Investment management and operations
Environmental, social, and governance (ESG) issues, including climate change, have an impact on the performance, risks, and value of all companies. Taking these issues into consideration in the investment process is an important means of improving the risk-return ratio of investments, and it is a critical success factor for investment activities.
Sampo Group is committed to responsible investment and signed the UN Principles for Responsible Investment (PRI) in 2019. At Sampo Group, responsible investment is defined as an approach to managing assets so that ESG issues are incorporated into investment analysis, decision-making, and reporting. Responsible investment also includes active ownership related to ESG issues. Responsible investment practices aim to combine better risk management with improved portfolio returns, and to reflect investor values. It complements traditional financial analysis and, therefore, ESG issues are considered in parallel with other factors affecting the risk-return ratio of investments.
The sustainability field is very broad and changes rapidly, which means that the list of criteria to consider in ESG analysis is growing. Environmental factors (E) cover e.g., climate change, deforestation, biodiversity, resource management, pollution, and waste management. Social factors (S) include e.g., human rights, labour rights, supply chain management, workplace health and safety, and the company’s relationship with different stakeholder groups. Governance (G) covers e.g., leadership, compensation, audits, internal controls, and shareholder rights.
The Sampo Group companies manage their investments according to their own responsible investment policies and provide data for group-level reporting regularly. The investment policies are updated annually and approved by the boards of directors of each Group company.
If’s responsible investment policy describes If’s commitment to responsible investment and outlines the responsible investment strategies, such as ESG screening and integration, as well as the approach to active ownership. If’s personnel are bound by this policy. The policy is updated annually and approved by If’s Boards of Directors.
Topdanmark has policies for responsible investment and active ownership, which describe the criteria applied to the company’s responsible investment activities. The company’s Board of Directors has the overall responsibility for the policies. Topdanmark’s investment team (front office) implements the policies in the investment strategies, and the middle office monitors investments to ensure compliance with the policy requirements.
Commitment to responsible investing
Hastings has a responsible investment framework and is a signatory to the UN PRI since 2022. At Hastings, investment management is undertaken by Advantage Insurance Company Limited (Advantage), the insurance subsidiary of Hastings. Quarterly reporting to the insurance subsidiary’s Investment Committee includes ESG ratings and any exposure to excluded or sensitive sectors. The committee also facilitates reviews of guidelines and may report to Hastings’ Board of Directors when changes to the ESG framework have been recommended or any breaches arise.
Hastings committed to the SBTi and its Net-Zero Standard in September 2022. This means that the company will define science-based climate targets for its investments that will be submitted to the SBTi for validation and published no later than September 2024.
Hastings’ current climate targets for investments are to reduce carbon intensity in the core investment portfolio by 50 per cent by 2030 and to be net-zero by 2050. The company’s Investment Committee oversees and reviews progress against these targets on a regular basis. Hastings’ current climate targets for investments will be reviewed as part of the process for setting SBTs according to the SBTi’s methodology.
Hastings aims to incorporate ESG criteria into the investment portfolio without negatively impacting returns, diversification, or the overall quality of the portfolio. Hastings is committed to maintaining an average ESG rating of “A” on its fixed income portfolio, based on MSCI ratings (scale CCC–AAA).
At Hastings, sector-based screening focuses on three sectors: coal, tobacco, and controversial weapons. These sectors have been excluded from the investment portfolio. In addition, Hastings undertakes regular reviews to identify exposure to other sensitive industries.
Hastings conducts norms-based screening and there is quarterly reporting to the Investment Committee on companies that do not meet the principles of the UN Global Compact. The Investment Committee then makes decisions on further actions, together with investment managers.
External investment manager selection
Hastings includes UN PRI status and ESG practices as part of external investment manager selection.