Sustainability information about funds
Here you’ll find information on sustainability considerations in our funds.
What is SFDR?
SFDR stands for “Sustainable Finance Disclosure Regulation” which is the EU regulation on disclosure of how advice on sustainability is being handled by financial advisers.
SFDR has been incorporated into Norwegian law and is in Norwegian called “Offentliggjøringsforordningen”. The regulation requires all financial advisers in Norway to publish an account of how sustainability is integrated.
Sustainability in mutual funds
The Sustainable Finance Disclosure Regulation (SFDR) came into effect in the EU on 10 March 2021. This has made it easier to compare financial products and services from a sustainability perspective, through uniform information and increased transparency.
SFDR - “Sustainability-related disclosure in the Financial services sector”
SFDR is the regulation in the EU action plan for sustainable finance. SFDR ensures that financial institutions publish their financial products’ investment strategy, investment objectives and actual investments.
Sustainability in investment advice
Sustainability risk
Sustainability risk is events or circumstances related to:
- Environmental risk factors such as climate change, Co2 emissions or lack of resources
- Social risk factors such as human rights violations or corruption
- Management risk factors such as breach of shareholder rights or lack of governance and leadership
Sustainability risk can have a negative impact on the value of your investment.
The size of sustainability risk varies depending on companies, sectors and markets. Some companies, sectors and markets are particularly exposed to sustainability risk, and they can therefore constitute an increased risk of financial losses. For example, energy companies are known to have large greenhouse gas emissions and can therefore be subject to considerable regulatory pressure. Investments in such companies may therefore have an increased risk of financial losses related to sustainability risk.
How do we handle sustainability risk in the advisory services?
A part of the product universe on which DNB Bank offers advice to its customers is mutual funds managed by DNB Asset Management AS. In these funds, sustainability risk is integrated into the underlying investment processes. Read more about how sustainability risk is integrated into DNB Asset Management at dnbam.com
All internal and external funds used in the investment advice are subject to DNB’s group instructions for responsible investments. The standard is based on international norms and standards. It ensures that DNB does not contribute to an infringement of human and employee rights, corruption, serious environmental damage or other actions that can be perceived as unethical. It will also ensure that assessments of ESG risks are integrated into the management.
Charting the customer’s sustainability preferences
As part of the advisory service, we chart the customer’s sustainability preferences by having the customer decide on PAI, SFDR and the EU’s environmental goals.
PAI
Principal Adverse Impacts (PAIs) are a method for measuring the most significant negative effects investments can have on sustainability, including the environment and social aspects.
At DNB, we give weight to these PAIs when we mention “selected PAIs” as being taken into account in our investment advice:
- Climate emissions
- Emissions of greenhouse gases
- Carbon footprint
- Climate gas intensity
- Fossil exposure
- Human rights
- Compliance with international standards and human rights
- Monitoring compliance with international standards and human rights
- Controversial weapons
The customer can choose whether a share of the investment should take into account “selected PAI” or not.
SFDR
SFDR stands for the Sustainable Finance Disclosure Regulation and sets standards for how savings products should disclose sustainability features.
This regulatory framework will contribute to greater transparency and accountability in the financial sector. The funds are classified as follows:
Sustainability focus – Yes
A fund that has sustainable investments as its main objective.
The funds are subject to disclosure requirements established in accordance with Article 9 of the SFDR (Sustainable Finance Disclosure Regulation).
Sustainability focus – Partly
A fund that, in addition to other considerations, promotes environmental and social aspects through its investment strategy. They do not have sustainable investments as the main objective.
The funds are subject to disclosure requirements set out in Article 8 of the SFDR (Sustainable Finance Disclosure Regulation)
Sustainability focus – No
A fund that does not focus on sustainability in its investment strategy.
The funds are subject to disclosure requirements set out in accordance with Article 6 of the SFDR (Sustainable Finance Disclosure Regulations).
Sustainability focus – Not available
Data on sustainability focus is not available or the funds have not reported on classification in SFDR (Sustainable Finance Disclosure Regulations).
The customer can choose whether the investment proposal should have a proportion of:
- Products that have a proportion of environmental or social properties and that have specific sustainability goals. This is a selected range of mutual funds with “Sustainability Focus - Partial” which also takes into account specific sustainability goals
- Products with sustainable investments as the main purpose. This is a mutual fund with “Product Focus - Yes”
EU environmental goals
Taxonomy is a classification system developed by the EU to define which economic activities can be considered sustainable. The aim is to steer investments towards activities that support the EU’s environmental goals and thereby contribute to a greener economy. In order for an activity to be classified as sustainable, it must contribute significantly to at least one of the following six environmental goals, without damaging the others:
- Limitation of climate change
- Climate adaptation
- Sustainable use and protection of water and ocean resources
- Transition to a circular economy
- Pollution prevention and control
- Protection and restoration of biological diversity and ecosystems
If the customer wants the investment proposal to take into account the guidelines in the taxonomy, DNB will endeavour to ensure that parts of the funds in the investment proposal have a certain proportion invested in accordance with the EU’s environmental goals.
More about compensation schemes:
The Act on sustainability information in the financial sector etc. sets requirements for Norwegian managers and investment advisers to disclose how the compensation scheme is compatible with the integration of sustainability risk into investment decisions/consulting. DNB Bank ASA has several businesses and subsidiaries with different remuneration schemes.
DNB Bank: As of today, sustainability risk is not included in the assessment basis when remuneration is to be determined. Currently, there is limited access to information from fund managers about their exposure to sustainability risks and this makes it difficult to establish relevance
DNB Asset Management AS DNB Asset Management AS has its own remuneration schemes, read more about them at dnbam.com
DNB Markets: DNB Markets has established a risk-adjusted remuneration scheme that aims to promote long-termism and good risk management. Sustainability risk is currently not included in the assessment basis when determining compensation at DNB Markets.
Sustainability reports
We want to be open about our work on responsible investments, and regularly publish updates.
Dialogues
Proactive and reactive influencing dialogue with companies is a central part of our work. The discussions are structured processes with clear objectives for desired outcomes.
Climate and environmental mutual funds
For investors who are concerned about the environment, we have some selected funds that focus on climate, the environment and the oceans.
Active ownership
DNB exercises active ownership through dialogue and voting.