At Danske Bank Asset Management, we always consider ESG factors in conjunction with the financial aspects to assess a business from a holistic perspective. Through dialogue and active ownership, we endeavour to influence environmental matters and social conditions as well as the corporate governance of our investee companies.
At the beginning of 2020, we learned that corona could be more than a Mexican beer. When corona came to Denmark, portfolio manager Kasper Brix-Andersen and his team experienced the pandemic as a kind of natural disaster that tested the resilience of European companies. However, other things changed, too. Corona increased attention to the S in ESG.
“For me, the pandemic was a landmark in relation to the S in ESG. Many years of focus on the environment and good management – the E and the G in ESG – were replaced by attention to social conditions, as ensuring the health of your employees suddenly became extremely important when, for example, factories had to be kept running. Almost overnight, social conditions dominated our discussions with companies,” says Kasper Brix-Andersen, chief portfolio manager of Danske Invest Europe.
These were very uncertain times, and some companies needed help to navigate through the new reality.Kasper Brix-Andersen, chief portfolio manager of Danske Invest Europe.Adidas refused to pay rent
One of the dialogues on social issues that Kasper Brix Andersen and his team had at the beginning of the pandemic was with German sports brand Adidas. In March 2020, when most of Europe went into lockdown, Adidas refused to pay rent for its stores. The decision created indignation in Germany, and several German government ministers expressed their discontent in the media.
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"We had many conversations with companies during the initial months of the pandemic, including several with Adidas. These were very uncertain times, and some companies needed help to navigate through the new reality,” says Kasper Brix-Andersen, who stresses they were just one of many investors who made Adidas aware that its approach was not acceptable.
A subsequent media storm in Germany caused Adidas to change its tune. After the first lockdown, Kasper Brix-Andersen talked to Adidas again, and the company assured him it had switched strategy, so Kasper kept Danske Bank’s investment in Adidas.
Kasper Brix-Andersen, chief portfolio manager of Danske Invest Europe.
Top of the agenda when we talk to Adidas
Just over a year later, Adidas once again hit the headlines. This time it was due to Adidas and several other global clothing brands refusing to use cotton from Xinjian in China, as it was allegedly harvested by forced labour. This caused great anger towards the clothing brands in China, which fiercely denied the existence of forced labour among the cotton pickers of Xinjiang.
Despite occasional social challenges at Adidas, Kasper Brix-Andersen retains the shares in his portfolio.
"Adidas is actively working to contribute to the UN Social Development Goals (SDGs) through its products. The task is not always easy and there are many aspects to consider, but the company generally does a good job. Issues such as the environmental impact of its supply chain, the handling of chemicals used in the products, use of raw materials and efficiency are at the top of the agenda when we talk to Adidas," he explains.
DISCLAIMER: This publication has been prepared as marketing communication and does not constitute investment advice. Please note that historical return and forecasts on future developments are not an indication of future return, which can be negative. Always consult with professional advisors on legal, tax, financial and other matters that may be relevant for assessing the suitability and appropriateness of an investment. Please refer to the prospectus and the key investor information before making any final investment decision. The prospectus, the key investor information of the fund and information regarding complaints handling (investor rights) can be obtained in Danish here (under “Documents”). Danske Invest Management A/S may decide to terminate the arrangements made for the marketing of its funds. More information on the sustainability-aspects of the fund can be obtained here. The decision to invest in the fund should take into account all of the characteristics of the fund as described in the prospectus.