Equity investments with a
sustainability focus
Equity investments in Danica Balance Sustainable Choice comprise actively managed and passively managed investments. In the actively managed portfolio, we hand pick equities in a number of companies. In the passive portfolio, we base our investments on various share indices, which we screen for a number of sustainability characteristics.
Hand-picked companies
The actively managed part of our equity portfolio comprises around 50 high-quality companies that we assess to be best positioned to address the global challenges related to sustainability. They are companies with strong business operations that are well-positioned to benefit from the economic growth potential of the transition to increased sustainability. We evaluate a company’s sustainability performance based on whether it has significant activities that support one or more of the 17 UN Sustainable Development Goals.
Some of the investments are picked by the portfolio managers behind Danske Bank’s Global Sustainable Future equity strategy. Under this strategy, the portfolio managers focus on picking companies that support increased sustainability within the three main themes of ‘Climate stability’, ‘Natural capital’ and ‘Social capital’. These investments are the same as those found in Danske Invest’s investment fund under the same name.
- CLIMATE STABILITY focuses, for example, on investing in companies that are leading the green transition and which supply solutions for achieving the goal of CO2 neutrality by 2050.
- NATURAL CAPITAL focuses, for example, on tackling the global water crisis and the global overconsumption of resources.
- SOCIAL CAPITAL focuses on creating a healthier and better life via, for example, the transition to an inclusive economy where everyone shares in economic growth, and also on a more sustainable health service.
We also focus on investing part of our equity portfolio in various sub-themes that in our opinion warrant special focus. Our current sub-themes are ‘Health and a healthy lifestyle’, ’Water and plastics’ and ‘Climate’. We will continually assess other potential themes that may be even more attractive.
Passively managed equities
In Danica Balance Sustainable Choice, as well as in our general Danica Balance solution, a broad passively managed equity portfolio is essential to achieve good overall equity risk diversification. However, in Sustainable Choice we do not invest in all equities in an index. Instead, we base our investments on various equity indices, where we screen the equities for various sustainability characteristics and performance to ensure that our overall passive portfolio has the desired sustainability focus.
- We do not invest in alcohol, fossil fuels, gambling, controversial weapons, military equipment, pornography or tobacco.
- We only pick companies that are in compliance with ISS-Climate’s 2oC scenario. This is to ensure that we only invest in companies that demonstrate a willingness to adapt their business model and their greenhouse gas emissions in accordance with the Paris Agreement’s goal of a maximum temperature rise of 2oC by 2050. It is not enough to just invest in companies that already have low carbon emissions. Companies must also be willing to improve further.
- We exclude companies that score poorly in our internal ESG analysis tool, mDASH. mDASH is a quantitative ESG integration tool developed by Danske Bank Wealth Management. The tool combines data from Sustainability Accounting Standards Board with data from other third-party ESG data suppliers to facilitate the evaluation of a company’s sustainability from a financial materiality perspective.
