Sustainability (ESG) in Stavanger Asset Management AS
ESG stands for “Environmental, Social and Governance”, and represents a holistic approach to what is called sustainability.
Stavanger Asset Management AS (SAM) works to promote transparency, integrity, rights and responsibility in all parts of our business, with our employees, investors, stakeholders and customers.
Sustainability risk is defined as environmental, social or governance-related events or circumstances that could have an actual or potential significant negative impact on the investment’s value should they occur.
At SAM, we create long-term value for our customers, and we are committed to ensuring that our managers and investment advisers take account of and inform customers about sustainability and any sustainability risks.
We have the opportunity to influence how the customers’ capital is allocated and which industries and companies can obtain capital for their business. Our view is that responsible action is both important and necessary to promote sustainable development.
Our principles for sustainability
SAM prefers to work with companies that live up to certain principles in terms of human rights, labor rights, the environment and anti-corruption:
The principles are based on our core values and are taken into account in all business decisions.
Reduction of environmental footprint
As a company, we have a continuous focus on reducing our environmental footprint. This may be through small and large measures, which can for example be:
The general manager and HR are responsible for the initiative and follow-up of the company’s sustainability strategy.
The investment director is responsible for compliance with investments, portfolios and that the portfolios are in line with the mandate given by the customer.
Integration of sustainability risk
Sustainability risk refers to the risk of environmental, social or governance-related events or circumstances that may have an actual or potential material negative impact on the value of the investment. Sustainability risk is therefore an important factor to consider for companies that want to take long-term sustainability goals into account in their decisions.
SAM shall provide training to managers, investment advisers and other relevant personnel on sustainability risks and their importance for investment decisions. This includes understanding ESG (Environmental, Social, and Governance) factors and their potential impact on financial results.
Customers must be informed about what sustainable investments are and what sustainability risks entail and how these risks can affect their investment.
All employees in the company must communicate clearly and transparently about sustainability risks to customers through marketing materials and other communications. Sustainability risk is dynamic and requires continuous follow-up and adaptation. Employees in SAM must keep up to date on developments in the area of sustainability and adapt to changing conditions.
Employees must strive to take environmental, social and business ethics into account when making purchases. When traveling on business, our employees must choose environmentally friendly alternatives such as public transport where appropriate.
What are sustainability risks:
Environmental risks can include exposure to climate change, resource scarcity and environmental pollution. For example, companies in fossil fuel industries may face increasing regulatory pressure and market failure due to the transition to renewable energy.
Social risks can include human rights violations, labor disputes and loss of reputation. For example, companies involved in child labor or forced labor may face legal consequences and negative publicity that may affect their long-term performance.
Governance risks can include poor corporate governance, unethical management and weak internal control systems. For example, companies with a lack of transparency in decision-making and inadequate control mechanisms may be more vulnerable to fraud.
Potential consequences for returns:
Investments in companies with high exposure to sustainability risks may experience lower returns in the long term due to rising costs, lost opportunities and reduced investor and consumer confidence.
Companies that are poorly prepared for sustainability challenges may experience increased volatility and risk to their financial results due to unexpected events and negative reactions from the market.
On the other hand, investments in companies that take sustainability risks seriously and implement robust ESG practices may have greater opportunities for long-term growth and stability, and thus the potential for higher returns.
Discretionary management and investment advice
SAM’s management of customer portfolios will be tailor-made and prioritize risk and return first and foremost.
Managers and investment advisers must take into account the customers’ sustainability preferences when advising and managing the customer’s funds. SAM must be a good discussion partner and must adapt the clients’ portfolios according to the ESG criteria that the client uses as a basis for management. SAM will also assist its customers in deciding which approach to sustainability best fits their convictions.
Employees must:
Consideration of the most important negative consequences of sustainability risks
SAM takes negative effects of investment decisions into account by using exclusion. Fund companies and products can be excluded if they contribute to or are themselves responsible for gross breaches of norms. This type of exclusion is linked to companies’ behavior. The criteria that can form the basis for exclusion on such grounds are:
Our remuneration policy
The remuneration policy stipulates that fixed salary, commission and any bonus for employees must be characterized by a long-term perspective and not encourage excessive risk-taking and not reinforce conflicts of interest. There must be a balance between fixed and variable remuneration and the variable remuneration must contain both quantitative and qualitative criteria for regulatory compliance, customer interest and quality of services. The criteria for variable remuneration must not be designed in such a way that a conflict arises with the Company’s duty to look after the customers’ interests. Our remuneration policy is considered to be compatible with the Company’s work with sustainability risk in management and advice to our customers.
