Our work with responsible investments is based on international conventions signed by the Swedish government regarding topics such as human rights, environmental issues, corruption and labor rights. PriorNilsson invests primarily in Swedish firms, but also to some extent in other markets across the globe. Our investments are aligned with the principles and policies settled by PriorNilsson’s Board of Directors.
We are investing in accordance with several principles, conventions and treaties. Thus, we are commited to refrain from investing in firms breaching these agreements. In addition, PriorNilsson is a signatory of the UN Principles for Responsible Investment (UNPRI) as well as the Sveriges Forum för Hållbara Investeringar (Swesif).
These commitments by PriorNilsson on the policy level with regards to responsible investments affect the operational management of funds directly through three primary methods: exclusion, screening & review and ESG integration.
We are restricting our funds’ investment universes (i.e. the companies and asset classes we can invest in) by excluding such companies that are operating in sectors where there is a general prohibition or in conflict with our commitments on the policy level (see ”Responsible investments” above). The general prohibition excludes companies involved in controversial weapons such as cluster mines, landmines, nuclear weapons, biological weapons, chemical weapons as well as weapons of white phosphorus or depleted uranium. Apart from this, there are no absolute prohibitions towards any specific type of investment. Instead, ESG factors are well-integrated into the fundamental analysis prior to every investment decision.
External resources such as reports and ESG research data are being used by PriorNilsson to consider exclusion. As an example, the AP7 fund communicates a ”blacklist” bi-annually that serves as a basis for exclusion from our investment universe. On top of this, our external ESG research analysis providers supply us with ad hoc recommendations on companies that could be excluded.
On a post-investment basis the news flow regarding portfolio holdings is naturally covered for news that could lead to exclusion based on our commitments.
Screening & Review
As a means to follow-up current holdings in order to (in severe cases) exclude/divest companies or (in less severe cases) discover opportunities to influence companies in a direction more in line with our overall take on responsible investments, we are conducting regular screenings and reviews. Our external partner for ESG services, Sustainalytics, is performing rigorous screenings of our portfolios twice a year to control and identify potential risks. These risks often concern companies that might deviate from PriorNilsson’s ESG commitment.
Apart from this, the Head of Responsibility as well as the portfolio managers are performing in-house screenings and reviews of ESG issues frequently.
We invest in companies where we see long-term potential for risk-adjusted excess returns for our clients. Under certain circumstances, we might come to the conclusion that the best means to achieve this goal is through active engagement with our portfolio companies in order to better their performance or risk management. The ownership actions available to us under these circumstances are proxy voting, dialogues and particitating in nominations to the board of directors.
A responsible approach to investments constitute an integral part of the investment decision-making process at PriorNilsson. The portfolio managers are treating company, sector and country ESG data in the financial analysis in the same way as and alongside other publically available data on the firm. This ESG data is sourced from the media, external reports, annual reports, CSR reports, equity research reports or any publically accessible information source.