Sustainable investing underpins our investment strategy. We work with our fund managers to take into consideration environmental, social and governance (ESG) issues.
The foundation will contribute to solve societal problems and support sustainable development locally and globally, through its grants program, investments and ownership in Gjensidige Forsikring ASA.
The Foundations’ investments shall target and be assessed for their contribution to the Foundation’s overarching mission and to the global sustainable development goals.
The integration of ESG factors enables investors and companies to better understand the full spectrum of future risks and opportunities to which assets are exposed. Beyond its impact on the specific investments of the Foundation, sound management of ESG factors contributes to the development of more efficient and sustainable markets, in turn enhancing long-term returns. This perspective is reflected into the Foundation’s investment decision-making trough the integration of ESG into the process for selecting external investment managers, evaluation of ESG factors in direct investments, and the management of ownership rights.
Gjensidigstiftelsens’ sustainable investing strategy builds on three pillars:
1. Ethical guidelines supporting high ethical standards and alignment with the Foundation’s mission. To this end, we shall comply with and promote the principles set out in the UN’s Global Compact.
2. Sustainable investing – approach to investing that aims to integrate environmental, social and governance (ESG) factors into investment decisions, to better manage risk and generate sustainable, long-term returns, in line with recognized principles of responsible investment practice. A sound long-term return is contingent on sustainable development in the economic, environmental and social sense, as well as well-functioning, legitimate and effective markets. The Foundation supports and works to and align responsible investments with the Sustainable Development Goals (SDGs) and focusing and measurable high-impact solutions
3. Impact investing. In addition to its grant-making, Gjensidige Foundation is targeting “double bottom line” investing or impact investing.
Ethical guidelines:
The principles and standards published by the OECD and the United Nations are voluntary, non- statutory recommendations that express expectations for good corporate governance and sound
business practices when it comes to environmental, social and governance issues. We expect the
companies we invest in to strive to observe these principles and standards. More specifically, comply with and promote the principles set out in the United Nation’s Global Compact and the United Nations Guiding Principles and Business and Human Rights.
The United Nations Global Compact sets out ten general principles derived from the Universal Declaration of Human Rights, the ILO Declaration on Fundamental Principles and Rights at Work, and the Rio Declaration on Environment and Development. Among other things, the principles require companies to respect human rights, avoid complicity in abuses of these rights, uphold the freedom of association and the right to collective bargaining, and eliminate all forms of forced
labour, child labour and discrimination in the workplace.
The United Nations Guiding Principles on Business and Human Rights are a global standard. The principles were unanimously endorsed by the United Nations Human Rights Council in 2011.
We will particularly focus on the following issues:
- Human rights
- Companies that contribute to serious violations of international law and human rights.
- Corruption and financial crime
- Companies involved in gross corruption or serious financial crime
- Serious environmental damage
- Companies that contribute to serious environmental damage.
- Controversial weapons
- Companies involved in the development, testing, production, storage or transportation of controversial weapons or the manufacture of components exclusively intended for controversial weapons. This includes landmines, cluster weapons, nuclear weapons and biological and chemical weapons.
- Tobacco
- Companies where the sale of tobacco products, or components explicitly calculated for such products, accounts for more than 30% of total sales. Tobacco products are defined as products where the raw material is wholly or partly tobacco leaves.
Sustainability investing and ESG integration in the investment process.
The Foundation incorporates ESG issues alongside more traditional investment factors when making investment decisions. In this process, the investment team use external consultancy services and specialized research.
ESG Integration
The Foundation invests largely through external investment managers. As such, these investment managers play an integral role in implementing our ESG strategy. This model requires careful coordination and alignment between the Foundation and its managers. As part of our manager selection and monitoring process, the Foundation’s investment team considers the extent to which the manager is effectively managing financial risks and opportunities that may arise from ESG issues.
A formal manager review framework is in place that tailors the due diligence requirements in line with the potential ESG risks and opportunities associated with a particular asset class and investment strategy. This process is underpinned by dedicated and ongoing engagement with our investment managers and supported by relevant analytics. The foundation does not necessarily sell out of a fund investing in unwanted companies, but cooperates with the manager to initiate a dialogue with the company in question. Where serious breaches of ESG standards have been identified, the Foundation requires an engagement plan from external fund managers, working with the entity to improve ongoing performance where appropriate.
The Foundation believes that there is a positive relationship between good governance and value creation over the long run. Therefore, the Foundation acknowledges the value of exercising its ownership rights, including voting rights where relevant, across the broad range of its investments. The exercise of ownership rights in the global listed equities portfolio is delegated to the external investment managers. The approach of external investment managers in exercising ownership rights on behalf of their investors is assessed as part of the due diligence process prior to the appointment of a manager. The exercise of those rights is subject to close oversight and regular reviews of the managers’ ownership policies and practices.
Alignment with SDGs
In December 2015, global leaders signed off on the third of the 2015 Agreements, the 2030 Sustainable Development Agenda. The seventeen Sustainable Development Goals embody the aspirations of global leaders across sectors for a sustainable world for future generations, and offer a single, shared global development agenda that cuts across issue areas, sectors, and
geographies. Each goal has specific targets to be achieved over the next 15 years.
The Foundation fully supports and works towards the sustainable development goals. The goals are interconnected and are equally important to the society.
The foundation will particularly focus on goals directly supporting its mission of promoting health and well-being, including:
SDG1 End poverty in all its forms everywhere
SDG2 Eradicate hunger, achieve food safety, improved nutrition and promote sustainable agriculture
SDG3 Ensure healthy lives and promote well-being for all at all ages
SDG8 Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all
Active ownership
Investment team has developed high-level corporate governance principles to enable the consistent and principled exercise of ownership rights. While these principles are primarily tailored to proxy voting in listed equity markets, they also guide our expectations on governance practices in private markets. The principles are based on the premise that a corporation’s actions should be consistent with the primary objective of generating long-term shareholder value. The principles include the following:
· Companies should disclose accurate and material information on a timely basis to allow shareholders to make informed decisions.
· Companies should respect shareholder rights and their directors should engage with shareholders, particularly on major decisions.
· All shareholders should be treated equally and have the right to vote in proportion to their economic interest in the company.
· Boards of directors should be composed to ensure the exercise of objective independent judgement
· Companies should establish a sound system of oversight, management and control of all business risks.
· Companies should have appropriate performance evaluation and incentive systems that align executives with long term shareholder interests and company strategy.
Impact investing
In addition to its grant-making, Gjensidige Foundation is targeting “tripple bottom line” investing or impact investing. Impact investing is a sub strategy is the private equity portfolio. The overall goal of impact management strategy is to deliver significant social impacts over the long-term.
The social return objectives are two-fold: (1) directly delivering attractive impacts over the long term and advancing the foundation’s goals (portfolio-level impact); and (2) supporting the development of the impact investing market through transparency, thought leadership and documentation (field-level impact).
Impact investing is a sub-strategy in the private equity portfolio since 2014. The Foundation is a member of the Global Impact Investing Network.
The Foundation has approximately NOK 200m invested and NOK 500m committed with Norwegian and international funds.