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If, Mandatum Life excluding Wealth Management, and Sampo plc
The parent company, Sampo plc, and its two wholly owned insurance subsidiaries, If and Mandatum Life, have a common group-wide infrastructure for investment management, as well as for performance and risk reporting, which facilitates simultaneous company and group-level reporting. This creates cost efficiencies in investment activities and also enables group-wide monitoring of portfolios.
Sampo Group’s Chief Investment Officer (CIO) is responsible for managing investments according to the investment policies prepared by If and Mandatum Life and approved by the companies’ boards of directors. This excludes Mandatum Life’s investments covering unit-linked policies. In its investment activities, Sampo prefers simple matured instruments and transparency. Hence, most of the investments are in fixed income securities and listed equities, which are tradable and subject to daily mark-to-market valuation.
Sampo’s investment philosophy is to invest directly in individual companies’ shares and debt instruments instead of allocating funds to chosen industries or geographical areas. These companies are carefully studied before any investments are made, and ESG issues are considered in parallel with other factors affecting the risk-return ratio of separate investments. Taking the ESG issues into account in the investment analysis and decision-making is part of the work profile of every person at Sampo, If, and Mandatum Life who is making investment decisions and analyzing investment objects.
In 2018, Sampo supplemented the investment policies of the Group companies to strengthen the role of ESG matters in investment analysis and decision-making. The investment policies were updated to include instructions on how to take ESG issues into account in the context of direct investments by using an internal ESG traffic light model. The traffic light model is based on ESG risk ratings provided by an external data provider. The risk ratings measure companies’ exposure to ESG-related risks and management of material ESG issues. Based on the risk ratings, Sampo classifies investment objects into risk categories: low risk, medium risk, high risk, and severe risk. Depending on the risk category of a current or potential investment, a portfolio manager is required to, for example, conduct additional research on the investment in question, study further the possible causes and effects of the ESG-related risks, and request an additional authorization from the Group CIO.
Risk Categories of the ESG Traffic Light Model
Investment Allocation According to the ESG Risk Categories
If Sampo’s positive view about a current or potential investment changes due to a high ESG risk rating or any other issue, after thorough background work, studying, and sometimes even a dialogue with the company, Sampo might decide not to make an investment or new investments in the company, and investments already in the portfolio might be sold over time. Companies for which there is no ESG risk rating provided by the data provider are analyzed carefully, considering all factors affecting the risk-return ratio. The analysis is based on publicly available information and includes ESG issues.
The ESG traffic light model and the corresponding reporting ensure continuous monitoring of ESG issues as part of internal reporting. Sampo Group’s investment units provide regular reports for internal committees, such as the Asset and Liability Committee (ALCO). The reports provide the internal committees with the possibility to follow the allocation of investments based on the risk categories of the traffic light model. Each company’s own internal committee then analyzes the investment portfolios together with the portfolio managers and reports to the Board of Directors, if this is considered necessary.
At the moment, Sampo plc, If, and Mandatum Life (excl. Wealth Management) do not have further ESG investment guidelines that would, for example, exclude some business areas or companies beyond the scope of investment opportunities, or earmark funds for sustainable investments, such as green bonds. In the future, Sampo will continue to integrate ESG considerations into Group's investment activities.
Further information can be found in the Corporate Responsibility Report (page 67).