Responsibility in investment operations
Responsibility is a factor in all our operations. The responsibility of Savings Bank’s investment operations is ensured by Sp-Fund Management Company, which is owned by Savings Banks. The task of the company is to manage the funds of our customers and strive to make a good long-term profit. Our investment decisions are always made taking into account environmental matters, social responsibility and good governance.
Accountability in environmental and social matters and good governance
Responsible investment refers to accountability in matters related to the environment, society and good governance (ESG factors) in investment operations. In relation to the environment, this includes giving due consideration to topics such as sustainable development, biodiversity and energy issues. The relevant areas of social responsibility include human resource policy and working conditions, respecting human rights and equality, taking local communities into consideration and appropriately addressing product responsibility. Assessments of governance include the independence and remuneration of the Board of Directors, the paying of taxes and maintaining anti-corruption and anti-bribery practices.
Sp-Fund Management Company has signed the UN Principles for Responsible Investment, and we are a member of Finland’s Sustainable Investment Forum (Finsif). We believe that responsible investment promotes the achievement of a good long-term return. Taking ESG factors into account helps manage the risks related to investment targets and identify opportunities. We also want to contribute to the shift towards more sustainability in business and in society as a whole.
The UN Principles for Responsible Investment
Sp-Fund Management Company signed the UN 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, Sp-Fund Management Company is committed to the following:
1. ESG issues are part of our investment process.
2. We are an active owner and we include ESG issues in our ownership practices.
3. We promote the appropriate ESG reporting of our investment targets.
4. We promote the implementation of responsible investment principles in the financial sector.
5. We cooperate with other investors to promote the responsibility of investment activities.
6. We report on the realisation of the principles of responsible investment and the development of our practices and operating procedures.
Responsibility is an integrated part of our investment process
At Sp-Fund Management Company, applying the principles of responsible investment has been directly integrated into the investment process, which means that ESG factors are evaluated and taken into consideration as part of investment decisions. 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 evaluate the risks and opportunities related to the investment target’s responsibility. They monitor the ESG factors as part of the other analyses they carry out on their investments.
The person charged with the coordination of ESG issues monitor the realisation of responsibility, produce internal analyses, take responsibility for reporting and continuously develop the responsible investment practices of Sp-Fund Management Company. He or she also promotes the responsibility of investment operations in cooperation with other investors, for example, through stakeholder meetings and networks.
Monitoring international norms
We avoid investing in companies that struggle with adhering to international norms. 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. Infringements against norms are always processed on a case-by-case basis. In the event of a new infringement against international norms, we aim to assess the company’s measures and willingness to rectify the underlying factors. We may contact the company in order to gain more information and to influence their actions. The use of a business model that repeatedly and seriously infringes against norms will lead to divestment if no obvious change can be detected in the company’s operating methods.
We also exclude 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 regularly review all of our direct investments with regard to infringements against norms and controversial weapons. The analyses related to the monitoring of international norms and controversial weapons are produced internally as well as through an external analysis service.
We are an active owner
We monitor especially the development of the companies whose shares are included in our portfolios. Our aim is to increase openness, transparency and responsibility in the operations of target companies. Where necessary, we maintain direct contact with the companies and aim to exercise influence in order to ensure that the companies take action in response to grievances and promote a responsible way of operating. We discuss ESG issues in company meetings and emphasise their significance. We participate in the General Meetings of the companies our funds invest in, in accordance with the principles of ownership steering.
Responsibly selected partners
We use the funds of our international partners to complement the scope of our investment activities. We choose responsible, financially sound and reliable partners whose investment philosophy is in line with our own. We favour companies that have signed the UN Principles for Responsible Investment.