Responsible investment

Savings Bank’s asset management (Sp-Fund Management Company) signed the UN supported Principles of Responsible Investment (PRI) in 2014 and is also committed to taking environmental, social and governance-related factors into account in its investment activities.

We report our activities to the PRI annually.

As a signatory to the UN Principles for Responsible Investment, we are committed to the following:

1. We will incorporate ESG issues into investment analysis and decision-making processes. ESG issues are part of our investment process.
2. We are an active owner and we incorporate ESG issues into our ownership policies and practices.
3. We will promote the appropriate disclosure on ESG issues by the entities in which we invest
4. We will promote the acceptance and implementation of the responsible investment principles within the financial sector.
5. We will cooperate with other investors to promote the responsibility of investment activities.
6. We will report on the realisation of the principles of responsible investment and our activities and progress towards implementing responsible investments.

Participating in various cooperation initiatives related to responsible investment is important to us, as it enables us to strengthen our efforts related to responsibility and promote responsibility in investment activities in cooperation with other investors.

In addition to observing the Principles for Responsible Investment (PRI) supported by the UN, we participate in various Finnish and international cooperation initiatives. Savings Banks’ Asset Management (Sp-Fund Management Company) has been an active member of Finland’s Sustainable Investment Forum (Finsif) since 2014.

In June 2018, we joined the CDP as an investor signatory of the climate change, water and deforestation initiatives. CDP is an organisation that collects company-specific information on the prevention of climate change, water consumption and greenhouse gas emissions, for example.

In 2019, we signed the Climate Action 100+ investor initiative, which aims to influence more than 100 companies with the highest emissions in various industries.

We are a signatory to the following initiatives:

• The UN Principles for Responsible Investment (PRI)
• Climate Action 100+
• CDP (Climate Disclosure Project)
  

   

We are a member of the following:

• Finsif
• UN Global Compact

 

Our activities support the following UN Sustainable Development Goals in particular:

• 12: Responsible consumption
• 8: Decent work and economic growth
• 9: Sustainable industry, innovation and infrastructure
• 16: Peace, justice and strong institutions
• 13: Climate action

    

We report in accordance with:

• GRI Core
• TCFD framework
  

      

 

At Savings Bank’s asset management, applying the principles of responsible investment has been incorporated into the investment analysises and decision-making processes. We continuously develop our investment process from the perspective of responsibility.

Designated portfolio managers are responsible not only for the return and risks of their portfolios, but also the application of the principles of responsible investment in their practical investment activities. Portfolio managers also analyse the material ESG risks and opportunities of their investments.

The person charged with the coordination of ESG issues monitors the activities of responsibille investments, produce internal analyses, report and continuously develops the responsible investment practices of Sp-Fund Management Company. He or she also promotes the responsibility investments in cooperation with other investors, for example, through stakeholder meetings and networks.

We monitor how our direct investments follow international norms and agreements. The norms we take into consideration are based on documents such as the UN Global Compact, the OECD Guidelines for Multinational Enterprises and the ILO Declaration on Fundamental Principles and Rights at Work. Violations are always processed on a case-by-case basis. In the event of a new violation, we aim to assess the company’s willingness and action to rectify the underlying factors. We may contact the company either directly or via our service provider in order to gain more information and to influence their actions. We exclude from our direct investments companies that constantly violate the norms.

We exclude from our direct investments companies that manufacture, sell or market controversial weapons that are prohibited by international agreements. Controversial weapons refer to weapons such as land mines, cluster bombs, biological and chemical weapons and, in some cases, nuclear weapons.

We also exclude form our direct investment some thermal coal users and producers. Exclusion is for mining companies where over 25 per cent of revenues come from thermal coal energy or where the production is significant. Electricity companies that uses significant amount of thermal coal are exclude. If a company has a proven strategy or plans reduce thermal coal and minimize their environmental impact, it can avoid exclusion.

We do not directly invest into tobacco manufacturers.

We regularly screen our direct investments with regard to exclusions and international norms and agreements. The analyses is done both internally and via service provider.

We monitor especially the development of the companies whose shares are included in our portfolios. Our aim is to increase openness, transparency and responsibility of our investee companies. Where necessary, we directly engage with the companies and aim to influence that the companies take action in response to violations and promote a responsible and sustainable way of operating. We aim to discuss ESG issues in company meetings and emphasise their significance. Our funds participate in the General Meetings of our investee companies, in accordance with the principles of ownership steering.

Read more of our ownership policy here (In Finnish).

We use external asset managers to complement the scope of our investment activities. We choose responsible, financially sound and reliable partners whose investment philosophy is close with our own. We prefer companies that have signed the UN Principles for Responsible Investment.

Sp-Fund Management Company only invests in funds whose management company is located in a country party to OECD’s AEOI agreement, or the agreement on the automatic exchange of tax information, or in the case of the USA, to the FATCA agreement similar to the AEOI.

We want to inform investors about the sustainability of our funds. We publish the sustainability review of Savings Banks’ Asset Management biannually. The review illustrates our actions in the field of sustainable investment and publishes information about the sustainability indicators of our funds. The fund-specific details include the ESG scores and ratings and carbon footprints, among other things. In addition, we indicate which of our funds have received The Morningstar® Low Carbon Designation™ and give an account of the positive environmental impacts of the investments of our funds. 

Read more on the Savings Banks’ Asset Management’s biannual sustainability review and the quarterly impact report of the Säästöpankki Ympäristö special investment fund (in Finnish) on the sustainability reporting website. 

Impact and thematic investing are coming more popular among responsible investing. Investors want more often choose funds that promotes also their values. Besides profits, an investor might want a positive, measurable impact of their investments. Few of the key areas are sustainable development and environmental solutions.

Säästöpankki Ympäristö is an impact fund that enhances the sustainable use of environment. The fund invests in companies and other that focus on climate change mitigation and environmental solutions. The fund reports quarterly on the positive environmental impacts of its investments.

Responsible investment refers to an investment process in which attention is paid to environmental, social and governance (ESG) factors in addition to financial figures. ESG stands for the words Environment, Social and Governance.

In recent years, the EU has also developed regulations to establish a definition for sustainable finance. The aim of the regulations is to provide companies, investors and political decision-makers of the Member States with uniform definitions and help and reorient financing in a sustainable manner.

What does the EU’s sustainable finance regulation mean?

In 2018, the European Commission published the Sustainable Finance Action Plan (SFA), which aims to steer financial markets towards sustainable development goals. In recent years, the EU has developed legislation to establish a definition for sustainable finance. The aim of the regulations is to provide companies, investors and political decision-makers of the Member States with uniform definitions and help and reorient financing in a sustainable manner. The basic pillars of the regulatory framework are the sustainability classification system (taxonomy), disclosure obligations and sustainable investment products. In addition, effective from 2 August 2022, the Markets in Financial Instruments Directive requires us to determine the sustainability preferences of the customers of our investment and insurance advisory services. More information on sustainable finance in the EU.

EU taxonomy and environmentally sustainable investments

The EU taxonomy is a sustainable financing classification system for environmentally sustainable economic activities. Taxonomy-eligible activities must promote to at least one of the six sustainability objectives that are related to climate change mitigation, climate change adaptation, the sustainable use and protection of water and marine resources, the transition to a circular economy, pollution prevention and control as well as the protection and restoration of biodiversity and ecosystems.

In addition, taxonomy-aligned activities must not cause any significant harm to the achievement of other objectives in line with the DNSH (Do No Significant Harm) principle. The taxonomy also requires minimum safeguards for social responsibility, i.e., respect for human rights and the principles of working life and good governance.

EU Sustainable Finance Disclosures Regulation

The Sustainable Finance Disclosures Regulation (SFDR) lays down disclosure obligations for all financial market operators and products. It promotes disclosures on, for example, incorporating sustainability risks into investment decisions and remuneration policies, adverse sustainability impacts and the sustainability of financial products.

The SFDR defines the sustainability of investment products as follows:

• Article 8 products promote, among other characteristics, environmental or social characteristics, or a combination of those characteristics, provided that the companies in which the investments are made follow good governance practices.
• Article 9 products are sustainable investments that promote an environmental or social objective.

A sustainable investment, as defined in SFDR Article 8 (17), contributes to:

a) an environmental objective, as measured, for example, by key resource efficiency indicators on the use of energy, renewable energy, raw materials, water and land, on the production of waste, and greenhouse gas emissions, or on its impact on biodiversity and the circular economy, or

b) a social objective, in particular an investment that contributes to tackling inequality or that fosters social cohesion, social integration and labour relations, or an investment in human capital or economically or socially disadvantaged communities.

Such sustainable investments must do no significant harm to any of the aforementioned objectives and the investee companies must follow good governance practices, in particular with respect to sound management structures, employee relations, remuneration of staff and tax compliance. A sustainable investment is typically an Article 8 or Article 9 product.

• Article 6 product, meaning a product that takes sustainability risks into account (or does not, with due justification). With regard to adverse impacts, for example, the SFDR applies sustainability indicators relating to climate, the environment, social and employee matters, respect for human rights, and anti‐corruption and anti‐bribery matters.

More information on the Sustainable Finance Disclosure Regulation

You can have an impact through your investment decisions

By investing in sustainable funds you participate in building a more sustainable future. At Sp-Fund Management Company, applying the principles of responsible investment has been directly integrated into the investment process. Portfolio managers also evaluate the risks and opportunities related to each investment target’s responsibility as part of the other analysis of investments. ESG factors and risks are evaluated and taken into consideration as part of investment decisions and analyses in our portfolio management activities.

More information on the sustainability disclosures of our funds in our fund prospectus

The ultimate purpose of the legislation governing sustainability risks is to promote the orientation of capital flows towards more sustainable investments. This is achieved, for example, by increasing the transparency of investment products from a sustainability perspective.

Regulation (EU) 2019/2088 on sustainability‐related disclosures in the financial services sector (SFDR) defines sustainability risk as an environmental, social or governance event or condition that, if it occurs, could have a material negative impact on the value of the investment.

Environmental, social and governance-related (ESG) factors are taken into account in the investment activities of Savings Banks’ Asset Management. More detailed descriptions of our responsible investment approaches and taking sustainability risks into account in our investment processes are provided in our Responsible Investment Policy and Ownership Steering Policy.

As part of the SFDR, financial market participants and financial advisers have been required, by 30 June 2023, to report on the principal adverse impacts of their investments for the first time. We take into account the principal adverse impacts on sustainability factors in our investment and insurance advisory activities and for the funds managed by Sp-Fund Management Company. Information on the principal adverse impacts is used in portfolio management as part of ESG analysis. We aim to establish an understanding of how the sustainability impacts affect the profitability and future prospects of the investment, also taking into account the asset class and investment horizon, and always giving due consideration to the best interests of the customer or unit holder.

Principal adverse impacts reported by Sp-Fund Management Company and Sb Life Insurance

The remuneration policy includes information on remuneration being consistent with taking sustainability risks into account. Remuneration must not be in conflict with the responsibility of operations and taking sustainability risks into account. Remuneration also incorporates certain sustainability risks, including social performance indicators.