Nordea Downgrades Diversity Fund to Engage with Companies

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    Stockholm (NordSIP) – On 4 August, Nordea Asset Management (NAM), announced the recategorisation of Nordea 1 – Global Gender Diversity Fund from the more stringent article 9 under the Sustainable Finance Disclosure Regulation (SFDR) to a lighter green article 8 classification.

    NAM argued that the decision was taken to allow the fund to reach a “wider investment universe and increased focus on engagement.”

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    The fund’s name has been accordingly amended to Nordea 1 – Global Diversity Engagement Fund, to reflect the change. Portfolio managers Julie Bech and Audhild Aabø, will continue to manage the expanded portfolio. While the managers will adopt the same investment process, the investment universe will be expanded beyond those deemed to be “sustainable investments” as per SFDR, and more intensive engagement with investee companies is now a core will be an even more important component of the strategy. Pursuant to UCITS rules, clients were notified of the change through a notice to shareholders published on August 1, 2023.

    The fund was one of the 18 global equity products whose first-quarter performance NordSIP reviewed. At the time, it ranked as one of the top (financial) performers on a relative performance basis.

    Engagement, not Fear

    Eric Pedersen, Head of Responsible Investments at NAM emphasized that this SFDR downgrade is different in nature from the mass of downgrades that took place at the start of the year. “Those downgrades – some of which have ironically been reversed after the latest clarification from the EU Commission – were carried out due to fear uncertainty about the interpretation of SFDR and to mitigate exposure to accusations of greenwashing or even regulatory action. Our decision regarding the Diversity Fund is a conscious and independent one, relating to what the portfolio management team wants to achieve with the fund,” Pedersen tells NordSIP.

    “The PMs feel there are opportunities for engagement on gender and the other dimension of diversity with companies that are not immediately clear ‘sustainable’ targets for an article 9 fund. For instance, advertising companies, cruise lines or coffee chains typically don’t meet the criteria, as they have no obvious alignment with the SDG’s or the EU Taxonomy – but there could still be important opportunities for diversity engagement and improvement. While this decision corresponds to an SFDR re-classification, it actually allows the fund to expand its diversity efforts, which we feel is a positive,” Pedersen adds.

    Expanding the investment focus of this fund gives us a broader scope, which translates into broader impact. The refocusing also allows us to place a stronger emphasis on engagement in order to drive both alpha and social change,” Bech says.

    The Diversity Project Europe

    Just a week ago, NAM became one of the founding members of the Diversity Project Europe, a cross-border initiative to encourage a more inclusive money management industry across the region. Alongside Aegon Asset Management, AXA Investment Managers, Franklin Templeton, HSBC Global Asset Management, Pictet Asset Management, Quoniam Asset Management, and T. Rowe Price Group, the Nordic asset manager will endeavour to clarify where the industry is today and look for best practice within and outside of investment management.

    According to Ric van Weelden, acting chairman of the Diversity Project Europe’s advisory committee, the initiative, to be launched later this year, will focus initially on three themes, gender equality, social mobility and inclusive culture. The project aims to facilitate change through voluntary collaboration and knowledge sharing and will also set up work streams across the three themes.

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