Active ownership is an integral part of Danske Bank’s work with sustainable investment – called ESG Inside - and our ambition to deliver attractive returns to customer while influencing companies and contributing positively to society.
The new report for active ownership for the first half of 2019 illustrates the increasing focus on ESG (environmental, social & corporate governance) from an investment perspective. The number of ESG topics discussed with companies has increased to 83 compared to 59 to 2018, and it illustrates the soar in sustainability issues that could have an impact on company performance and thereby the potential return to investors.
Healthcare is one of the industries where Danske Banks’s investment teams zoom in on sustainability.
“Sustainability plays an ever more important role for us as investors and our customers, and this has made pharmaceutical companies more responsive to our input and more willing to discuss their sustainability work. ESG matters are important to discuss as we experience that they can influence companies’ future earnings,”
says Claus Henrik Johansen, Senior Portfolio Manager at Danske Bank and Healthcare specialist.
Spotlight on business ethics
Business ethics is a focal point in Claus Henrik Johansen’s company dialogues, as weakness here can have negative consequences for company performance.
“We have seen a number of cases of companies being involved in misleading marketing or bribery, and court cases that have resulted in fines or bans on selling particular products. This can have a negative effect on our investment and is something we have to include in our valuation of the company. What is important for us is that companies learn from these cases and tighten their internal guidelines so they can prevent similar cases,” says Claus Henrik Johansen.
Claus Henrik Johansen prefers to see sustainability strategically anchored with executive management and a clear business priority, which he has discussed and emphasised in company dialogues. This is increasingly the case among European companies, while US companies tend to have sustainability less well integrated with top management.
Danske Bank’s approach to active ownership
Danske Bank exerts active ownership as a tool to manage risks, unlock opportunities, maximise returns and contribute to positive developments. It is part of our fiduciary duty to customers to achieve the highest and most stable investment returns. Our investment teams engage with companies to get a better understanding of their business models, strategies and positions. Through dialogue and voting at annual general meetings, our investment teams can influence companies to integrate sustainability into their business models, challenge their positions and support their development and growth.