Trying to bring the Nordic region up to speedMarch 2010
Nordea's head of SRI, Sasja Beslik, believes responsible investment products in the Scandinavian region are 'ridiculous' and, in many cases, at least ten years behind the times. Mike Scott finds out why.
The enlightened approach of the Nordic region towards environmental and social issues suggests it should be a leader in socially responsible investment. The proactive approach of the region's state-owned pension funds, particularly Norway's, which is one of the most important institutions in engagement, backs up this theory.
But when it comes to the commercial sector, the idea does not quite hold true, says Sasja Beslik, director of environmental, social and governance (ESG) analysis at Nordea Investment Funds, part of Stockholm-based Nordea bank, the largest financial player in the region with ten million customers and 1400 branch offices in 19 countries.
'Because Nordic business is generally good on CSR issues, there's a misperception about the approach to SRI,' he argues. 'The financial community is generally far more conservative than in the UK or the US.'
What SRI investment there is tends to be based on negative screening and the exclusion of companies that deviate from international norms, he says. 'SRI products in the Nordics are ridiculous,' he asserts. 'Selling products based on screening is like being in the car market and selling Ladas. The market has not developed at all in the last ten years.'
However, the flip side is that SRI offers a big opportunity in the region. 'Consciousness among consumers is fairly high... and over the next couple of years, the market will really shape itself,' he says.
Beslik joined Nordea in 2009 from Banco Fonder – having previously been global head of engagement at ABN Amro Asset Management – with a brief to develop the bank's responsible investment offering. 'Nordea perceived a growing interest in responsible investment and an opportunity to grow that market, both by offering niche SRI products and through integrating ESG concerns into its mainstream activities,' he says.
He is keen to move away from negative screening to a strategy based on the material impact on earnings that can come from companies' exposure to ESG risks. This will involve taking a best-in-class approach, as well as seeking out companies that will profit from an increased future focus on ESG issues.
'The next step is to figure out and develop a comprehensive approach to integrate these issues into the mainstream,' he says. 'However, it is complicated, it takes time, it takes resources and it needs another level of thinking and communication.'
There is a disconnect, he believes, between traditional responsible investors from an ESG activist background, and the financial community. The two groups are not talking the same language. 'We're inventing a new language that can bring together these two communities.'
Nordea, which manages €136billion (£120bn, $186bn), signed up to the UN's Principles on Responsible Investment in 2007, is likely to increase its emphasis on engagement with companies, and will be more active in voting on governance issues.
It is planning to beef up its in-house screening and engagement capabilities, having formerly used external bodies, such as Ethix, to do this.
'I want to see Nordic companies becoming leaders in this area,' Beslik says. 'For Nordea, it is not just about selling responsible products, it is about being a responsible company.'
Already a member? click here to login