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In order to receive the Nordic Swan Ecolabel, a fund must fulfil 25 obligatory requirements. The fund must also exclude or limit investments in certain industries and companies that are particularly problematic (fossil fuels, weapons and tobacco).

This poses several challenges, from limited reporting to multiple reporting standards and a disproportionate focus on environmental aspects at the expense of social issues and corporate governance. While companies tailor sustainability reports to their target audiences, we need to detect and see through greenwashing.

We raise the bar

For this purpose, we have developed an ESG model that has been vetted by the Nordic Swan Ecolabelling. The fund must fulfil 25 obligatory requirements that cover: disregarding poor companies (exclusion), choosing the better companies (inclusion) and operating openly (transparency) in order to receive a Swan label. 

We raise the bar for companies in higher-risk industries exposed to significant sustainability challenges versus companies in low-risk industries. Similarly, we strive to promote companies that work specifically with sustainable development, offering products and services with environmental and social benefits.

Swan magnifying glass

The task of integrating sustainability and identifying corporate governance issues is conducted through a fundamental ESG analysis prior to investments.

The following examples provide an idea of the challenges we meet in implementing this analysis:


Positive ESG profiles and well-structured information

GetLink describes itself as a leader in eco-responsible transport and infrastructure solutions, and a major player in the European transportation sector engaged in the Eurotunnel. By enabling trains to use the Tunnel, GetLink contributes to the shift from short-haul air travel to rail, helping to save an estimated 2 million tonnes of CO2 annually compared to ferry travel / airlines.

Each year, Getlink publishes a Corporate Social Responsibility report. Whereas the report highlights notions like respect for the environment, regional roots, economic and cultural ties, which are invariably difficult to verify, it does include specific, quantifiable measures, reported according to GRI standards (Global Reporting Initiatives). 


Positive ESG profile, reporting in need of improvement

Then we have smaller companies with limited resources and lower reporting requirements (i.e. they do not report according to GRI standards), such as Småkraft, the largest small-scale hydro power company in Norway. Småkraft invests, develops and operates small-scale hydropower plants in cooperation with local landowners. The business model has an uncontrovertibly positive effect on the climate and the company has provided strong evidence of active ESG engagement.

As for reporting, the company hired an external party (The Governance Group) to help develop their ESG profile and reporting framework. We were asked to participate in the process to help strengthen their sustainability profile. As a bond holder we highly value transparency and communication with the company, where the additional ESG effort was awarded in our company analysis.

We raise the bar for companies in higher-risk industries exposed to significant sustainability challenges versus companies in low-risk industries.


A question of doubt

Phone operator Lebara (VIEO) is an example of possible non-conformity, in particular on governance issues.

In 2017 Lebara founders sold the business to a Swiss "family office" called Palmarium, which raised the bond to help pay for the acquisition. It soon surfaced that Lebara failed to provide investors with full financial disclosure and the requisite transparency on Palmarium's other investments, whereupon Palmarium's CFO – formerly a real estate agent in Florida – resigned.

VIEO has maintained a dialogue with its stakeholders to inform about its ongoing issues. We have requested meetings and telephone conferences with both the owners and the managers.

In December 2018 the company released a series of audited accounts and, in a separate press release, announced that their CEO was stepping down.

After meeting both the CEO and the CFO, as well as the release of audited accounts, we were able to feel greater comfort and allay a fair amount of doubt and scepticism. Despite initial shortcomings, the company now seemed to act in a greatly improved and transparent manner. Our concern on a number of corporate governance issues had been addressed in a sufficiently satisfactory manner. PGCB kept the bond.

However, after a renewed review, the bond was sold in May 2019.


The article is an excerpt from our 1-2019 SRI-report.  

Portfolio management team