We are looking into using PRI Transparency and Assessment Reports in the coming years. The most important for us are regular meeting and discussions with managers.
Other RI considerations: investment in companies that do have/working on the solution to the most critical challenges we face: climate change/ Energy/transportation, water, waste, social inclusion/equality and other SDGs.
Even though sustainability themes have been a key feature in our portfolios, we have stepped up our efforts in terms of resources, system support and analytical tools. This has given us a better understanding of the quality of our portfolio as well as potential problem areas. With this, we can work more systematically and purposefully on these issues in our manager dialogue. At the same time, we acknowledge the fact that today’s quality of data is not good enough for decision-making, but can be used carefully as a monitoring tool. The data is typically static and backward-looking, without the capacity to monitor future change, which must be the purpose of responsible investments.
We have established a process of monitoring external managers’ level of integration of ESG including their active ownership, and we have developed internal scorecards for monitoring ESG risks based on inputs from public sources in a more systematic way. We continuously evaluate managers and our portfolio composition, and we will not hesitate to withdraw the mandate from a manager if we are dissatisfied with their understanding of future sustainability risks.
We strive to continuously improve our process for extra quality assurance and reporting on ESG factors:
• Screening - screening of known ESG factors in the funds based on data input from Sustainalytics and NBIM’s exclusion list
• Sorting - sorting and processing of data material from the above and other sources
• Evaluation - analysis and risk assessment, evaluation if something new should immediately be addressed with a manager
• Dialogue and follow-up - based on our assessment of material risk. We have a close and continuous interaction with our managers as they are part of our “investment team”
• Assessing the impact of cooperation and dialogue