Investments in shares are carried out in two ways:
Selecting investee companies
Our ambition is to select companies that are striving to make a positive contribution to the sustainable transition through their products and solutions and through their own business operations. How and to what extent sustainability-related issues are promoted differs from company to company, and this often depends on how far a company has progressed in transitioning its business model. Such investee companies can include those that are focused on improving health, creating greater social equality, or creating better access to education. Focus can also be in the form of promoting sustainable food production, working with renewable energy or climate-change mitigation, ensuring clean water, or working to minimise the consumption of resources in the production of goods or provision of services.
To ensure a sound diversification of investment risk, we may also invest in companies that do not have a specific contribution towards the sustainable transition. But we aim to select companies that adhere to sound sustainability practices and that do not cause significant harm to the environment and society.
Following a carbon reduction-focused index
Investments are placed in a broad range of companies via a share index in order to ensure you a sound spread of risk. These investments follow an EU Paris-aligned benchmark, the framework of which has been set by the European Commission. The objective behind this benchmark is to construct investments that can support the Paris Agreement’s targets of limiting global warming to 1.5°C.
Overall, the companies in the index must have a weighted average carbon intensity that is at least 50% lower than that of the financial market in general and should comprise an equivalent proportion of the most energy-consuming sectors as the general market. The total carbon intensity of the companies in the index must decrease by a minimum of 7% per year, in alignment with the targets of the Paris Agreement.
This means that the carbon emissions reduction is achieved by selecting the companies that have the lowest emissions across sectors and not merely by selecting companies from sectors that naturally have low levels of carbon emissions. This also means that each company is selected not on the basis of specific carbon emission requirements but by considering the companies as a collective unit that must meet the benchmark's requirements.