Sissener AS is focused on sustainable investments

Sissener AS is focused on sustainable investments. By this we mean that the firm’s ambition is to offer funds that have a portfolio of companies with favourable social and sustainable characteristics, which will contribute to a good return with an acceptable level of risk. We are well aware that, as investors, we can make a difference by using our ownership to influence the companies in the portfolio to integrate sustainability into business models, strategies and corporate governance.


In recent years, we have taken several steps to make the significance of this visible in our business. We seek information, build experience and knowledge, and attempt to maintain a dialogue with the companies we invest in. We believe this helps support our analysis of companies and can improve our investment decision-making process.


We seek to create returns for the investors in our funds by investing in companies with a focus on long-term value creation and sustainable business models. All companies we invest in are thoroughly analysed in advance. As part of the investment decision process, the environmental and social aspects of the company are assessed, as well as the quality of its corporate governance. The funds do not follow the ESG index as a benchmark.


Sustainability goals


Company sustainability goals are important drivers for creating value in the investment opportunities we analyse. Active integration of sustainability measures can increase a company's competitiveness in the form of improved market position and market share, lower costs and raise margins. Furthermore, integrating sustainability improves focus on risk management, reduces capital costs and lowers return requirements. In sum, companies that integrate sustainability will achieve a higher present value of discounted future cash flow.


Guidelines for integrating sustainability risk into investment decisions


We integrate sustainability risk into our investment decision-making process. By sustainability risk, we mean environmental, social or governance (ESG) events or circumstances that may have an actual or possible significant negative impact on the value of the investment should they occur (i.e. sustainability-related threats). If the sustainability risk is considered to be too great, and/or the companies are not willing to do anything about the risk, we will not invest in these companies.


Social and sustainable conditions are a natural part of Sissener AS analysis of the companies we invest in. That such conditions are part of our investment process is based on a basic attitude that companies that integrate sustainability into their business models, strategies and corporate governance over time will create added value. Sustainability risk is integrated into our risk monitoring to the extent that the risk represents a potential risk.


Sustainability risks that are assessed include, but are not limited to:


  • corporate governance (e.g. composition of the board, incentives for management, remuneration to managers);
  • shareholder rights (e.g. election of board members, capital changes);
  • changes in legislation and framework conditions (e.g. restrictions on greenhouse gas emissions, change in governance recommendations);
  • physical threats (e.g. extreme weather, climate change, water shortages);
  • physical damage to the company's assets or IT system, cyber-attacks, working conditions (e.g. health, safety and human rights regulations); and
  • equality and social rights (e.g. gender, cultural and social background).


In addition, companies we invest in may be exposed to full or partial loss of value due to sustainability risk due to fines from the authorities, reduced demand for the company's products or services offered, disruptions in the supply chain, increased operating costs or reputational damage. A sustainability risk event can affect both a specific investment, but also have a broader impact on an economic sector or a geographical region that can affect a larger part of the fund's portfolio.


Integration of sustainability risk is part of the overall risk assessment for our funds and is therefore included in our internal Instructions on remuneration to which all Sissener AS employees are covered.


Sissener AS considers negative effects in our investments through the use of exclusions, active ownership and quantitative analysis. We exclude companies that violate international norms or that produce/pass on products with unfavourable characteristics. This includes enterprises with a large negative climate and environmental impact, enterprises that violate international law/human rights or enterprises where issues related to corruption and/or economic crimes have been identified.


Active ownership


Where possible and necessary, we use active ownership to drive improvement in companies. Active ownership means that we as shareholders seek to influence companies in the desired direction, through, for example, dialogue with management, voting at general meetings and/or statements in the media. Such commitment is a natural part of our business model. Active ownership in enterprises is exercised related to specific issues such as the environment, climate, social conditions and corporate governance and may also include the enterprise's guidelines and routines in certain areas.

We also work actively with companies that we believe should reduce their sustainability risk. In this way, we can help companies reduce their sustainability risk, while reducing the risk in our investments.


Negative screening of companies


Sissener AS has two approaches to exclusion and negative screening of companies.

The first approach consists of ethical exclusions of companies based on the nature of their business. Examples could be companies that produce certain types of weapons, base their business on coal or produce tobacco.


Sissener AS follows the ethical guidelines for management laid down by the Ministry of Finance for the Government Pension Fund Global (GPFG). The fund has an independent ethics council (the “Ethics Council”) which monitors and assesses whether investments in individual companies are in conflict with current ethical guidelines. Decisions on the exclusion of individual companies from the portfolio are made by Norges Bank on the recommendation of the Council on Ethics. Companies that are excluded by Norges Bank will also be excluded from Sissener AS funds.


The second approach is a risk-based exclusion of companies based on the companies' behavior. Sissener AS is free to exclude companies where sustainability risk is considered to be of a potentially harmful nature. Examples may be companies that contribute to violations of basic ethical norms such as human rights or employee rights.


Membership


Sissener is a member of Norsif (Norwegian forum for responsible and sustainable investments) and PRI (Principles for Responsible Investment).


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