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Topdanmark wishes to attain the biggest possible return on investments in relation to risk, but it also wishes to ensure that value creation is responsible and not in violation of the internationally recognized standards and principles or conventions.
Topdanmark has policies for responsible investment and active ownership, which describe the criteria applied to the company’s investment activities. The Board of Topdanmark Asset Management has overall responsibility for the policies, while Topdanmark Asset Management is responsible for implementing and continually monitoring them, and for ensuring that investments follow the principles set by the policies. Asset management invests actively and selects which shares, bonds, property types, and so on to invest in and for how long.
Topdanmark integrates ESG criteria into the investment process with the aim of assessing the return potential based on both traditional financial analysis and ESG analysis. Topdanmark conducts quarterly ESG risk analysis of its equity holdings based on ESG data purchased from an external service provider.
Topdanmark’s responsible investment policy includes continuous screening and evaluation of existing and potential investments based on the UN Global Compact and sectors identified as controversial.
Topdanmark has a process for excluding companies in the event of continued and verified breaches of the UN Global Compact. More information on the process is available under the heading Active Ownership.
In addition, Topdanmark excludes companies that produce thermal coal and tar sands, with the revenue threshold being 5 per cent. All production of smoking tobacco and production of controversial weapons is also excluded.
Further, Topdanmark only invests in government bonds issued by developed countries.
As an active owner, Topdanmark aims to support the long-term value creation of the companies in which it invests. Therefore, Topdanmark will conduct active ownership activities to a greater extent by voting at the investee companies’ AGMs.
Topdanmark will also increasingly enter into dialogue with investee companies that have a verified breach against the principles of the UN Global Compact. If the dialogue does not lead to a change in conduct, it can lead to a divestment. Topdanmark will also start dialogue with companies if it has been assessed that there is an ESG problem needing attention, including if it is not yet a verified breach. In both situations, dialogue will be through Topdanmark’s external service provider.