Bolmstrand: Climate Impact on Cash Flows “Underestimated”


Stockholm (NordSIP) – “ESG adds an additional layer into the analysis of portfolio companies and it enhances returns. It is having a profound effect across the entire investment industry.” So says Nils Bolmstrand, the newly appointed chief executive of Nordea Asset Management, in an interview with the Financial Times this week detailing Nordea’s renewed commitment to active management under his leadership.

Indeed, Nordea, with €217 billion in AUM, is developing quite the reputation as a leader in the Nordics in the implementation of ESG standards. As previously reported by NordSIP, the bank will be introducing a new Swedish fixed-income fund in the course of 2017 called Nordea Swedish Bond Stars, which currently includes 23% green bonds and targets customers prioritizing an ESG approach. “Clients who want us to manage their money responsibly and who share our deep belief that ESG issues are essential to manage in order to deliver long term returns also want fixed income alternatives to match their allocation strategies,” co-head of Nordea’s RI team Katarina Hammar said last month. The funds included in Nordea’s “Stars” programme invest in companies across emerging and developing markets that score highly on corporate governance metrics such as human rights, business ethics and labour standards.

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In addition, Nordea has implemented other screening measures recently, resulting in bans on Volkswagen and on investments in companies building the $3.7 billion Dakota Access oil pipeline in the U.S., as well as an overall moratorium on companies that score badly on a range of environmental measures, such as pollution.

“ESG managers have to show they can deliver returns that are comparable with any other active manager and that the price charged is reasonable,” Mr Bolmstrand told the FT. At the same time, using “Stars” as an example, investors “do not have to sacrifice returns” to invest responsibly, he said. The SEK 19.2 billion Nordea Emerging Stars fund, for example, was up 17.4% over the past five years by comparison with +4.1% for the MSCI Emerging Markets index. “The impact that climate change will have on companies’ cash flows is underestimated,” Mr Bolmstrand said. The fund charges 1.5% management fee.

Nordea’s ESG implementation is part of a broader effort by Nordea to engage in active management since Mr Bolmstrand replaced Christian Hyldahl as chief executive earlier this year. Despite some recent setbacks, it is an approach he calls true to his investment principles.

“ESG is more than a marketing ruse,” he said.

Read the interview here.

Picture (c) Gü

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