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Folksam

PRI reporting framework 2020

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Investment policy

SG 01. RI policy and coverage

New selection options have been added to this indicator. Please review your prefilled responses carefully.

01.1. Indicate if you have an investment policy that covers your responsible investment approach.

01.2. Indicate the components/types and coverage of your policy.

Select all that apply

Policy components/types

Coverage by AUM

01.3. Indicate if the investment policy covers any of the following

01.4. Describe your organisation’s investment principles and overall investment strategy, interpretation of fiduciary (or equivalent) duties,and how they consider ESG factors and real economy impact.

Folksam is a mutual company which means that our customers are also our owners. What is important for them is important for us. Within the Folksam Group we have different sets of investment criteria based on customer demands (see SG 01.5). Common for all are our engagement criteria. We believe that we both have a responsibility and a possibility to contribute to a positive change in the real economy through the investments we do.  

01.5. Provide a brief description of the key elements, any variations or exceptions to your investment policy that covers your responsible investment approach. [Optional]

We engage with our investments according to our investment criteria regarding the climate and environment, human rights and anti-corruption. Our goal is not primarely to reject companies to invest in, but rather to encourage as many as possible to improve at taking responsibility. However, if we see no possibility to contribute to a change we do exclude. This is why we have several exclusion criteria.  

We exclude tobacco and illegal arms such as cluster weapons, anti-personnel mines and nuclear weapons. From 2015 we neither invest in companies with more than 30 percent of their returns from coal. Last year we introduced a new criteria regarding oil sands where we exclude companies with 10 percent of their returns from oil sands. Our boards also made the decision to exclude commercial gambling. All companies within Folksam apply these criteria, with two exceptions. The companies within KPA Pension have even tougher exclusion criteria and therefore do not invest in the alcohol industry or the arms industry.For Folksam General, whose car, home and holiday home insurance products are Good Environmental Choice certified, investments in coalfired generators, nuclear power and uranium are excluded in addition to arms and alcohol.

Since 1st January 2017, our investment criteria cover all our asset classes, ie listed companies, fixed income, alternative investments and real estate.

01.6. Additional information [Optional].

          
        

SG 01 CC. Climate risk

01.6 CC. Indicate whether your organisation has identified transition and physical climate-related risks and opportunities and factored this into the investment strategies and products, within the organisation’s investment time horizon.

Describe the identified transition and physical climate-related risks and opportunities and how they have been factored into the investment strategies/products.

The climate-related risks have led us to exclude coal (30% threshold), oil sands (10% threshold) and when we launched our new foreign equity portfolio in 2019 where we went from around 1300 holdings to around 500 we decided to keep only half the energy sector compared to our reference index. 

During 2019 we have done a scenario analysis of our equity portfolio and the assumption that the value of all oil and gas companies would become zero. This analysis showed that the value our portfolio would decrease 0,7 - 3 percent. We are aware that not all risks and opportunities have been identified yet, and that our work with active ownership is as important in the future as it has been historically.

01.7 CC. Indicate whether the organisation has assessed the likelihood and impact of these climate risks?

Describe the associated timescales linked to these risks and opportunities.

Certain risks are more short term such as physical risks (storms, floods et c). The transition risks are generally more long term. It is difficult to assess the risks and opportunites and one of our greatest challenges as investors as of today. Please see answer above for more information about the possible impact we have found. 

01.8 CC. Indicate whether the organisation publicly supports the TCFD?

01.9 CC. Indicate whether there is an organisation-wide strategy in place to identify and manage material climate-related risks and opportunities.

Describe

We have set up an internal task force to identify and manage material climate-related risks and opportunities.

1.10 CC. Indicate the documents and/or communications the organisation uses to publish TCFD disclosures.

specify

          Our TCFD report is published on our webpage.
        

SG 02. Publicly available RI policy or guidance documents

 

02.1. Indicate which of your investment policy documents (if any) are publicly available. Provide a URL and an attachment of the document.

URL/Attachment

URL/Attachment

URL/Attachment

02.2. Indicate if any of your investment policy components are publicly available. Provide URL and an attachment of the document.

URL/Attachment

URL/Attachment

02.3. Additional information [Optional].


SG 03. Conflicts of interest

03.1. Indicate if your organisation has a policy on managing potential conflicts of interest in the investment process.

03.2. Describe your policy on managing potential conflicts of interest in the investment process.

The policy is part of the "Guidlines for conflicts of interest" and describes different situations and how they should be handled.

03.3. Additional information. [Optional]


SG 04. Identifying incidents occurring within portfolios

04.1. Indicate if your organisation has a process for identifying and managing incidents that occur within investee entities.

04.2. Describe your process on managing incidents

Folksam and our consultancy firms regularly screen our holdings for incidents related to for example breaches of international norms. In case we discover an incident we handle situation through a well defined process including contacts with the company in question, objectives for managing the incident, contacts with for example NGOs et c. If we find we don't make progress with the dialogue the company might be excluded but this is considered our very last step.


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