What's it been like so far in your time as portfolio manager for Equal Opportunities fund?
Since the fund's launch in late 2021, the macro environment has been affected by inflation, bank collapses, recession fears, and geopolitical uncertainty. That's a lot to navigate, but I believe that companies that offer products and services much needed for sustainable development, can keep contributing to long-term growth — even in tumultuous market conditions.
Since I began working in the Solutions team, there's been substantial development within ESG (Environmental, Social, Governance) investing. New regulations, like the Sustainable Finance Disclosure Regulation (SFDR) have helped define the criteria for sustainable investments and can help bring greater transparency to the market. Now, with 2030 not far ahead, it's becoming more urgent to achieve the UN Sustainable Development Goals, and a significant amount of capital is needed to reach these goals.
There is a long way to go also on the social side of ESG. When talking about sustainable investing, we often focus on the 'E'. However, to achieve the SDGs, we need to use a holistic approach that integrates both the 'E' and the 'S'. Even with that there would be an increasing need for new regulations and clear guidance about social investing. Attempts have been made, exemplified by the social taxonomy, but it is still difficult to see real progress.
What does it mean for a company to contribute to "equal opportunities"? How do you as a portfolio manager gauge the potential impact of companies?
Right now, billions of people lack access to essential services, such as digital, financial and healthcare services. Companies with the right products and services can ensure better access, can provide more opportunities, and thereby contribute to sustainable economic growth in society. So, Storebrand Equal Opportunities seeks to invest in companies that can provide people around the world with better access to these services.
Due to the lack of high-quality data in the social aspects of ESG, it can be quite a challenge to pinpoint companies for the 'Equal Opportunities' theme. Because of this lack of quantitative data, I need to utilize more qualitative assessment in this thematic area. The constraints are limited only by creativity that can stop me from identifying solution companies. It can be a comprehensive process, as we lack easy-access specific data points, such as green revenue, for filtering purposes — but it is precisely this aspect that makes my job even more exciting.
You were recently on a trip to Japan, where you met some of Solutions' portfolio companies. What did you learn that you did not know before?
We travelled to Japan this October, to visit our portfolio companies and to participate in this year's Principles of Responsible Investment (PRI) conference. Within our Solutions team, we focus on some governance topics when we are in dialogue with our portfolio companies. This is because we believe that undertaking positive dialogue around the issues of fair remuneration and board and management diversity supports our work aiming to contribute to a more sustainable future.
We expect companies to execute fair remuneration policies and ensure board and management diversity across, but not limited to, gender, ethnicity, age, marital and parental background. As we operate with a global mandate, we will take each company's operational context into consideration when starting a dialogue with them. Since many topics have different levels of maturity in different regions, it is important to develop realistic expectations for our portfolio companies.
Last year, the Japan Financial Services Agency (FSA) proposed new ESG disclosure requirements, where some of the proposed topics listed companies in Japan had to report on included:
- The representation of women in management positions
- The percentage of male employees who have taken paternity leave
- Salary disparities between female and male employees
With these regulations setting the stage for better and improved sustainability reporting, we were interested in getting insight and learn more about our portfolio companies' stance on these subjects as well as their strategic plans, in light of the new regulations proposed by the FSA. My key takeaway from the trip was that in general, companies were very keen to improve their sustainability reporting and they were especially interested in improving work-life balance and workforce diversity. Japanese companies have recently seen increased interest from international investors, and as a part of this trend, they want to make sure that their reporting is in line with international standards.
What is inspiring you these days?
I find a lot of inspiration working together with my colleagues. I am grateful and privileged to have had the opportunity to work together with so many talented people of different backgrounds. I also find it very inspiring being able to have a workday that is diverse, whether doing research independently or working together with my colleagues. And of course, travelling to Japan, meeting our portfolio companies, and learning and experiencing how it is to do business in Japan.
Meeting people from around the world, all working on sustainable investments, is a great experience, as I get to learn from people with different backgrounds, ideas, and skill sets. The trip helped me gain a lot of new insight and inspiration, all of which I take with me into my everyday work.
