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S-Bank Plc.

PRI reporting framework 2020

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ESG incorporation in actively managed listed equities

Implementation processes

LEI 01. Percentage of each incorporation strategy

01.1. Indicate which ESG incorporation strategy and/or combination of strategies you apply to your actively managed listed equities; and the breakdown of your actively managed listed equities by strategy or combination of strategies.

ESG incorporation strategy (select all that apply)

Percentage of active listed equity to which the strategy is applied — you may estimate +/- 5%
1 %
Percentage of active listed equity to which the strategy is applied — you may estimate +/- 5%
99 %
Total actively managed listed equities 104%

01.2. Describe your organisation’s approach to ESG incorporation and the reasons for choosing the particular strategy/strategies.

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.

01.3. If assets are managed using a combination of ESG incorporation strategies, briefly describe how these combinations are used. [Optional]

First we screen out categorial exclusions from the investment universe. Thereafter from a somewhat reduced universe ESG integration is used when analysing companies for stock selection and portfolio construction.


LEI 02. Type of ESG information used in investment decision (Private)


LEI 03. Information from engagement and/or voting used in investment decision-making (Private)


(A) Implementation: Screening

LEI 04. Types of screening applied

04.1. Indicate and describe the type of screening you apply to your internally managed active listed equities.

Type of screening

Screened by

Description

Product and activity based exclusion. We exclude companies in certain clearly defined business segments from our direct investments. We do not invest in manufacturers of weapons prohibited by international treaties, including nuclear, biological and chemical weapons, cluster munitions and anti-personnel mines. We do not invest in producers of tobacco or producers of cannabis intended for recreational use either. We use external experts for identifying the companies that fall within the above categories. Based on our own analysis, we have excluded mining and power companies whose business is strongly coal-based. We exclude mining companies if coal used for energy production accounts for more than 20 % of their turnover. In the case of electricity companies, we have first calculated the coal-intensity of their electricity production and then more carefully examined the source of the emissions of the most coal-intensive companies.

When it comes to companies' ESG related practice and performance, exclusion can be made if there are serious problems in corporate practice.

Screened by

Description

We have five funds where there are pre-set requirements on ESG rating. In these cases companies' ratings have to be above a certain level. ESG ratings consist of E, S and G.

Screened by

Description

We use information provided by MSCI ESG Research to conduct the screening.

04.2. Describe how you notify clients and/or beneficiaries when changes are made to your screening criteria.

Screening criterion and principles are defined in our ESG policy. If the policy is updated, we will make the new information publicly available.


LEI 05. Processes to ensure screening is based on robust analysis

05.1. Indicate which processes your organisation uses to ensure ESG screening is based on robust analysis.

05.2. Indicate the proportion of your actively managed listed equity portfolio that is subject to comprehensive ESG research as part your ESG screening strategy.

05.3. Indicate how frequently third party ESG ratings are updated for screening purposes.

05.5. Additional information. [Optional]

We compare ESG research providers' offerings from time to time for example in terms of quality and universum size. We also supply feedback to the service provider regularly regarding research quality and other issues.


LEI 06. Processes to ensure fund criteria are not breached (Private)


(C) Implementation: Integration of ESG factors

LEI 08. Review ESG issues while researching companies/sectors

08.1. Indicate the proportion of actively managed listed equity portfolios where E, S and G factors are systematically researched as part of your investment analysis.

ESG issues

Proportion impacted by analysis
Environmental

Environmental

Social

Social

Corporate Governance

Corporate Governance

08.2. Additional information. [Optional]


LEI 09. Processes to ensure integration is based on robust analysis

09.1. Indicate which processes your organisation uses to ensure ESG integration is based on robust analysis.

09.2. Indicate the proportion of your actively managed listed equity portfolio that is subject to comprehensive ESG research as part your integration strategy.

09.3. Indicate how frequently third party ESG ratings that inform your ESG integration strategy are updated.

09.5. Describe how ESG information is held and used by your portfolio managers.

09.6. Additional information. [Optional]


LEI 10. Aspects of analysis ESG information is integrated into (Private)


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