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Ohman

PRI reporting framework 2020

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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%
100 %
Total actively managed listed equities 130%

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

It is our firm belief that ESG considerations is essential in order to be able to assess the risks and opportunities which could impact a company both in the short- and long-term. For this reason, we have decided to take a systematic approach to ESG incorporation. Integrating ESG factors into the investment process contributes to better risk management and mitigation, and is a strategy to capture greater investment opportunities and long-term growth trends. As of this year, all of our funds are managed according to our highest sustainability level (ESG integration). Each investment team determines how the sustainability factors are material to the investment, depending on their investment strategy, universe and mandate.

We only invest in companies that live up to our high standards for sustainable business conduct. Hence, we exclude companies that according to our criterias are engaged in unethical behavior or are in breach of international norms and conventions. We do so by conducting quarterly screenings, to ensure that our investments are compliant with our standards and client demands.

ESG integration strategy:

  • If it is a new company which have not been assessed before: portfolio manager inform the ESG team. An ESG Due Diligence is conducted to ensure that it meets our minimum requirements.
  • The ESG team makes a qualitative assessment of the company's ESG profile and gives a recommendation/ESG outlook (positive / neutral / negative outlook). The ESG score from the external service provider, which is a more quantitative score (ESG risk rating), is thus complemented by our own internal and qualitative assessment. The company's ESG profile is taken into account in the fundamental analysis and could hence impact the valuation and investment decision. 
  • We also apply a thematic strategy, to identify specific investment themes and value drivers. We strive to invest in companies that, due to their exposure to certain themes or specific Sustainable Development Goals (SDG), are deemed to have the potential to increase their long-term growth opportunities.
  • We have developed an ESG Risk Monitor, to identify portfolio holdings with high or heightened ESG risk, or companies with an improving ESG profile. The results from the monitoring process is discussed at regular meetings with the portfolio management teams.
  • If a company has been identified as having high ESG risk, and if the ESG team has a negative outlook for the company, this is discussed at the regular meetings. If we continue to have a negative view of the company's ESG profile, and do not see the necessary improvements from engagement, we can choose to divest.

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

Screening is the foundation of our responsible investment strategy and is applicable to all of our investments. This strategy was chosen to meet client demands as well as regulatory requirements, but also because certain business practices simply are misaligned with a sustainable development and hence not something we deem is a good investment. A quarterly screening is conducted of the investment universe to ensure compliance with our criterias. An investment is not eligible if the company violates our exclusion criteria or if it is verified for violating international norms and conventions.

ESG integration:

Actively managed funds: see ESG incorporation strategy above (LEI 01.2). ESG integration strategy applied to enhance the investment decison making process, to widen the scope of factors we evaluate when considering an investment.

Passively managed funds: the more sustainable companies are assigned a higher weight in the fund than in the benchmark index.


LEI 02. Type of ESG information used in investment decision

02.1. Indicate what ESG information you use in your ESG incorporation strategies and who provides this information.

Type of ESG information

Indicate who provides this information  

Indicate who provides this information 

Indicate who provides this information 

Indicate who provides this information 

Indicate who provides this information 

02.2. Indicate whether you incentivise brokers to provide ESG research.

02.3. Describe how you incentivise brokers.

In our assessment of counterparties and in the annual broker vote, we evaluate to what extent they deliver ESG research and the quality and scope of these. In meetings with brokers we always encourage their ESG efforts and give feedback on improvements. 

 

02.4. Additional information. [Optional]


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

03.1. Indicate whether your organisation has a process through which information derived from ESG engagement and/or (proxy) voting activities is made available for use in investment decision-making.

03.2. Additional information. [Optional]

We have an ESG research log (centralized front-desk system), where ESG analysts add company-specific research notes, for example after company presentations and meetings. We also flag whether the company is subject to an ongoing engagement.

The portfolio managers always have access to this log, but the ESG-team also send ESG-updates to relevant teams when a change is made; including a short comment, the company's ESG risk profile and ESG outlook. Through these updates we notify portfolio managers about the engagement process and potential changes in our assessment.


(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

Quarterly screening is conducted by an external service provider based on our ethical standard as well as international norms and conventions. For all actively managed listed equity we exclude companies that are producing and distributing controversial weapons; cluster munitions, anti-personnel mines, nuclear-, biological- and chemical weapons. We also exclude companies if more than 0% of their revenues are derived from production of weapons/military material, tobacco and pornography. Also, companies involved in distribution of alcohol, weapons/military material, gambling, tobacco, pornography and cannabis (more than 5% of their revenues) are excluded. We do not invest in companies involved in extraction of fossil fuels (coal, oil and gas) or companies which derive more than 10% of their revenues from coal-based electricity and oil and gas-services.​

Screened by

Description

Quarterly screening is conducted by an external service provider on the basis of international norms and conventions. If a company is found to be a confirmed violation, we exclude the company from the investment universe. We do not invest in companies that systematically are in breach of international norms and conventions based on UN Global Compact 10 principles on labor, human rights, environment and anti-corruption. 

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

The screening criterias are defined and set by our Committee for Responsible Investment, and decided upon by the Board of Directors. We have identified these criterias based on customer demand, industry standards and what we deem are important sustainability risks. The criteria’s are evaluated once a year, and potential changes are included and revised in our policy. They are communicated to our clients in many ways, for example news letters and meetings.


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.

05.4. Indicate how frequently you review internal research that builds your ESG screens.

05.5. Additional information. [Optional]


LEI 06. Processes to ensure fund criteria are not breached

06.1. Indicate which processes your organisation uses to ensure fund criteria are not breached.

06.2. If breaches of fund screening criteria are identified, describe the process followed to correct those breaches.

The internal control function on a daily basis monitors that our clients’ and fund holdings are in line with its sustainability criterias. Any deviations must immediately be reported to the responsible portfolio manager, CEO and Head of Responsible investment. The portfolio managers have to sell the holding that are in breach of the sustainability criteria. Head of Responsible Investment must annually report to the Board of Directors on the selection process and its compliance.

06.3. Additional information. [Optional]


(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.

09.4. Indicate how frequently you review internal research that builds your ESG integration strategy.

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

09.6. Additional information. [Optional]

We have an ESG research log, where ESG analysts add company-specific research notes for example after company presentations and meetings. We also flag whether the company is subject to an ongoing engagement.

The portfolio managers always have access to this log, but the ESG-team also send ESG-updates to relevant teams when a change is made; these updates include a short comment, the company's ESG score and the ESG outlook. Through these updates the ESG-team notify portfolio managers about the engagement process and potential changes in our assessment.


LEI 10. Aspects of analysis ESG information is integrated into

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

10.1. Indicate which aspects of investment analysis you integrate material ESG information into.

Proportion of actively managed listed equity exposed to investment analysis

Proportion of actively managed listed equity exposed to investment analysis

Proportion of actively managed listed equity exposed to investment analysis

Proportion of actively managed listed equity exposed to investment analysis

Proportion of actively managed listed equity exposed to investment analysis

10.5. Describe how you apply sensitivity and /or scenario analysis to security valuations.

We have conducted a scenario-analysis using the PACTA-tool, created by 2-degrees Investing and supported by the UNPRI. We have conducted this analysis on our listed equity portfolio, and the results have been published in our annual climate report (aligned with TCFD), which can be found here: https://www.ohman.se/fonder/rapporter/kilimatrapport/

10.6. Additional information. [OPTIONAL]

During 2019 we have developed a sector-specific ESG research conducted in house. We look further into the material ESG aspect within a sector and highlight what we see as the main risks but also drivers going forward. This complements our industry anlaysis above, and assess how political, regulatory and ESG factors could affect an industry.

  • The first sector report covered the Tech sector and issues such as data privacy and integrity: https://www.ohman.se/wp-content/uploads/Öhman_Prospektiv_Hållbarhetsrisker_inom_teknologisektorn_2019_1-1.pdf
  • The second sector report covered the Banking sector, especially focusing on climate-related financial risks and business ethics: https://www.ohman.se/wp-content/uploads/Öhman_Prospektiv_2_2019.pdf

These reports are both used as a foundation for discussion on these topics with the portfolio managers. But also in discussions with our clients and other stakeholders. We will soon publish our third sector report, focusing on Industrials.


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