ESG stands for Environmental, Social and Governance. This is often called sustainability. In a business context, sustainability is about the company’s business model, i.e. how its products and services contribute to sustainable development.
It is also about a company’s risk management, i.e. how it manages its own operations to minimise negative impact.
Below is an explanation of what ESG stands for. We explain how a financial entity works with ESG as part of its wealth management. This also gives a good understanding of ESG and why it is an important factor in business decisions.
Global production and consumption have a major impact on our environment. When producing and consuming everything from cars to food, we contribute to climate change, resource depletion, waste, pollution, deforestation and bio-diversity to name a few examples.
Below is an example of how a factory can make a business out of reuse and lifecycle management of computers, mobile phones and other IT products.
In 2017, our ESG analysts visited Meyer Burger, a Swiss solar energy company, that seeks to be a part of the solution for a sustainable future – and a company that we invest in. Temperatures in the Swiss Alps are rising at twice the global average. The glacier ice is thousands of years old and now melting at an alarming pace. Imagine a world where companies and investors are part of the solution to this global issue.
Active ownership
As a responsible investor Nordea has joined the Investor Initiative on Hazardous Chemicals (IIHC) where over 50 asset managers are trying to impact companies to phase out the use of hazardous chemicals.
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Active ownership
In the blistering heat of Texas, Nordea Asset Management went on a week-long field trip to Houston and the Permian Basin to engage 12 important oil and gas companies in reducing their methane emissions.
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Diversity & inclusion
As a fund company and active owner Nordea is working for diversity in the companies we have invested in. Head of Corporate Governance, Katarina Hammar, shares insights on how we engaged with 75 companies to get more women in their Boards.
Read moreCompanies have a responsibility for their employees as well as their impact on the societies in which they operate – for instance in terms of working conditions, labour rights and diversity.
In 2013, we visited a gold mine outside Johannesburg, South Africa. Gold is used for components in the technology industry that we invest in. For us, it is important to get a first-hand look at how the industry operates and the conditions for the workers.
Nordea has extensively engaged for several years with many known consumer brands to improve labour rights at the companies. Recent examples are Tesla, Starbucks and Amazon.
Read moreGovernance can serve as a control mechanism in relation to bribery and corruption, tax, executive remuneration, shareholders’ voting possibilities and internal control. We believe active corporate governance is important for the development of companies and provides long-term benefits for shareholders, employees and society.
One way of ensuring this is to focus on increasing transparency and openness in contacts between the company and shareholders on issues such as board composition and shareholder rights.
To see how we have voted at various Annual General Meetings, please visit our voting portal.
Active ownership
In 2023 Nordea’s responsible investment experts engaged in more than 1,000 dialogues with companies in the name of our investment funds. The aim of the dialogues was to discuss how the companies work with topics such as climate change, human rights and governance.
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Active management blog
In our work to engage with companies as shareholders, Tesla is a one of them. It is an interesting and challenging company from an ESG engagement perspective and some of the issues we have raised with Tesla range from labour rights, to the size of Tesla CEOs pay package.
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Nordea On Your Mind
What role have owners played in making so many Nordic corporates sustainability pioneers? Our Nordea On Your Mind author Viktor Sonebäck sat down with Eric Pedersen, Head of Responsible Investments at Nordea Asset Management, to explore the evolution of responsible asset management, key drivers of its growth and how Nordic companies stand out on the global stage.
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