Norron’s Path to Sustainability

    Stockholm (NordSIP) – Norron Asset Management, a boutique founded in 2010, has established a reputation among Nordic clients for being professional and committed. With a philosophy of common sense, competence, simplicity, and transparency, there is certainly a base for developing a meaningful sustainability offering. A clear sign of the firm’s growing ambitions in the field was the announcement at the end of September that Norron Sustainable Preserve will be classified under Article 9 of SFDR. It is the second fund in Norron’s product offering to choose the narrow sustainability path. Norron Sustainable Equity has already been managed as an Article 9 portfolio since 2020.

    NordSIP reached out to the team behind Norron’s new Article 9 fixed-income fund to find out more about the firm’s increased focus on responsible investing.

    “When it comes to sustainability, I can’t really say that we were early adopters,” admits Peter Werleus, Partner and Portfolio Manager at Norron. “We have always preferred tangible facts and hard data, and we felt they were missing in this field. However, witnessing the evolution of the regulatory landscape during the past few years, with the Taxonomy and the SFDR providing ever more concrete guidelines, our confidence has grown steadily,” he adds.

    Werleus points proudly at his colleague Clara Hamrén who has been leading Norron’s sustainability efforts deftly since August last year. According to him, Hamrén’s experience and drive have been instrumental in elevating the firm’s work to a whole new level. “Sustainability has spilt over to the whole organisation,” he says. “We now have much more well-defined processes and systems to integrate ESG properly.”

    “I am also very grateful to Clara from whom I have learned so much,” concurs the Sustainable Preserve fund’s manager Jan Törnstrand, Partner at Norron. “As a portfolio manager, you can only go so far in your sustainability analysis before you need proper expert help, and that’s where Clara comes in.”

    Hamrén guides us quickly through Norron’s sustainable investment strategy. “It is essential to have specific and measurable goals from the onset,” she explains. Being a staunch proponent of the Science Based Targets Initiative (SBTi), Norron has set, for instance, a goal that by 2026, at least 50 % of the companies in their portfolios should be committed to following the framework. By 2040, they expect 100 % of the portfolio companies to be on board SBTi. Meanwhile, the asset manager strives to have only UN Global Compact signatories among its investee companies.

    “These goals, alongside the relevant regulatory guidelines and exclusion criteria that we apply, are common for all our investments,” continues Hamrén. “To take a step further, into the Article 9 realm, we must also establish intentionality.” What she means is that to make it into the dedicated sustainable fund, an investment must contribute measurably to one of the five sustainable objectives that Norron has identified. Based on the Sustainability Development Goals, these objectives are a way to organise the investment universe into five buckets: Sustainable Finance; Sustainable Cities and Infrastructure; Climate and Environment; Innovative Sustainable Solutions; and Healthy and Prosperous Societies.

    “We are not only looking to invest in assets that are already green,” explains Werleus. “Although we are a sustainable bond fund, we refuse to just run after the same green bonds as everyone else. We want to finance sustainable companies and those that enable a more sustainable society. I am a big believer in kaizen, the continuous improvement strategy,” he adds.

    “The hardest work, of course, is trying to establish whether a company is really planning to move in a more sustainable direction or whether they just tell us what we want to hear,” chimes in Törnstrand. “The key here is to verify, measure, and then follow up,” adds Hamrén.

    According to both portfolio managers, the thorough sustainability analysis of the companies they are looking to invest in has further improved the quality of their meetings with management teams. “Some companies are quite shocked by the questions we ask, but eventually, most come around and even appreciate the dialogue and find it useful,” says Törnstrand.

    Throughout the conversation, one phrase keeps coming up, like a refrain: “It is our responsibility.” Whether talking about various sustainability data sources or ways to verify the information obtained by companies and external providers, both portfolio managers are adamant that responsibility ultimately lies with them.

    “There is so much happening in the sustainability area right now, and everybody seems to be making mistakes. Most probably, we are going to make mistakes, too, but the important thing is that both our portfolio companies and we are moving forward,” concludes Werleus.

    Image courtesy of Norron
    Julia Axelsson, CAIA
    Julia Axelsson, CAIA
    Julia has accumulated experience in asset management for more than 20 years in Stockholm and Beijing, in portfolio management, asset allocation, fund selection and risk management. In December 2020, she completed a program in Sustainability Studies at the University of Linköping. Julia speaks Mandarin, Bulgarian, Hindi, Russian, Swedish, Urdu and English. She holds a Master in Indology from Sofia University and has completed studies in Economics at both Stockholm University and Stockholm School of Economics.

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