Sustainability-related Website Disclosure

Danske Invest Global Sustainable Future, klasse NOK

On this page, you can find product specific information for the fund on sustainability-related aspects. This information supplements the information in the prospectus.

You can read about the fund’s:

SUSTAINABLE INVESTMENT OBJECTIVE

The fund has as its sustainable investment objective to accelerate the transition into a sustainable real economy and positively contribute to the achievement of selected United Nations Sustainable Development Goals (SDGs). Climate Stability, Natural Capital and Social Equity are main SDG themes selected by this fund.

The fund also promotes other environmental and/or social characteristics that are not necessarily decisive to the attainment of the sustainable investment objective:

Inclusions
The fund favours investments in companies that demonstrate:
• sound sustainability practices
• sound environmental stewardship

Exclusions
The fund excludes companies that:
• do not meet the fund’s enhanced sustainability standards
• are involved in non-ethical and/or controversial activities
• are involved in activities with significant negative impact on the climate

Active ownership
The fund seeks to influence investee companies’ impact on sustainability matters through engagement and voting on material sustainability topics.

INVESTMENT STRATEGY

The fund applies an actively managed strategy to attain its sustainable investment objectives.
The strategy aims at selecting companies with the potential to accelerate the transition into a sustainable real economy and/or companies positively contributing to the SDGs at the time of investing.

This fund is focusing on economic activities within the themes of Climate Stability, Natural Capital, and Social Equity including economic activities such as activities relating to renewable energy, solutions that target the global water crisis, sustainable healthcare and/or social infrastructure.

Within these areas, the fund selects companies receptive to benefit from shareholder engagement in order to create and/or further enhance Positive SDG Contribution and SDG exposures by the respective companies.

CCPs are set to ensure that investee companies take action and progress towards a sustainable future. As such, the fund evaluates the credibility of the pathway, and will only invest if sufficient credibility can be established. Typically, primary, secondary and tertiary targets are set. The CCPs are defined prior to initial investment and are evaluated on ongoing basis. If a company does not progress towards the CCPs a dialogue will be initiated to evaluate the probability for the company to reach its CCPs. If the probability is deemed low, the company will be divested from the fund.
Minimum environmental and social safeguards are in place for the portfolio, and the strategy ensures that investments aligned with its sustainable investment objectives do not significantly harm other environmental or social objectives.

The fund’s portfolio is further composed to meet its standards on sound sustainability practices and environmental stewardship. This implies that the fund for investee companies takes into account environmental and social dimensions such as environmental capital, social capital and human capital augmented with traditional corporate governance factors, as well as climate parameters such as climate targets together with measures and strategies to reduce emissions.
The fund excludes investments that would not meet its enhanced sustainability standards, be involved in activities with significant negative impact on the climate and/or involved in non-ethical or controversial activities.

In pursuing a sustainable investment objective and promoting other environmental or social characteristics, the fund commits to engage with companies on CCP related items and other material sustainability topics as well as vote on environmental and/or social proposals in accordance with Voting Guidelines and Voting Scope.

MONITORING OF SUSTAINABLE INVESTMENT OBJECTIVE

A number of processes is in place to monitor the attainment of the sustainable investment objective and promotion of other environmental and/social characteristics of the fund.
 
First, the investment team has access to a wide selection of ESG data and research through our ESG Data Platform that they use on an ongoing basis to assess and monitor the underlying investments’ performance and management of the relevant sustainability indicators of the fund. Further information on the ESG Data Platform may be found under “Data Sources And Processes”.
 
In addition, the Danske Bank Investment Risk Team regularly challenges and monitors the extent to which the sustainable investment objective is met and other characteristics promoted through the sustainability risk challenger role.  The sustainability risk challenger assesses to what degree the investment teams actively consider sustainability matters, address sustainability indicators, take principle adverse impacts into account and how all this affects the portfolio. More specifically, the sustainability risk challenger is tasked with: 
  • Challenging investment teams on how they meet a fund’s specific sustainable investment and objective and sustainability characteristics;
  • Monitoring sustainability factors and challenging investment teams on their investment decisions with reference to sustainability aspects;
  • Assessing the principal adverse impacts that investment decisions might have on societies;
  • Including an evaluation of an investment strategy’s market risk and excess return from a sustainability perspective to ensure that sustainability is not used as justification for poor investment performance.
 
Moreover, the fund is screened daily to ensure that the applicable investment restrictions are adhered to. The Responsible Investment team is responsible for maintaining the restriction list that sets out the companies that funds are not permitted to hold. As restrictions list are integrated into our trading and compliance systems, we can automatically detect whether a fund is holding a security that it, in accordance with the prospectus/investment guidelines is not permitted to.

METHODOLOGIES

The sustainable investment objectives of the fund are measured by two different sets of indicators:
• Acceleration of the transition into a sustainable real economy is measured by use of indicators
assessing how investee companies have progressed with delivering on their tailored Critical Contribution Points (CCPs). Through the CCPs, companies are evaluated on their contribution
towards selected SDGs, and in particularly towards the targets and indicators underpinning those SDGs
• Positive SDG contribution is assessed by a proprietary scoring method that measures the investee companies’ positive exposure to the SDGs
Indicators used to measure the fund’s other environmental and/or social characteristics include: "Sound sustainability practices" is measured by the fund’s proprietary ESG score.

"Sound environmental stewardship" is measured by a carbon risk rating score.

"Enhanced sustainability standards" is measured by the number of companies restricted as a result of this exclusion.

"Reduction of involvement in non-ethical and controversial activities" is measured by the number of companies restricted as a result of this exclusion.

"Reduction of activities resulting in significant negative impact on the climate" is measured by the number of companies restricted as a result of this exclusion.

“Investee companies’ impact on sustainability matters” is measured by the number of engagements, engagement themes as well as environmental and/or social proposals voted on.

DATA SOURCES AND PROCESSES

In order to attain the sustainable investment objective and promote other environmental and/or social characteristics of the fund, the investment team managing the fund leverages Danske Bank’s ESG Data Platform for data and research on the objectives. Danske Bank’s ESG Data Platform consists of the following ESG data & research providers: CDP, ISS, MSCI, RepRisk, SASB, Sustainalytics, TruevalueLabs, Util, and Verisk Maplecroft.  The various ESG data points, which the investment team have, available through our ESG Data Platform is published online: ‘ESG Data Platform’.

The fund’s sustainable investment objective is to positively contribute to the achievement of the United Nations Sustainable Development Goals (SDGs). This is measured by two indicators. The first indicator is The Material SDG Score (mSDG), which is a proprietary scoring method that measures the issuers’ positive exposure to the SDGs. As such, it can be used to identify companies whose business models are likely to create positive externalities, helping societies progress towards more sustainable ones, while capturing business potential. Companies can impact the environments and societies they operate in mainly either via the impacts of consuming their products & services or via their operations & business model; in other words, by what they produce and by how they produce. Therefore, mSDG identifies linkages and considers potential contribution of both of these impact channels. mSDG has specific criteria to evaluate both impact channels separately, and then aggregates the combination of the two assessments into the overall mSDG Score. The model leverage data from Util, MSCI and from our proprietary mScore.

When it comes to sustainability labelled bonds which is the second indicator, the proceeds of the issuance will have to make a positive contribution to at least one of the 17 SDGs. In order for a sustainability labelled bond to be eligible for the fund, the sustainable bonds have to pass the fund’s proprietary assessment that defines whether a sustainability labeled bond contributes to the SDGs.

A description of additional indicators that may be used to measure the fund’s other environmental and/or social characteristics is provided below. The descriptions include the measures to ensure data quality, how the data is processed and the proportion of data that is estimated.

“Sound sustainability practices” is measured by the fund’s proprietary ESG score mScore (material ESG Score). This model calculates performance of companies in managing sustainability issues that are most likely to affect company value creation. mScore is essentially built on two key tenets. First, the model identifies those industry-specific sustainability issues that by evidence are most likely to impact companies' financial or operational performance, and focuses on measuring sustainability performance only against them. Materiality assessment of SASB is used as foundation to this assessment, with the addition of Corporate Governance factors. Second, the model calculates performance of companies using indicators from different sources mapped to the industry-specific material topics. With this complementary data approach, the model allows capturing different perspectives on material performance, both inside-out and outside-in factors. mScore model leverages the most researched and supported sustainability standards and high quality raw data from multiple sources to construct a transparent and credible assessment. The fundamental reason for development of in-house ESG score arises from the fact that ESG disclosure is not standardised and mostly on voluntary basis, meaning there is no universal definition of what constitutes to a set of characteristics of a sustainable company. As a result, different ESG service providers have developed different ESG assessment methodologies that correlate very little.

“Sound environmental stewardship” is measured by a carbon risk rating score. ISS carbon risk rating is used for this indicator and measure the climate-related performance of companies, taking into account not only industry-specific challenges and risk profiles, but also considers companies positive impact. Specially the Carbon Risk Rating considers; climate performance development of the company, climate targets, measures and strategies to reduce emissions as well as emissions along the entire value chain, from the procurement of raw materials to the disposal phase of products.

“Enhanced sustainability standards” is measured by the number of companies restricted as a result of this exclusion. “Enhanced Sustainability Standards” is a multidimensional characteristic imposing minimum standards/safeguards on the portfolio in terms of both environmental materiality as well as social materiality. By promoting enhanced sustainability standards, the relevant investment products commit to exclude companies and countries that a) are involved in activities, or with a conduct, leading to significant principal adverse impacts and/or as relevant significant harm on sustainable investment objectives b) otherwise express weak sustainability practices c) do not have minimum social safeguards. These exclusions are a result of assessments made under the proprietary screening model. The screening model is conducted four times a year where multiple data sources such as input from multiple ESG data providers (e.g. ISS, MSCI, Sustainalytics, RepRisk), Input from our investment teams (e.g. through company dialogues, investment analysis), Investors/Nordic institutions having conducted analysis (e.g. Norge Bank Inv. Mgmt. Etikrådet, ATP) as well as Other relevant sources and stakeholders (e.g. NGOs, Academia).

“Reduction of involvement in non-ethical and controversial activities” is measured by the number of companies restricted as a result of this exclusion. “Reduction of involvement in Non-Ethical & controversial activities” constitute an ethical overlay to the environmental and/or social characteristics otherwise promoted by the investment product as per this framework. The reduction of involvement in Non-Ethical and controversial activities applies binding investment restrictions that exclude companies involved in involved in tobacco and controversial weapons as further governed by the Responsible Investment Instruction. For certain funds the exclusions are expanded to cover other types of Non-Ethical & controversial exposures (e.g. Alcohol, Gambling, Military Equipment). Data is provided primarily by ISS ESG, MSCI and Sustaianalytics.

“Reduction of activities resulting in significant negative impact on the climate” is measured by the number of companies restricted as a result of this exclusion. “Reduction of activities resulting in significant negative on impact on the climate” promotes environmental sustainability factors means restricting investments in companies involved in thermal coal, tar sands and peat-fired power-generation unless they have a credible transition plan.  For certain funds the exclusions are expanded to cover other types of activities resulting in significant negative on impact on the climate (e.g. Fossil Fuels). Data is provided primarily by ISS ESG, MSCI and Sustainalytics. 

“Investee companies’ impact on sustainability matters” is measured by the number of engagements, engagement themes and, where relevant to the investment strategy, the environmental and/or social proposals voted on. Engagements are mapped and logged by investment teams on a continuous basis and aggregated on a quarterly basis. 

The Responsible Investment team is responsible for continuously assessing the indicators to ensure that the data contained therein meets the needs of our investment teams and to address any identified issues with data quality. Any new indicators are subject to an assessment against our robust ESG Data Provider Assessment Framework, to maintain the quality of the data. Models are also whenever relevant subject to model validation. Currently, Danske Bank Asset Management estimates no data for any indicator on the platform.

LIMITATIONS TO METHODOLOGIES AND DATA

There are vast amounts of sustainability data available to the management and monitoring of the fund, but the data landscape is characterized by a lack of consistent methodologies and limited transparency on how scores, indicators ratings are calculated for companies. These limitations in data are due to a number of factors, not in the least being that they, in part, a reflection of how sustainability data is produced.

As corporate sustainability disclosures remains largely voluntary, far from all companies issue reports covering their management or approach to addressing the sustainability-related aspects of their activities. Moreover, there is a lack of consensus on the scope and format of reporting and as such, companies that do report do not disclose information in a standardised or easily comparable format. This creates, in certain instance, limitations in relations to the attainment of environmental or social characteristics of the fund.  Furthermore, in a bid to support investors in the their assessment of companies, a growing body of ESG data and rating agencies have emerged with their own proprietary scopes and methodologies, which in turn do not allow for comparisons to be made on environmental and/or social issues. In addition, issues emerge across regions and asset classes, small cap and emerging markets in particular, with regards to comprehensive coverage and the availability of quality data.

Various measures are taken to ensure that the attainment of the environmental and/or social characteristics are not affected by these known limitations. In recognition of the lack of consensus and standardisation, Danske Bank’s ESG Data Platform consists of credible sources that are assessed to provide relevant information on the material sustainability-related aspects of an investment. Nonetheless, as methodologies vary across the chosen vendors, information is, where relevant and necessary, validated by the investment teams through the review of corporate reports and engagement with the companies. Finally, to address the risk that arises from metrics being based on modelled rather than reported data, indicators that are used for the attainment of environmental and/or social characteristics, and are, to the extent possible, validated through our model validation framework. 

Indicator Data Coverage

mScore: 100.0%
Carbon Risk Rating: 100.0%
Coverage as of 20.01.2022

DUE DILIGENCE

In addition to the outlined indicators, the investment teams review financial and sustainability information from multiple data sources (including but not limited to company reports and third-party investment research). Tools, knowledge, research, education and subject-matter expertise are provided to the investment team to support the due diligence processes. The strength of this bottom-up approach is a solid foundation of data, tools and resources that enables the investment teams to conduct due diligence and promote the environmental and/or social characteristics for the fund.

In addition, to the general principles on the integration of sustainability risks, the team will factor in material information to ensure that the attainment of the environmental and/or social characteristics. Sustainability-related aspects may then influence a decision to either buy or increase weighting, hold or maintain weighting, sell or decrease weighting, in order to promote the characteristics.

Sustainability related performance of companies or issuers and good governance practices are promoted through engagement with companies, collaboration with other investors and voting at general meetings. This enable the funds to address higher standards of corporate governance and sustainability within areas such as emissions, energy, biodiversity, water, waste, social and employee matters, human rights as well as anti-corruption.

Finally, screening and restrictions are used as a tool to identify companies that exhibit harmful environmental practices, by contributing, for example, to climate change, biodiversity loss or pollution, or companies that display inadequate social practices on human rights issues or labour standards.

Based on our assessment and company dialogue, we may from time to time decide to divest or restrict investments in a company, in a specific investment strategy or across multiple strategies in an effort to secure the attainment of the environmental and/or social characteristics.

ENGAGEMENT POLICIES

The investment teams engage on a regular basis with investee companies on material ESG matters to seek improvement in performance and processes in order to enhance and protect the value of our investments.

Reasons for Dialogue can be, but are not be limited to, the following:
- Inform about voting decisions and guidelines
- Clarify publicly disclosed information from company
- Conduct research
- Identify and assess quality of available data
- Understand performance and identify potential vulnerabilities
- Develop insights into risks and opportunities
- Identify potential regulatory developments and impacts

Each investment team is responsible for outlining which key ESG issues to engage on and which standards companies are expected to adhere to. This can be done both in a preventive manner, or reactive to address issues that may have already occurred.

The investment teams can interact with companies in different ways (i.e. letters, emails, one-to-one meetings, conferences, site visits, etc.) and with preferred company representatives (e.g., board, chairman, CEO, Investor Relations, Sustainability).

The investment teams must be aware of the risk that they may have obtained insider knowledge. As such, the investment teams follow Danske Bank’s Market Abuse Policy and Market Abuse Directive.

If an engagement is unsuccessful, the investment team can decide to escalate the engagement, or decide to either hold/maintain weighting, decrease weighting, or sell/divest.
Latest update:
09.12.2021: The website disclosure has been amended to reflect updated descriptions in the fund’s prospectus concerning the promoting of environmental and/social characteristics. The different sections of the website disclosures have further been subject to adjustments aiming to improve and enhance descriptions provided herein. 01.12.2021: The website disclosure has been amended to reflect the adjusted strategy of the fund triggering a re-categorisation under article 9 in SFDR as equally reflected in the fund’s prospectus. The different sections of the website disclosures have further been subject to adjustments aiming to improve and enhance descriptions provided herein.