We consider responsible investing as part of our fiduciary duty. We find responsibility as a competition factor for companies. Responsibility assessment can provide information on the risks and opportunities that could potentially affect the company’s financial performance in the future, for example, through changes in sales or expenses. These impacts can be triggered by, among other things, changes in legislation or consumption habits that result from a phenomenon or activity associated with responsibility.
ESG integration refers to the consideration of ESG matters (environment, society and governance) in investment analysis and decision-making. Following the identification of substantial ESG issues, the purpose of ESG integration is to assess a company's ability to take into consideration the risks and opportunities associated with these and to assess whether the price of company's securities reflect these factors. Portfolio managers are supported in ESG integration by high-quality ESG assessments and ratings produced by third parties. We also collect ESG information ourselves, for example, discussing relevant responsibility issues in meetings with company management. Our portfolio managers meet company representatives on a daily basis. There are hundreds of meetings like these every year. In addition to assessments carried out by third parties, our country analysis utilises country-specific ESG factors included in our own country-risk model.
We are interested in the performance of our investments in terms of initiatives and principles concerning general international business practices and responsibility-related norms. We observe, for example, the UN Global Compact and the OECD Guidelines for Multinational Enterprises. The UN Global Compact contains principles related to human rights, labour and corruption. The human rights principles include the eradication of forced and child labour. We have access to comprehensive analysis and ratings by third parties. These help us monitor the compliance of the companies we have invested in with international codes of practice. When considering an investment, our portfolio manager checks the company’s compliance with international norms. If there are serious problems with compliance, we can start to engage, monitor the company or exclude it from our investment options. However, our priority is to improve the company's responsibility performance and to eliminate risks resulting from questionable activities. Screens that rely on external data and analysis, are run regularly in addition to the checks that are done before making a new investments.