Accordingly, we are long-term, active owners and we take advantage of our opportunity to influence business and industry in a sustainable direction, independently and in partnership with other investors. Our strategy can be summarised in four points:
- We invest our capital in funds whose managers have strong expertise in integrating factors that relate to the environment, social issues and corporate governance in their investment decisions.
- We emphasise well-managed companies engaged in sustainability issues that are material to business and society. We are restrictive about investing in controversial industries that are problematic in relation to the fundamental values of the Church.
- We contribute to developing investment products that have a distinct focus on sustainability.
- We take advantage of our opportunity as asset owners to influence individual companies, and sectors, including the financial industry.
Guided by the financial policy
The Church of Sweden’s work with responsible investment has been ongoing for many years and is under constant development.
Asset management is based on the financial policy adopted by the Central Board in 2010. The policy is based upon two fundamental values: the principle of human dignity and the concept of stewardship as reflected in international environmental and human rights conventions and existing frameworks for responsible business.
The policy stresses that the Church of Sweden’s asset managers must actively seek out companies that are contributing to sustainable development through their operations, goods, or services. These may include companies that are working systematically and in a goal-oriented manner with issues such as the environment, working conditions, human rights, corporate governance, poverty reduction and corruption.
They may also be companies that develop products and services that are advancing solutions to some of the most pressing needs of society today. We also refrain from investing in certain businesses, such as extraction of fossil fuels and manufacturing of tobacco and weapons.
From policy to action
Assets are managed externally by Swedish and foreign asset managers with varied investment strategies and methods of ensuring compliance with our financial policy. Since the managers put emphasis on companies that have an established and systematic sustainability programme, many companies are eliminated in the initial research process.
In addition to the research and screening conducted by the asset managers, we engage independent consultancy firms to perform a control screening at least once a year. The screening checks that no company is in breach of the exclusionary criteria for controversial businesses and that the companies are generally given good sustainability scores.
The screening also investigates whether any of the companies have acted in contravention of corporate responsibility frameworks and international conventions intended to protect human rights and the environment. If such is the case, the manager investigates the allegations, sometimes jointly with the Church of Sweden. Depending on which measures the companies take and the gravity of the allegations, a decision is later taken as to whether the holdings will be retained or sold.
Contributing to new funds
We also contribute to bringing new financial products to the market either by stepping in as a seed investor or by establishing our own funds. The Ethos Funds are one example, created in cooperation with two asset managers who we work closely with: SEB (Swedish equity and fixed-income funds) and RobecoSAM (a global equity fund).
The Ethos funds are based on the Church of Sweden’s financial policy and are marketed primarily towards dioceses and parishes. At the end of the year, various units within the Church of Sweden, including the national level, had invested approximately SEK 6 billion in the Ethos Funds.