Pareto Asset Management AS (PAM) works systematically with ethical considerations in the management of funds and discretionary mandates. PAM shall not make investments which constitute an unacceptable risk of investments contributing to unethical acts or omissions. Such contributions could reduce sustainability and long-term value creation.
In September 2014, PAM decided to formalise our commitment to social responsible investments by committing to the UN PRI (United Nations Principles for Responsible Investment). The principles were signed in November 2014 and PAM presented its first PRI report in March.
In 2016, PAM decided to further formalise its commitment by becoming a member of Norsif. Due to our strong presence in Sweden through a branch in Stockholm, it was logical for us to also join the Swedish sister organisation Swesif. In April 2018, our chief investment officer became a member of the Norsif board.
Due to our fundamental investment philosophy and a limited number of investments, it is our ambition to provide solid and transparent documentation of our portfolio management being in compliance with our guidelines for responsible investments.
Our guidelines for responsible investments are founded on the guidelines used by the Norwegian Government Pension Fund, the United Nations Principles for Responsible Investments (PRI), as well as recognised principles and standards.
The current guidelines also state that precautionary measures shall be taken when investing in bio-technology, weapons, alcohol and gambling, meaning that ethical issues should be subjected to careful considerations before an investment can be made. This may also apply to other ethical issues.
In more general terms, environmental, social and governance issues, as well as technological changes, may affect how PAM views bans or additional precautionary measures when investing in other sectors than those explicitly being addressed by our current guidelines.
Our sustainability considerations roughly imply a process with two basic steps. First, we screen all investments on specific criteria. Second, companies subject to red flags in screening are put under scrutiny.
In our screening we have made a distinction between unethical/unsustainable products or production processes and companies with unethical/unsustainable conduct or behaviour.
In the first case, the question is whether the actual properties of the product or manufacturing process are negative. The company may exercise proper social responsibility, but the behaviour is still irrelevant if the product or manufacturing process warrants exclusion due to ethical considerations. In the second case it is the companies’ conduct, and not necessarily the products, that are negative.
The company also keeps a record of high risk companies.
The investment process
Each management team is responsible for the thorough assessment of ESG criteria before an investment is made. Likewise, they have a responsibility for ongoing monitoring so that they maintain preparedness for any ESG issues that are not necessarily visible or actualised when the investment is made. In the event of doubt, the case will be presented to the ethics committee.
Our approach to responsible investments covers all asset classes, and there are no exceptions to our policy.