Danske’s New Fund Selector Counts on ESG Transparency

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Stockholm (NordSIP) – As the popularity of sustainable investing and ESG integration becomes increasingly more mainstream, the hurdle for investors becomes finding the right opportunities. To assist in this effort, Gustaf Sjöström was appointed as one of two new Fund Analysts at Danske Bank last month in the team led by Susanne Bolin Gärtner, Head of Manager and Fund Selection. He joins the Danish bank from Skandia where he was a portfolio manager. Sjöström is educated in statistics and economics from Örebro University and from Stockholm University.

“I started working in the Financial industry in 2000 and worked since then in various positions and with different investment companies such as Nordea, Skandia and Coeli. Since 2007, my main focus has been to evaluate investment managers and investment strategies. I have also worked with constructing portfolios as a fund of funds manager, investing in both equity, fixed income and alternative strategies,” Sjöström starts.

Danske Bank’s Pull

- Promotion -

“Joining the selection team at Danske Bank gives me the opportunity to work closely together with the internal stakeholders that construct the advisory and discretionary portfolios, acting as a speaking partner in regards to external strategies,” Sjöström explains. “Danske Bank also offers a number of white label funds with a significant volume of assets under management, for which the team have the responsibility to select the external managers. This makes the work both interesting and relevant, which is what appealed to me in this position at Danske bank.”

According to Sjöström Danske Bank must set an example that can be leveraged to get other banks and companies to upgrade their sustainability efforts. “Danske Bank has set a target of having a net-zero greenhouse gas emissions investment portfolio by 2050 or sooner as part of the banks support for the Paris Agreement, for example. Sustainability risks have been incorporated into the investment analysis and investment decision making processes for many years at Danske Bank. ‘mDash’ – a proprietary analytical tool – enables the teams to make better-informed investment decisions based on ESG data. It is important to focus on constantly improving the sustainability efforts at Danske Bank”

Sjöström also notes the appeal of Danske Bank’s open approach. “Mindful that sustainability is not just one solution, the Fund selection team engages with external fund managers on sustainability and seeks to align the external fund offering with Danske Bank’s work as much as possible. We are open-minded and look forward to continuing our dialogues and collaboration even further with our existing and prospective fund managers, peers, forums and other stakeholders,” he explains.

Understanding ESG Integration

Understanding the processes of external managers is crucial to grasp how sustainable investment can make provide returns and a sustainable impact, according to Sjöström. “For me, sustainable investments create value for clients while contributing to a positive and sustainable development both in regard to the environment and society. ESG factors present investors with risks as well as possibilities. I believe that positive financial outcome can be realised through active engagement.”

The transparency of an external manager’s ESG integration is Sjöström’s core consideration. “Similarly to evaluating a manager’s skill in identifying good investment ideas based on traditional fundamental metrics, it is equally important for the manager to be able to present a policy and process regarding ESG integration into their investment strategy,” he explains.

“It is crucial to understand how they identify investment value based on ESG data, the ESG-scoring process (product and operation) and how it impacts the valuation (both positively and negatively) of a company and the investment decision. It is also important that the organisation have the resources and infrastructure necessary to support their ESG commitment in terms of monitoring, engagement and voting etc. Finally, transparency and how they communicate is also of high importance,” Sjöström concludes.

Partner message

The coronavirus epidemic has further accelerated the rise of ESG into the investment mainstream. As deficits skyrocket, bond investors have an opportunity to engage with governments on climate change, argues Thomas Dillon, Senior Macro ESG Analyst at Aviva Investors.

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