Issue 5, 2020

The Nordic Fund Selection Journal's October-November 2020 issue addresses several key developments in institutional investing across the Nordics, with a strong focus on responsible investment, emerging market challenges, and adapting to pandemic-driven changes. Highlighted is Akademikerpension's groundbreaking move to blacklist China from its investment universe due to serious human rights violations, marking a bold ethical stance and necessitating the creation of customized benchmarks to manage exclusions without compromising portfolio accountability. This decision underscores the complexities Nordic asset owners face in balancing human rights concerns with investment risks, particularly in sovereign debt markets where engagement possibilities with governments are limited.

Discussions also revolve around evolving sustainable investment products, as Finnish pension funds like Ilmarinen and Varma pioneer ESG-themed ETFs, though they call for greater standardization and unified ESG methodologies to improve product comparability and investor confidence. Additionally, a roundtable with Norwegian investors highlights definitional challenges, measurement difficulties, and industry readiness in impact investing, emphasizing intentionality, additionality, and the importance of credible impact measurement alongside financial returns. Furthermore, the pandemic's impact on Nordic asset owners' working practices reveals swift adaptation to remote work, with investors enhancing in-house capabilities, particularly in trading, while rethinking traditional due diligence approaches, including the perceived necessity of onsite manager visits.

Together, these themes illustrate a Nordic investment landscape in transition, grappling with ethical responsibilities, product innovation, and operational shifts catalyzed by global developments. Key takeaways include the growing imperative for robust ESG integration across asset classes, the critical role of investor-led exclusion and engagement policies in addressing human rights concerns, and the necessary evolution of investment infrastructure and processes to meet contemporary market and societal challenges.

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Table of content

Introduction: Changing Office Life at Nordic Asset Owners

A look at how Nordic pension funds and asset owners have adapted their work environments and policies amid the COVID-19 pandemic, featuring insights from institutions such as Elo, AP2, and Lífsverk.

Danish Pension Fund Akademikerpension’s Exclusion of China for Human Rights

Akademikerpension becomes the first Danish fund to blacklist China completely over human rights concerns, excluding government bonds and state-owned companies, sparking global media attention and discussions on the complexities of country exclusions in sovereign debt investing.

Navigating Distressed Debt: Perspectives from Nordic Investors and Managers

Insights from Christer Franzén (Ericsson pension fund), Jimmy Lundby (Pensam), and Chris Boehringer (Oaktree Capital) on timing, opportunities, risks, and manager evaluation in distressed debt investing during uncertain economic cycles and the COVID-19 crisis.

Elo’s New In-House Trading Team: Cutting Costs and Enhancing Performance

Finnish pension company Elo establishes an internal trading desk to reduce costs and improve execution speed amid increasing market volatility, detailing the team’s structure and strategic objectives for better trading efficiency and sustainability integration.

Discussing Sustainable ETFs with Finnish Pension Pioneers

Finland’s Ilmarinen and Varma lead Nordic investors in ESG-themed ETF adoption, addressing challenges like lack of standardized products, methodological consensus, and data availability; the discussion also covers governance and social factors’ integration within sustainable ETFs.

Changing Office Culture in Nordic Asset Owners During COVID-19

An overview of remote work policies, team organization, and operational adjustments at asset owners including Elo, AP2, and Lífsverk during the pandemic, highlighting benefits and challenges in maintaining productivity and morale.

Varma’s Revamped Sustainable Equity Portfolio

Varma increases its sustainable equity allocation to EUR 1 billion, splitting the portfolio into an active satellite and a passive core aligned with five selected UN Sustainable Development Goals, emphasizing ESG data evolution and inclusion criteria focusing on developed markets.

Interview: A Decade of Managing the Nobel Foundation’s Assets with Lars Heikensten

An in-depth interview with Nobel Foundation’s executive director Lars Heikensten on overhauling its investment strategy and organization, balancing returns with ethical considerations, challenges with country exclusions, and reflections on modern monetary theory and central bank roles.

Roundtable: Norwegian Investors Discuss Impact Investing

Panel discussion featuring Norwegian institutional investors exploring impact investing definitions, challenges in intention versus measurement, additionality, ESG integration, emerging market opportunities, manager selection, and the role of regulations like the EU taxonomy.

In Conversation: Georg Kell on Sustainable Investing and Corporate Sustainability

Georg Kell, founding director of the UN Global Compact and Arabesque chairman, discusses the convergence of corporate sustainability and sustainable finance, rapid systemic changes, pandemic implications, and the vision behind a new comprehensive book on sustainable investing.

Selector Insight: New Perspectives on Sustainability and Travel at Danske Bank

Susanne Bolin Gärtner, head of fund and manager selection at Danske Bank, on managing a Nordic team remotely, harmonizing sustainable fund offerings, cross-country ESG integration differences, and her reassessment of the necessity of onsite manager visits amid travel restrictions.

Up-Close & Personal: Interview with Karsten Kjeldsen, CEO of Lærernes Pension

Karsten Kjeldsen shares his career transition from banking to pension management, priorities as a new CEO, investment philosophy balancing long-term goals with near-term risk, regulatory challenges, and interests in contributing to the green transition.