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Storebrand ASA

PRI reporting framework 2020

Export Public Responses

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Outputs and outcomes

LEA 09. Number of companies engaged with, intensity of engagement and effort

Indicate the proportion of companies in your listed equities portfolio with which your organisation engaged during the reporting year.
We did not complete any engagements in the reporting year.

Number of companies engaged

(avoid double counting, see explanatory notes)

Proportion of companies engaged with, out of total listed equities portfolio

Individual / Internal staff engagements

139
5

Collaborative engagements

269
5

09.2. Indicate the breakdown of engagements conducted within the reporting year by the number of interactions (including interactions made on your behalf).

No. of interactions with a company
% of engagements
One interaction
2 to 3 interactions
More than 3 interactions
Total
100%

09.3. Indicate the percentage of your collaborative engagements in which you were the leading organisation during the reporting year.

Type of engagement

% leading role
  Collaborative engagements

09.5. Additional information. [Optional]

Below is a summary of the different roles we play in the PRI engagement groups we are members of:

Climate Action 100+: Storebrand has been leading the dialogue with Equinor with a strong focus on Paris alignment (scenario analysis, capex, targets, disclosure and policy dialogue). In order to support the adoption and implementation of the TCFD recommendations, Storebrand together with Equinor have carried out a case study to test the TCFD framework.

Palm oil: Leading the dialogue with Bank Mandiri with the aim to strengthen their policies to avoid environmental risks. Co-lead for Wilmar

Soy/Cattle: Storebrand has been co-leading the dialogue with Bunge (soya) and Marfrig with the aim to strengthen its policy and its implementation as well as the negative social impact its operations may cause. 

Methane: Storebrand has a supportive role and has followed the development of methane guiding principles. The aim is to harmonise existing reporting frameworks used by the industry and investors. 

In addtion, Storebrand has also had an active role within the FAIRR platform, being active in confernce call with Yum! Brands as part of the investor meat sourcing coalition towards the six largest fast food players (Restaurant Brands International; McDonalds; Wendy's; Domino's Pizza; Chipotle and Yum! Brands) aksing fast food giants to set tough targets to reduce the greenhouse gas emissions and water usage of their meat and dairy suppliers.

 


LEA 10. Engagement methods

10.1. Indicate which of the following your engagement involved.

10.2. Additional information. [Optional]

When engaging with companies Storebrand Asset Management seeks at all times to maximise potential leverage and influence. In regards to methods used, this means seeking to establish contact with high level executives at the companies we contact and executives directly responsoible for the areas under question. Site visits are also conducted when fact finding is needed, or to further extend our own understanding of an industry or sector.


LEA 11. Examples of ESG engagements

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

ESG Topic
Climate Change
Conducted by
Objectives

Engagement to ensure the world’s largest corporate greenhouse gas emitters take necessary action on climate change. 

Scope and Process

Storebrand has been leading the dialogue with Equinor under Climate Action 100+. In a joint statement, Equinor has committed to take significant additional action on climate change and agreed with the investors to pursue a business strategy consistent with the goals of Paris Agreement. Equinor's commitments inlcude: 1) reviewing existing climate-related targets up to 2030 and setting out new ambitions beyond 2030, 2) Intending to further strengthen the link between climate related targets and remuneration for senior executives and employees, 3) Undertaking a comprehensive review of industry association memberships that hold an active position on climate and energy policy, 4) To report in line with final recommendations of the Task Force on Climate-related Financial Disclosures, 5) To assess its portfolio, including new material capital expenditure investments, in relation to a well below 2°C scenario from 2019 onwards. 

In the beginning of 2020, as a follow up of the joint statement, Equinor launched new climate ambitions to reduce GHG emissions. Storebrand will continue the engagement with Equinor to support the company to ensure delivery of the commitments made. 

Outcomes
ESG Topic
Human rights|Labour practices and supply chain management
Conducted by
Objectives

Bring the company's attention to freedom of association issues and labor rights so that it can improve its policies and performance regarding its relationship with employees and avoid recurrent strikes.

Scope and Process

Hyundai was excluded from our investments in Q3 2017 due to its recurrent and systematic conflicts with employees in several countries due to the lack of company's recognition of freedom of association rights and anti-union activities. In addition, employees often complained of long days without being paid over time. Temporary workers complained of being unfairly treated. These situations have led to violent conflict and 23 strikes in the last 26 years. After the exclusion, Storebrand has continued its dialogue with the company.

Storebrand and Skagen Funds (part of Storebrand group) have been engaging with the company by visiting the company in South Korea during 2018 and via conference calls an e-mail correspondence during 2019. The company has been asked regarding a formal freedom of association policy and its implementation as well as working conditions for its employees. The company has been working with these issues since it was excluded from our investments. As a result of the positive dialogue with the company Hyundai was moved from exclusion to watch list status which means the company is investable with restrictions. 

The company has improved policies; new director on the board with expertise in labor-relations; new sustainability team repproting to top managment

 

Outcomes
ESG Topic
Climate Change
Conducted by
Objectives

Discussion on the implementation of the Task Force on Climate-related Financial Disclosures (TCFD) climate risk framework.

Scope and Process

Part of a collaborative project with three other Norwegian investors to engage with Norwegian companies listed on the Oslo Stock Exchange. The process started with contacting companies within high emitting sectors that would benefit from disclosing their strategy to manage climate-related risks and opportunities. Furthermore, the investor group set up a meeting with the companies' management to present the TCFD framework and how the requested data would be used from the investor side. The company would then present their own ESG work and initiatives, followed by a joint discussion on TCFD alignment and which disclosures were most useful.

Outcomes: Currently engaging with 6 companies. The investor group has had useful discussions with Norsk Hydro and reached a mutual understanding of the strengths and weaknesses of the TCFD framework given the challenges in the aluminum industry. The focus on climate-related disclosures was improved in Norsk Hydro's reporting compared with previous years.

Outcomes
ESG Topic
Human rights|Labour practices and supply chain management
Conducted by
Objectives

Implementation of purchasing practices that should lead to an increase in wages, ultimately living wages. 

Scope and Process

Storebrand has been engaging with the textile company Hennes & Mauritz over the years regarding labor conditions and living wages, in particular. This has led to results over the years: in 2013 H&M announced its Fair Living Wages roadmap; In 2017-2018 after criticism of slow process the company explained they had been successful in creating pay structures together with a 20 other brands initiative with trade unions, governments and suppliers. Living wages is a complex issue that requires several stakeholders if it is to be achieved.

In 2019, the company has shown that wages have increased at suppliers with pay structure but they are still low. Storebrand's continues its dialogue with H&M trying to assess to what extent it is sharing the cost of raising wages through the implementation of these practices.

Outcomes
ESG Topic
Anti-bribery and corruption
Conducted by
Objectives

Improve anti-money laundering routines and processes 

Scope and Process

DNB is the latest of the Scandinavian banks to be implicated in money laundering allegations and we wish to understand what has happened and how DNB has changed its routines and systems to prevent it from recurring. In 2019, we have been in contact with DNB's investor relations department and  they were reluctant to share much information other than what had been communicated in the media and through Økokrim. We continue to discuss their systems and routines further in 2020 and expect them to be more forthcoming as soon as the first step of Økokrim's investigation is completed.

We are awaiting DNB's internal report on the issue and the outcome of Økokrim's investigation.

Outcomes
ESG Topic
Climate Change|Sustainability reporting|Water risks|Deforestation|Other

specify

          
        
Conducted by
Objectives

Implementation of climate risk analysis/scenarios according to TCFD; Ensure that company’s supplier policy requires measuring, reporting, reducing GHG emissions and freshwater impacts; Publish quantitative, time-bound targets and associated metrics to reduce the impacts of company's animal protein supply chains; Commit to publicly disclosing on progress towards these targets

 

Scope and Process

Engagement on meat sourcing towards the six largest fast food players (Restaurant Brands International; McDonalds; Wendy's; Domino's Pizza; Chipotle and Yum! Brands) organized by Ceres and FAIRR. Storebrand has been actively participating in calls with Yum! Brands (the parent company of KFC, Taco Bell and Pizza Hut) together with three other investors, in addition to coordinating calls to discuss issues and process forward. 

Committed to pursue science-based target to reduce GHG emissions from its operations, franchises and supply chain (Scope 1,2,3) and to explore purchasing renewable energy.

Outcomes
ESG Topic
Human rights|Water risks
Conducted by
Objectives

Ensure that company’s suppliers reduce freshwater impacts; Implementation of human rights due diligence at suppliers

Scope and Process

Engagement with the supermarket chain, ICA group, due to allegations of suppliers depleting freshwater resources for local communities in Peru, which has led to an acute water crisis.

Despite being one of South America’s most water-stressed countries, Peru is a leading asparagus exporter. While a surge in demand for the water-consuming crop has boosted economic growth and job creation in the country’s agro-export sector during the last decade, increased pressure on freshwater resources has led to an acute water crisis for local communities.

The company's suppliers are part of the large-scale export agriculture industry in the Ica Valley, accounting for over 90 percent of yearly groundwater extraction. The local population in some areas only have access to water for a few hours a week. Lack of access to water is a violation of a fundamental human right and impacts on other human rights, such as the right to food, health and an adequate standard of living. Storebrand has engaged with the company so that it mitigates its impact on freshwater resources via its suppliers in Peru.

The company stoped sourcing gradually so that supplierscan adapt and their workers are not affected. Complex issue, requring several stakeholders collaboration to effect change

Outcomes
ESG Topic
Climate Change|Human rights|Deforestation
Conducted by
Objectives

PRI engagement group: Soy and Cattle

In 2019, Storebrand launched its deforestation policy which is a call on companies to eliminate deforestation and what we expect of companies regarding their disclosure and management of deforestation risks. Our expectations are directed at all companies in our portfolio. We are however mindful that deforestation risk may be especially relevant to companies engaged in activities related to the production of soy, palm oil, cattle and timber. As a result, Storebrand is active in the working groups under Sustainable Forest Initiative. We have led the dialogue on cattle, soy, palm oil and also banks. 

Scope and Process

Storebrand is a co-lead in the dialogue with Bunge (soya), Marfrig (cattle), Wilmar (palm oil) and Bank Mandiri (ASEAN banks) with the aim to strengthen company policies and implementation as well as the negative social impact its operations may cause. We want companies to demonstrate a commitment to eliminating deforestation by taking the following steps, among others:

- Stronger awareness and governance regarding deforestation risks, including oversight at the board of directors level;
- A publicly-disclosed commodity-specific deforestation policy with quantifiable, time bound commitments covering the entire supply chain and sourcing geographies;
- Traceability across the entire commodities supply chain;
- Monitoring and verification processes to ensure that suppliers are complying with the company’s deforestation policy.

The dialogues are ongoing. 

Outcomes
ESG Topic
Anti-bribery and corruption
Conducted by
Objectives

Implementing of measures that sufficiently reduce the risk of recurrence for any financial crimes

Scope and Process

Samsung was put on Storebrand’s observation list in Q4 2018. The reason was senior management involvement in corruption and bribery, and we assess the risk of recurrence as high enough to warrant observation, but not full exclusion. Since the decision we have had several meetings with Samsung in South Krea and London  to explain our concerns, expectations and to hear how they are working to improve their systems and operations.

We see clear improvements in the company but will continue our engagement with Samsung and expect further changes before removing them from the observation list. Samsung's willingness to discuss ESG issues and openness regarding previous practices We met with Samsung in London most recently in February 2020 and they could report that they have created and independent compliance committee with a wide mandate for investigations and that will report all its recommendations online. They have also replaced the Chairman of the Board (the former CFO that recently was convicted for union busting) with an independent director.

Outcomes

11.2. Additional information. [Optional]


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