarily learns of potential violations of international norms through service provider screening. KLP prioritizes engagement mainly based on the severity of the alleged violation. KLP's service provider engages on KLP's behalf, but KLP also becomes directly involved when practical and in cases where divestment may be indicated. KLP may also engage in cases directly on our own initiative on thematic issues that receive minimal coverage from service providers. If the engagement both involves a violation of the KLP guidelines for responsible investment and we see no realistic expectation of progress, then divestment will be recommended. An internal committee comprised of members of the asset owner and the asset manager make the final decision on divestment.


LEA 05. Process for identifying and prioritising collaborative engagement

Indicate if you monitor and/or review engagement outcomes.
Individual / Internal engagements
Collaborative engagements
Service provider engagements
Indicate if you do any of the following to monitor and review the progress of engagement activities.
Individual / Internal staff engagements
Collaborative engagements
Service provider engagements

05.3. Additional information [Optional]


LEA 06. Role in engagement process

06.1. Indicate whether your organisation has an escalation strategy when engagements are unsuccessful.

06.2. Indicate the escalation strategies used at your organisation following unsuccessful engagements.

06.3. Additional information. [Optional]

When there i s a breachof international norms KLP will exsclude a company if the engagement does not lead to suffiecient changes. The rationale for the exclusion is made public. In many instances we might use media to put additional preassure on the company if we believe it might be effectfull in getting the company to improve practices. 

We vote on all companys in our holdings and have on several incidents voted against the board. Volkswagen is an example on this  practice. All voting decissions are public on klp.no. KLP also takes part in international class actions. 

 


LEA 07. Share insights from engagements with internal/external managers

07.1. Indicate whether insights gained from your organisation's engagements are shared with investment decision-makers.

Type of engagement

Insights shared

Individual / Internal staff engagements

Collaborative engagements

Service provider engagements

07.2. Indicate the practices used to ensure information and insights collected through engagements are shared with investment decision-makers.

07.3. Indicate whether insights gained from your organisation’s engagements are shared with your clients/beneficiaries.

Type of engagement

Insights shared

Individual/Internal staff engagements

Collaborative engagements

Service provider engagements

07.4. Additional information. [Optional]

Insights gained from engagements with companies that are part of KLP's actively managed investments are systematically shared with internal investment managers. 

KLP publishes which companies we engage with on KLP.no, if we divest the rationale for exclusion will be published. Nordic Engagement Collaboration (NEC) publishes an annual report on engagement activities. Clients sometimes request specific information about engagement with certain companies which we share on an ad-hoc basis with them. 


LEA 08. Tracking number of engagements

08.1. Indicate if you track the number of your engagement activities.

Type of engagement
Tracking engagements

Individual / Internal staff engagements

Collaborative engagements

Service provider engagements

08.2. Additional information. [OPTIONAL]

We track all of our engagements, but do not systematically distinguish between those that are conducted internally, collaboratively or through service providers. Many engagements may involve a combination of the three.


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