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Investment Management at Topdanmark

Topdanmark wishes to attain the biggest possible return on investments in relation to risk. Therefore, both risks and opportunities related to ESG criteria are integrated into the company’s daily investment activities.

Topdanmark wants to ensure that value creation is responsible and not in violation of the internationally recognised standards and principles or conventions adopted by Denmark. Topdanmark’s responsible investment framework applies to all assets. However, the proportional benefit of analysing different asset classes is assessed, to ensure that attention is directed to the areas where the perceived ESG risk is the greatest.

Commitment to Responsible Investing

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.

Commitment to Set Science Based Targets

Topdanmark committed to the Science-Based Targets initiative in May 2022. Topdanmark also supports the Business Ambition for 1.5°C campaign led by the SBTi in partnership with the UN Global Compact. Topdanmark follows SBTi’s sector-specific guidelines for the financial sector and will set targets aligned with the Paris Agreement for investments, claims handling and own operations.

ESG Integration

Topdanmark conducts quarterly ESG risk analysis of its holdings, based on ESG data purchased from an external service provider. The aggregate analysis, a market value weighted average of the ESG risk ratings, is done on equities, equity futures, and ETFs.

Besides the quarterly analysis, investments are regularly evaluated according to their ESG risk, both at company level and at an aggregate level through the service provider. While Topdanmark does not have a stated goal for the ESG risk rating, it is evaluated and monitored to avoid unnecessary risk and to understand company exposure.

Sector-based Screening

Certain sectors can be considered controversial by nature and entail excessive costs for the surrounding society. According to Topdanmark’s approach, this applies to the sectors and activities listed in the table Controversial sectors.

Topdanmark does not exclude companies that have only a limited exposure to controversial sectors. Instead, to monitor exposure, Topdanmark has set thresholds for the share of investee companies’ turnover arising from controversial business activities.

Controversial sectors, Topdanmark

Sector Threshold (percetage of turnover)
Fuel based on tar sands Maximum 5%
Thermal coal Maximum 5%
Production of smoking tobacco Threshold for deselection 0-1%
Controversial weapons Threshold for deselection 0-1%

Norms-based Screening

Topdanmark screens and evaluates existing and potential investments for any breaches of the UN Global Compact, the OECD Guidelines for Multinational Enterprises, and The UN Guiding Principles on Business and Human Rights. The company’s objective is that investment return is created without deliberate breaches of these principles. Topdanmark also has procedures for the exclusion of investments in companies with a verified breach.

Active Ownership

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 and by entering into dialogue with companies that have breached the principles of the UN Global Compact. Topdanmark will also start dialogue with investee companies if there is a contradiction with Topdanmark’s investment policy. The dialogue is typically conducted in collaboration with an external service provider. If the dialogue does not lead to a change in conduct, it can lead to divestment.

More information in Sampo Group’s Sustainability Report.

Updated 22 Sep 2022