Engagement Philosophy 
 

Exerting Influence Through Active Ownership

Storebrand's sustainable investment team is in dialogue with a large number of companies each year, seeking to influence them to move in a more sustainable direction.
 

By questioning companies about their sustainability practices and development, we challenge them to be more proactive in addressing these issues. In our experience the best results are achieved through co-operation with other investors and targeted engagement with companies where our ownership level is highest.
 

Active Ownership

Active ownership and engagement is an important part of Storebrand's approach to sustainable investments and it is in alignment with Storebrand's group's purpose: "A future to look forward to" and the values that come with it. As a result, our main objectives to reduce risk, safeguard and create value on behalf of shareholders also explicitly refer to environmental, social and governance value. Thus, the ultimate objective of our engagements is not just to require companies to redress wrongs but we aim with our engagements to actually have a positive impact.
 

Therefore, we prioritize engagements where we think we can have a better opportunity to obtain good results. We engage for long periods of time to obtain those results and often with other investors for more leverage. Accordingly, our resources are more focused on engagement activities to lift the standards of a whole industry, which lead to better practice in general and thus positive impact—proactive engagements—instead of many dialogues requesting companies, for example, to clean rivers after a spill – reactive engagements.
 

We also use proxy voting as a complement to our engagement activities to exert extra influence over companies we are engaging with or just to signal that some sustainability issues are important to us.
 

Considering the fact that some sustainability issues, such as climate change, cannot be solved by investors and companies alone, we do also express our views regarding these pressing issues to governments and authorities.
 

The Storebrand's Engagement Forum supervises, selects and prioritizes all engagement initiatives. It is also a place where active ownership/engagement best practice is discussed. It includes financial analysts as well as ESG analysts and the head of Storebrand Asset Management. The forum reports to Storebrand Asset Management's board.
 

Engagement Process

The Storebrand Group believes in exercising our rights as shareholders. We employ two main ways of doing this, either through voting at shareholder meetings or direct company engagement by expressing our views, in writing or orally, to the company's management, advisers or Board of directors.
 

Both methods can be very effective in addressing ESG concern and provide complementary signals to companies on where we stand on important issues.
 

The decision to engage with companies is based on our assessment of the significance of a particular matter, the scope to effect change, opportunities to collaborate with other investors and although the size of our holdings in a company is important is not decisive. There are some controversial issues that need to be discussed with companies regardless of the size of our investments. What is more, when working in a proactive initiative together with other investors it is the size of the collaborative initiative that is important and not necessarily ours. 
 

Cases for engagement

The Storebrand Group will consider engagement with companies in the following cases:

  • Serious or systematic breaches of human rights
  • Corruption and bribery
  • Serious environmental and climate damage
  • Company strategy or performance differing substantially from that previously communicated
  • Governance issues such as:
    - Replacement of directors
    - Equity issuance and dividend policies
    - Remuneration of key personnel
    - Transactions between related parties
    - Diversity issues
  • Improve ESG reporting
     

In relation to climate change, the Storebrand Group has signed the Montréal Pledge and the Portfolio Decarbonisation Coalition and is thus committed to reducing the carbon footprint of our investments over time.
 

For some of our funds, due to the nature of their investment style, the carbon footprint may vary substantially over time. We are, however, committed to working with our holdings to reduce their carbon footprint and operate more efficiently over time. Climate change plays a key part in our monitoring of companies and we often engage with those we consider lagging in their efforts to reduce their carbon footprint and encourage them to improve.
 

Engagement alternatives

If the outcome of engaging with companies fails to meet our expectations, the Storebrand Group may consider other actions. If the company is on our observation list, we will make an exclusion assessment. For other companies, our actions may include:

  • Expressing our views publicly
  • Proposing resolutions at the company’s Annual General Meeting
  • Requesting an Extraordinary General Meeting
  • Considering exclusion
     

The Storebrand Group may engage in collaboration with other investors where we believe this to be in the best interests of our unit holders.
 

When working with other investors to influence companies, the Storebrand Group is always mindful of conflicts of interests and of being put in an insider position.
 

Use of Voting Rights

The framework for the use of voting rights for funds managed by the Storebrand Group is set out in sections 2-24 of the Norwegian Regulations on Securities Funds and in the industry recommendations from the Norwegian Fund and Asset Management Association.

The ultimate responsibility for the execution of corporate governance in the Storebrand Group’s funds lies with the Board of Directors of the respective fund management company. The daily execution is delegated to the portfolio managers of each fund and activities are reported back to the Board. The Board annually evaluates the execution of corporate governance.
 

Guidelines for Voting

Voting rights must be exercised to the benefit of the fund in question, with the objective of securing the best possible risk-adjusted returns for unit holders. Voting rights are exercised directly by the fund management company or by using a proxy voting platform.
 

The Storebrand Group typically votes against management in the following situations:

  • Inadequate information ahead of meeting
  • Quality of Board and its members
  • Anti- takeover mechanisms
  • Unnecessary or unfair changes in capital structure
  • Excessive executive compensation
     

In general, Storebrand will support shareholder resolutions requesting reporting or disclosure of environmental, social, governance issues, or seeking policies or measures that have a positive impact on investee companies' ESG performance. Storebrand will also vote in favour of resolutions encouraging measures or policies that may avoid that the company's behavior comes in conflict with the Storebrand Standard.
 

Specific situations may call for unique responses and we will always take market and company conditions into consideration. To the extent that voting rights have been exercised in controversial cases or where the Storebrand Group has voted against the Board’s or management’s recommended course of action, the Storebrand Group will disclose the voting rationale. A vote disclosure is sent to the [company’s] Board and our unit holders are informed via the Storebrand Group website.
 

Voting Process

The Storebrand Group has selected Institutional Shareholder Services (“ISS”), an independent service provider, as the platform for our proxy voting activities. ISS provides notices of general meetings and comprehensive information about the companies, the voting items on the agenda and recommendations. Funds managed by the Storebrand Group will vote according to our own voting policy, and always in what we deem to be the best interest of our funds. When we do not have a policy in place for a specific ballot item, we will typically follow the ISS recommendation. We review our relationship with ISS on an annual basis, including the quality and effectiveness of the services provided. Each fund has a custodian approved by the Financial Supervisory Authority of Norway. The custodian bank also provides information related to general meetings.

Storebrands Voting Statistics


Securities Lending

The Storebrand Group engages in stock lending but will normally recall shares so that its funds can vote for at least 50 % of share ownership at a general meeting. Securities lending does not compromise our funds’ ability to focus on sustainability.
 

Inside Information

The Storebrand Group is dependent on access to company information in order to assess any challenges related to corporate governance. It is also important to retain flexibility with respect to our funds' investments so that we can act in the best interests of their unit holders.
 

In relation to the exercise of corporate governance, the Storebrand Group believes it has a clear understanding of the rules on inside information and will always act within these laws. We similarly expect that companies and their advisors also have an awareness of relevant legislation and do not put the Storebrand Group in an insider position without our consent.