Storebrand Asset Management (SAM), a Nordic asset manager with a focus on sustainability, manages over NOK 1 000 billion in private and public markets1. We recently spoke to Jan Erik Saugestad (CEO), Kamil Zabielski (Head of Sustainable Investments) and Henrik Wold Nilsen (Portfolio Manager), about their company's partnership with AMX.
Tell us about Storebrand?
Storebrand is a pioneer in sustainable investments, managing our funds according to strict sustainability criteria. We have a wide range of investment products in our multi-boutique setup, to meet our clients’ needs, from active funds to passive and alternative products. From our offices in the Nordics and the UK, we serve clients cross Europe, including Germany and France.
1. Can you explain how Storebrand demonstrates a lead in areas such as climate, biodiversity and human rights?
We address these areas through a holistic approach, because we believe that all aspects of ESG are interlinked. Meeting the climate challenge is critical: but getting there requires halting and reversing biodiversity loss, and preserving nature's ability to sustain both life and livelihoods, However, we can only achieve all the above through a stable, just transition in which human rights and well-being are ensured2.
Recently we have helped lead efforts to standardise how companies account for and disclose their nature-related risks, which enables responsible financial decision making. In this area, we have helped launch, and continue to advise, the Task Force on Nature-related Financial Disclosures (TNFD)3. And recently we have announced our new commitment to a founding partnership role in the BIOPATH research program4, to collaboratively map, evaluate and co-develop new approaches to integrating biodiversity into financial decision-making.
We are also involved in collaborative efforts to ensure that labour conditions and COVID vaccine access are addressed, both of which impact supply chain resiliency. Recently, we have brought the issue of indigenous rights to the forefront, ensuring that our portfolio companies contribute to positive sustainability impact while respecting native peoples' rights5.
It is also important to note that we have shifted towards a more proactive engagement strategy, aimed at achieving both real-world sustainability impact and long-term value creation for the companies in which we are invested. Now, we weight our engagement towards identifying and mitigating potential risks, rather than just reacting. This is reflected in the fact that last year 87 per cent of all our ESG engagements were proactive6.
2. Why did you decide you needed to launch a tax-transparent vehicle?
This was a client-driven decision: pension funds and other European investors can benefit from the tax transparent CCF (Common Contractual Fund) structure. The performance drag for large investors can be significant and this structure is well known and used, not least by UK Pension Funds where this is widely used and requested.
The UK market has almost a 10-year head start, when it comes to using tax transparent vehicles compared to many other European markets, but we also see interest from clients outside the UK.
3. Why work with AMX rather than set up the structure yourselves?
Storebrand’s primary focus is to deliver world class strategies for clients who want their investments managed in a sustainable way. During the investigative phase SAM quickly realized that AMX had positioned themselves in a unique space where, as a young company, they had no old legacy systems which, coupled with a strong partner in Northern Trust, provided the complex services needed in a tax transparent structure. The choice of AMX in the end was really easy.
4. In your view, why is the Storebrand global ESG sub-fund approach different?
The fund aims to provide broad, well-diversified exposure to the global developed stock market, while however offering a significantly different climate change risk profile compared with the market cap-weighted index. The fund is overweight stocks which we expect will profit from faster implementation of the Paris agreement than the market currently expects − and underweight those securities which we think will underperform in such a scenario. We use risk models to minimize the expected contributions to the fund's tracking error from events unrelated to climate change.
We have been running the strategy for over six years with a stable team, so we have more experience than many in the segment. Our strategy is based on an in-house model, allowing us to improve the strategy over time, in line with the rapidly changing topic of climate change, as opposed to more static, index-based alternatives. The strategy gives exposure to small/mid cap climate solutions companies which are not normally part of climate indices.
5. Can you sum up the working relationship with AMX?
AMX as an organisation is very easy to work with. Their team overall is service-minded and proactive when it comes to suggesting improvements and sharing their expertise, which benefits us a client.
