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Catella Fondförvaltning AB

PRI reporting framework 2019

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Policy

HF 01. Rationale for adopting a RI policy

01.1. What is your rationale for adopting a policy to incorporate RI into the investment decision- making process? Please select all options that apply to your organisation.

01.2. Additional information. [Optional]

We believe greater focus on sustainability is contributing to the value performance of the funds by improving our capacity to avoid risks and take advantage of opportunities. All companies have exposure to sustainability risks in some form and to varying extents. The degree of risk and its potential impact on the financial statements is affected by the company’s sector, where it does business and its ownership structure. We impose higher standards on companies operating in controversial industries than on companies with low risk profiles. We use external analysis firms’ assessments of the individual company's sustainability work and include the score/rating as an aspect of our investment process. The score/rating is also the basis for the shareholder dialogues on sustainability that we engage in with the companies.
We believe there is a connection between a sustainable business model and sustained company growth and profitability, and this is the basis of our approach to sustainability. Accordingly, we consider sustainability a source for finding investments. For the absolute return funds, we also examine the risks in a company’s operations to find potential investments that we can sell short. We do not buy shares in companies doing business in controversial sectors. Refer to the “Controversial sectors” section for more information about limits and rationales. For our hedgefunds, we also examine the risks in a company’s operations to find potential investments that we can sell short.

Generally speaking, we look for companies that are both driven by sustainability and can demonstrate attractive financial qualities and a clear profit and return trend that is underestimated by the market. We use the UN 2030 Agenda for Sustainable Development as a basis for identifying business models that can benefit structurally by offering a solution to one or more of the 17 Agenda 2030 Goals. We have identified four themes that we believe are potential sources of structural growth and profitability for companies exposed to these themes. Last but not least, we study the extent to which company financial statements are affected by sustainability. We enhance our understanding of the long-term potential of the business model by integrating sustainability with financial analysis.In addition to our own assessment of sustainability as a driver of WHAT a company does, we use ESG research from Sustainalytics* as a basis for evaluating HOW companies, regardless of whether they have sustainability profiles, are dealing with their ESG challenges.

We draw a clear line at companies that produce goods and services associated with harmful impacts on human health and the environment or that are addictive. With regard to absolute return products, however, we may take short positions in these companies if we believe the market has not fully priced in the risks. This is consistent with our view that sustainable business creates value and competitive advantage over time.


HF 02. Normative codes/initiatives in the Hedge Fund industry (Private)


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