The investment process is described as a cone as shown above. The asset managers will select a number of companies from their investment universe (a large number of companies available to choose from for the portfolio in question).
Then, the managers conduct both a financial analysis and a sustainability analysis to ensure that the eligible companies for the portfolio fulfills all established requirements including the financial policy of the Church of Sweden. Lastly, the optimal portfolio is constructed (step 1-3).
Screening and company engagements
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 if 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 screening consultant investigates the allegations.
If these prove to be real and point at serious flaws in the company management, the screening firm would initiate an engagement process, where the Church is also invited to participate. Additionally, we conduct other engagements, often together with other investors to get a higher impact, on various themes that we consider important from our viewpoint as a responsible investor.
The aim is to influence the companies to take measures and prevent shortcomings in their operations. 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.
For a complete list of the managers we hired in 2016, see page 8 in the RI Annual Report 2016.
Read more about the Church of Sweden’s work on sustainable development in other areas.