Issue 2, 2021

The Nordic investment community has maintained a strong focus on climate change and sustainability despite the pandemic. The Folksam Group, a Swedish pension and insurance company, has been a pioneer in building a net-zero portfolio and set ambitious intermediate climate targets through its membership in the Net-Zero Asset Owner Alliance. Key challenges include coordinating across diverse investors, engaging with high-emitting companies to improve their climate outcomes, and developing green investment opportunities. Achieving a net-zero portfolio will require shared efforts among asset owners, managers, companies, and policymakers over the coming decades.

In manager selection and alternatives, platforms like Global Fund Search have played a vital role amid pandemic-induced constraints, helping investors efficiently identify suitable managers across equities, fixed income, and alternatives including private equity. Nordic investors tend to prefer diversified portfolios and emphasize robust ESG integration and qualitative diligence when selecting managers. Meanwhile, pension companies like Finland's Elo have expanded their climate risk analysis into new asset classes and increased active ownership through in-house trading teams, reflecting maturity and evolving demands in ESG practices. Velliv in Denmark, shifting from Nordea's advisory, has diversified its private equity partnerships with global firms to improve access and monitoring, responding to increased regulatory expectations.

Thought leaders highlight that achieving net-zero investment portfolios involves complex challenges. Researchers like AQR's Lukasz Pomorski argue most companies today have significant emissions; thus, investors must consider supplemental techniques beyond divestment, such as carbon offsets and notably short selling high-carbon companies. Shorting not only counters carbon exposure but can also serve as a hedge against climate risks like stranded assets and influences corporate behavior. However, adoption of such strategies remains limited partly due to reputational concerns. In parallel, financial institutions such as the Bank of Finland are adapting ESG approaches to their unique investment profiles, focusing on fund manager monitoring and advancing standardized sustainability data platforms to enhance transparency and comparability across markets. Overall, Nordic investors and managers continue to evolve, balancing return objectives, regulatory pressures, and meaningful sustainability integration through innovation, collaboration, and strategic engagement.

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Table of content

Editor’s Comment and Overview

Overview of thematic investment initiatives to combat climate change, featuring insights from asset owners such as the Folksam Group and the challenges investors face in aligning with net-zero goals.

Folksam Group’s Net-Zero Portfolio Journey

Folksam’s climate targets aiming for a Paris-aligned portfolio by 2025, leveraging collaboration within the Net-Zero Asset Owner Alliance, emphasizing engagement with high emitters and developing green investments.

Manager Selection Trends Amidst Pandemic Challenges

Global Fund Search discusses pandemic-induced obstacles in manager searches, benefits of its platform for institutional investors, and trends in manager appointments including ESG and alternatives.

Elo Pension Fund’s Executive Reshuffle and Strategic Outlook

Details on Elo’s CEO transition, regulatory challenges regarding solvency, and the impact on corporate governance amid pressures from the Finnish Financial Supervisory Authority.

Nordic Sales and Distribution Landscape Updates

Industry changes highlighted by the departure of JPMorgan’s François Xavier Douin, new appointments at DNB Asset Management, Principal Global Investors, BNY Mellon, and Kempen Capital Management.

Interview with Keva’s CEO Timo Kietäväinen

Insights into restoring Keva’s reputation, organizational reforms, preparation for possible market competition, and managing growth in public sector pension management.

Short Selling as a Tool Toward Net-Zero Portfolios

AQR’s Lukasz Pomorski on the difficulties achieving net-zero investments, advocating for considering short selling of high emission companies and trading instruments like carbon offsets to meet net-zero objectives.

Roundtable Discussion: Nordic Investors and High Yield Bonds

Perspectives from Nordic fund selectors and managers on strategic allocation to high yield bonds, ESG integration, manager selection challenges, and current market opportunities and risks.

Perspectives on ESG Integration from a Central Bank

Bank of Finland’s Anna Hyrske discusses responsible investment practices suitable for central banks, challenges with ESG data especially on fixed income and sovereign bonds, and evolving reporting standards.

Investor Focus: Velliv Pension Company’s Private Equity Set-up Changes

Velliv’s strategic move from Nordea Asset Management advisory to partnerships with Nuveen and BlackRock in private equity, aiming at broader global coverage, cost efficiencies, and enhanced regulatory compliance.

In Conversation with Ulrika Hasselgren

Career reflections from ESG veteran Ulrika Hasselgren and her transition to Arabesque, combining sustainability with AI, machine learning, and big data to advance ESG data integration and sustainable investing.

Additional Content and Features

Advertising highlights from major asset managers, publisher and subscription information, Nordic Fund Selection Forum preview, and editorial team contacts.