Danske Invest adjusts its exclusions
As part of Danske Invest’s work with responsible investments and focus on meeting investor preferences within sustainability, we are adjusting the exclusion categories for our funds. At the same time, we are making it easier for investors to see the extent to which each fund’s investment universe is expected to be affected by the exclusions they are subject to.
Danske Invest is committed to delivering competitive returns to its investors in a responsible manner and to meeting investor expectations and preferences in relation to how funds should integrate sustainability factors. This also applies to the use of exclusions, which Danske Invest continuously assesses and adjusts.
"Our exclusions are not static. They evolve as societal norms and investor preferences change, and as legislation develops in the EU and the countries where we market our funds," says Robert Mikkelstrup, CEO of Danske Invest.
What is an exclusion?
An exclusion involves excluding a company or issuer from a fund's investments if the company or issuer does not meet the requirements that the fund has committed to uphold for its investors. This can be in relation to specific activities, such as investments in the cultivation or production of tobacco, or various events, such as human rights violations or failure to adhere to principles of good governance.
The adjustment means that Danske Invest now has 18 different exclusion categories that can be applied across its funds in various combinations.
In addition to the existing categories,* a handful of new categories are being introduced, including the exclusion for sustainability risk and the exclusion for fossil fuel transition laggards.
By increasing the number of exclusion categories, Danske Invest is increasing its flexibility to tailor funds to different investors and market preferences.
The new exclusion categories are as follows:
- Exclusion for sustainability risk: Includes investments where there is deemed to be a significant sustainability risk with potentially high negative impact on the value of the investment. With a few exceptions, it will apply to all Danske Invest funds.
- Exclusion for fossil fuel transition laggards: Includes investments in companies that have more than 5% of their revenue from activities in the fossil sector and do not meet Danske Bank's requirements to support the transition to a more sustainable society. It will apply to selected Danske Invest funds.
- Climate Transition Benchmark (CTB) exclusion: Follows exclusions for the EU Benchmark for Climate Transition (Climate Transition Benchmark) targeting companies associated with certain activities, including tobacco and controversial weapons. The exclusion broadly overlaps with the exclusions already applicable to the funds but is introduced to meet new regulatory requirements for funds with ESG-related terms in their names. It will particularly apply to Danske Invest funds sold under the name "Restricted".
- Paris Alignment Benchmark (PAB) exclusion: Follows exclusions for a Paris-aligned Benchmark (Paris Aligned Benchmark) targeting companies associated with certain activities, including companies whose revenues from exploration, mining, extraction, distribution, or refining of coal are 1% or more. The exclusions broadly overlap with exclusions already applicable to the relevant funds but are introduced to meet new regulatory requirements for funds with "sustainable" or equivalent terms in their names. It will particularly apply to Danske Invest funds with sustainable investment objectives, i.e., Article 9 funds.
- Extended enhanced sustainability standards: Includes exclusions based on a heightened screening process conducted for clients with limited appetite to invest in companies associated with certain sustainability themes and/or controversies.
Easier to see extent to which exclusions affect a fund's investment universe
As part of the adjustment, Danske Invest prospectuses and websites will now include information about how much the exclusions applicable to each fund are expected to affect each fund’s investment universe. The aim is to create more transparency for investors.
There will be a few funds where the expected impact of exclusions on their investment universes will not be shown. This, for example, applies to funds that do not have a benchmark as well as actively managed funds with sustainable investment objectives, as their investment universes are defined by whether the investments are sustainable.
Get an overview of the exclusions
Investors can see which exclusions a fund is subject to in the fund prospectus and via our website.
Investors, who would like information about thresholds, definitions, and data sources for the individual exclusions can find these in the Danske Invest exclusion instruction.
The background for the exclusion for fossil fuel transition laggards can be found here.
*Enhanced sustainability standards, controversial weapons, pornography, thermal coal, tobacco, fossil fuels, tar sands, peat-fired power generation, alcohol, gambling, military equipment, and SPU (Statens Pensjons Utland - a list of exclusions defined by Norges Bank). Article 9 funds, which invest fully in sustainable investments, have the so-called PAI exclusion to ensure no significant harm is done. In the future, PAI will also appear as a separate category in the overview of exclusions.
**The six funds in Danske Invest SICAV-SIF are: Danske Invest SICAV – SIF Alternatives - Global Private Credit, Danske Invest SICAV – SIF Alternatives - Global Private Equity, Danske Invest SICAV – SIF Alternatives - Global Future, Danske Invest SICAV – SIF Fixed Income Global Value, Danske Invest SICAV – SIF Global Cross Asset Volatility and Danske Invest SICAV – SIF Merchant Formuepleje Solution.
This publication is marketing material and does not constitute investment advice.
Always consult your professional advisers regarding legal, tax, financial, and other aspects that may be relevant to assessing the suitability and appropriateness of an investment.
Please refer to the prospectus and the Key Information Document before making any final investment decision. A summary of investor rights can be obtained in English as well as more information on the sustainability aspects of the fund here.
The decision to invest in the fund should take into account all of the environmental and/or social characteristics of the fund as described in Article 23 disclosure statement.
