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Our funds consider sustainability risks in their investment operations. The ESG data supplement gives you an in-depth understanding of how Article 8 and 9 funds compliant with the ESG Rating promote sustainability factors during the investment process.
The ESG data supplement includes the following information:
Statement on the principal adverse sustainability impacts of investment decisions. (pdf)
Summary
No sustainable investment objective
Environmental or social characteristics of the finance product
Investment strategy
Share of investments
Monitoring of environmental or social characteristics
Methods
Data sources and data processing
Limitations of the methodology and data
Due diligence
Shareholder engagement policy
Designated reference benchmark
The Fund is a passive index fund. It promotes environmental and social characteristics by using an index based on environmental, social and governance (ESG) analysis of ESG offences and selected controversial industries and by excluding certain investments based on this analysis. The Fund places no emphasis on, nor does it prioritise, any single theme or sustainability factor, but it takes sustainability factors into account by excluding selected industries that are controversial and harmful in terms of sustainability and by using a base index that is committed to a carbon intensity 30% lower than the parent index.
This financial product promotes environmental or social characteristics, but sustainable investment is not its primary objective.
To the extent that the Fund engages in sustainable investment by investing in financial activities that promote either environmental or social objectives, steps are taken to ensure that these sustainable investments do not cause significant harm to any sustainable investment objective.
The Fund is based on the MSCI ESG Universal Index, using both the MSCI ESG Rating and the MSCI ESG Rating Trend data. In addition, the Fund uses MSCI data on international standard violations and controversial weapons. The Fund is based on the MSCI ESG Screened Index, which uses Business Involvement Screening data by MSCI ESG Research to exclude controversial industries, data by MSCI ESG Controversies to exclude international norm violations and other very serious ESG offences, and data by MSCI Climate Change Metrics to exclude companies based on climate-related themes and carbon intensity.
This financial product promotes environmental or social characteristics, but sustainable investment is not its primary objective.
To the extent that the Fund engages in sustainable investment by investing in financial activities that promote either environmental or social objectives, steps are taken to ensure that these sustainable investments do not cause significant harm to any sustainable investment objective.
Principal adverse impacts (PAI) on sustainability are regularly analysed by screening all investments for their PAI indicators. If screening reveals investee companies with significant principal adverse impacts on sustainability in comparison to its peers and if the PAI indicator is deemed essential for the investee company, the investee company will be monitored more closely.
More information about how we take adverse sustainability impacts into account can be found in the document “Consideration of Principal Adverse Sustainability Impacts in Investing and Insurance Operations (in Finnish)”, which is available online at op.fi.
The OP Asset Management’s sustainable investment analysis model is used to check whether a company has violated international standards (UN Global Compact and OECD guidelines for multinationals). If a company violates any of the standards, it cannot be classified as a sustainable investment. The definition of international standard violations and company-specific analysis is based on the methodology of a third-party service provider.
The Fund places no emphasise on, nor does it prioritise, any single theme or sustainability factor, but it takes sustainability factors into account by excluding selected controversial industries and companies with reported serious ESG offences and by committing to a carbon intensity that is significantly lower than the parent index.
The Fund is a passive index fund. It promotes environmental and social characteristics by using an index based on environmental, social and governance (ESG) analysis on ESG offences and certain controversial industries, and by excluding certain investments based on this analysis.
Negative screening: As the Fund is a passive index fund, the Fund manager cannot make individual exclusion decisions. The Fund is based on an index which excludes companies whose business involves the production of controversial weapons or nuclear weapons. The Fund also excludes companies whose business depends on the production of civilian arms, tobacco, palm oil, coal, and energy produced from coal or Arctic oil and gas. The index also excludes companies which have been identified by the methods used by MSCI ESG Research to be in violation of international standards (UN Global Compact and OECD guidelines for multinationals) and companies with other very serious ESG offences. A stricter policy is applied to ESG offences that affect biodiversity and offences discovered in companies' supply chains.
Use of ESG data in the analysis of investment targets: The benchmark index takes into consideration companies' exposure to controversial or harmful industries, international norm violations, and violations of global norms and other very serious ESG offences. Based on the analysis, the index excludes companies that do not meet the requirements of the universe for the MSCI ESG Screened Index. The index is also committed to a carbon intensity 30% lower than the parent index.
Shareholders’ meetings: The Fund votes in shareholders’ meetings through a service provider in line with OP Fund Management Company Ltd’s shareholder engagement principles that take responsibility aspects into account.
Assessing good governance: The Fund is based on the MSCI ESG Universal Index, using both the MSCI ESG Rating and the MSCI ESG Rating Trend data and gives weight to those companies with better ratings. The level of corporate governance is included in the ESG Rating.
Investments that promote ESG characteristics: 90%, of which 3% are sustainable investments
Others: the Fund may also invest its assets in exchange traded derivatives and OTC derivative contracts in order to hedge against the risk of adverse market movements, to replace direct investments and to otherwise promote effective portfolio management. Sustainability data might not be available for possible derivatives.
The Fund might include investment options which are in line with the EU Taxonomy, but the Fund does not commit to a certain minimum number of investments in line with the EU Taxonomy. Currently, only few investment options in line with the EU Taxonomy are available, and there is a limited amount of reported information on compliance with the EU Taxonomy.
The Fund is a passive index fund. This means that the Fund’s investments are split between the countries and companies of the benchmark index in the same proportion as in the index. Changes to the portfolio are basically only made once a year in conjunction with index adjustments.
Portfolio managers have access to the Fund’s ESG analysis, which indicates, among other things, the weighted ESG rating, carbon intensity and share of green business of the portfolio.
Fund-specific ESG indicators on top-level environmental and social characteristics related to the Fund are reported on a monthly basis.
The Fund is a passive index fund. This means that the Fund’s investments are split between the countries and companies of the benchmark index in the same proportion as in the index. Changes to the portfolio are basically only made once a year in conjunction with index adjustments.
The Fund is based on the MSCI ESG Screened Index, which excludes companies whose business involves the production of controversial weapons or nuclear weapons. The Fund also excludes companies whose revenue depends on the production of civilian arms, tobacco, palm oil, coal, and energy produced from coal or Arctic oil and gas. The index also excludes companies which have violated international standards (UN Global Compact and OECD guidelines for multinationals) and companies which have committed very severe ESG violations. A stricter policy is applied to ESG offences that affect biodiversity and offences discovered in companies' supply chains.
The base index of the Fund (MSCI ESG Screened) uses data by MSCI ESG Business Involvement Screening, MSCI ESG Controversy and MSCI Climate Change Metrics to exclude selected companies operating in controversial and harmful industries and commit to a carbon intensity 30% lower than the parent index. Data by MSCI ESG Rating Business Involvement Screening and MSCI ESG Controversy is used to assess whether companies are exposed to controversial industries and the extent of the exposure, as well as whether companies are involved in very serious ESG offences. Data by MSCI Climate Change Metrics is used to exclude companies based on climate themes and for monitoring carbon intensity.
The Fund votes at shareholders’ meetings through a service provider in line with OP Fund Management Company Ltd’s shareholder engagement principles that take responsibility aspects into account. Participation in general meetings of foreign companies takes place in markets where participation is cost-effective, taking into account their proportion of the Fund’s investments. Attendance at shareholders’ meetings and the Fund’s votes are reported twice a year in connection with shareholder engagement reporting.
The Fund is based on the MSCI ESG Screened Index, which uses Business Involvement Screening data by MSCI ESG Research to exclude controversial industries, data by MSCI ESG Controversies to exclude international norm violations and other very serious ESG offences, and data by MSCI Climate Change Metrics to exclude companies based on climate-related themes and carbon intensity.
In shareholder meeting votes, we use data and company research by ISS ESG.
The service providers we use have detailed and appropriate processes in place for ensuring data quality and correcting inaccuracies in the data.
When selecting new data packages and service providers, we carefully compare and analyse the data quality, coverage, methodology and reliability of each service provider. We regularly monitor trends in ESG data and service providers on the market to ensure the best possible data to support our investment decisions and client reporting.
The share of data that is assessed depends on sustainability indicators and the sustainability factor under scrutiny, and it is not possible to give a universal definition of the share of assessed data of all ESG data. The MSCI ESG analysis used as the basis for ESG Ratings is mainly based on public data reported by companies. It is difficult to determine what portion of ESG data are based on reported information and estimates, respectively. In cases where reported data is available, it is used as the primary source. Third-party service providers must specify for each metric whether the data is reported by companies themselves or estimated using the provider’s internal model.
At the moment, ESG data is not fully standardised, and investee companies do not report on the data widely. This makes it challenging to compare investee companies. Service providers may use different methods for compiling, evaluating and analysing data. For these reasons, we carefully review the methodologies of service providers to ensure their suitability for our purposes.
The Fund is subject to exclusion criteria and is screened for international standard violations as described above in part (d) Investment strategy. A party independent of portfolio management oversees that the Fund complies with the criteria. The Fund’s material exclusion criteria are implemented in the trading system.
OP is an active shareholder through its funds by voting in Finnish and international shareholders’ meetings, engaging in direct dialogue with companies and supporting joint initiatives by investors. OP's funds comply with the principles of shareholder engagement that take into account OP Fund Management Company Ltd’s ESG perspectives. These principles and the latest report on the implementation of shareholder engagement principles are available at op.fi/responsible-investing. Participation in general meetings of foreign companies takes place in markets where participation is cost-effective, taking into account their proportion of the Fund’s investments.
This Fund participates in the shareholder meetings of listed companies in accordance with OP Fund Management Company’s principles of shareholder engagement. A detailed list of attended meetings and actions taken and decisions adopted at the meetings can be found at op.fi/responsible-investing. By 2025, OP Asset Management’s climate-related shareholder engagement will cover 70% of financed emissions, as measured by direct equity and bond investments by OP funds in high climate risk sectors (NACE categories A-H and J-L). In practice, shareholder engagement in these companies involves either voting at shareholders’ meetings, direct dialogue or joint initiatives by investors. In addition, the Fund is involved in shareholder engagement more broadly where necessary, such as in relation to good governance, responsible tax practice or business ethics.
The Fund is a passive index fund the assets of which are invested in accordance with the index. This means that the Fund’s investments are split between the countries and companies of the benchmark index in the same proportion as in the index. The investment strategy corresponds to the benchmark index on an ongoing basis.
The benchmark index differs from a relevant market index in that it excludes companies and industries based on the above criteria. Companies for which MSCI ESG Controversy data on ESG offences is unavailable are also excluded from the benchmark index.
Data published on 1 January 2023
ISIN: FI40000294
Updated 24.8.2023
Summary
No sustainable investment objective
Environmental or social characteristics of the finance product
Investment strategy
Share of investments
Monitoring of environmental or social characteristics
Methods
Data sources and data processing
Limitations of the methodology and data
Due diligence
Shareholder engagement policy
Designated reference benchmark
The Fund promotes environmental and social characteristics using environmental, social and governance (ESG) analysis while excluding certain investments. The Fund does not place emphasis on or prioritise any single theme or sustainability factor, but takes sustainability factors broadly into account by focusing on environmental and social risks, opportunities and impacts relevant for each sector and investee company.
To the extent that the Fund invests in financial activities that promote either environmental or social objectives, steps are taken to ensure that these sustainable investments do not cause significant harm to any sustainable investment objective.
Principal adverse impacts (PAI) on sustainability are regularly analysed by screening all investments for their PAI indicators. If screening reveals investee companies with significant principal adverse impacts on sustainability in comparison to its peers and if the PAI indicator is deemed material for the investee company, the investee company will be monitored more closely and excluded, if necessary. An engagement process to influence the company’s behaviour can be initiated.
OP Asset Management uses several data sources from different service providers. Primary data sources are MSCI ESG Research and S&P Trucost, which provide information on topics such as the sustainability risks of investee companies, share of business operations with adverse impacts, climate risks and opportunities, and how the operations of investee companies align with UN Sustainable Development Goals. The service providers use both data reported by companies and estimates based on an assessment model developed by each service provider.
This financial product promotes environmental or social characteristics, but sustainable investment is not its primary objective.
To the extent that the Fund invests in financial activities that promote either environmental or social objectives, steps are taken to ensure that these sustainable investments do not cause significant harm to any sustainable investment objective.
Principal adverse impacts (PAI) on sustainability are regularly analysed by screening all investments for their PAI indicators. If screening reveals investee companies with significant principal adverse impacts on sustainability in comparison to its peers and if the said PAI indicator is deemed essential for the investee company, the investee company will be monitored more closely and excluded, if necessary. Also, a process to influence the company’s behaviour can be started.
More information about how we take adverse sustainability impacts into account can be found in the document “Consideration of Principal Adverse Sustainability Impacts in Investing and Insurance Operations (in Finnish)”, which is available online at op.fi (LINK)
The OP Asset Management’s sustainable investment analysis model is used to check whether a company has violated international standards (UN Global Compact and OECD guidelines for multinationals). If a violation is identified, the company cannot be determined as a sustainable investment. The definition of international standard violations and company-specific analysis is based on the methodology of a third-party service provider.
The Fund does not place emphasis on or prioritise any single theme or sustainability factor, but takes sustainability factors broadly into account by focusing on environmental and social risks, opportunities and impacts relevant for each sector and investee company.
The Fund promotes environmental and social characteristics and, to ensure it, uses environmental, social and governance (ESG) analysis and excludes certain investments.
Exclusion: The Fund excludes from its active direct investments controversial weapon manufacturers, mining companies producing thermal coal, power companies using thermal coal, tobacco companies, and companies that have breached international standards and where engagement has been unsuccessful. The list of exclusions is public. In addition to general exclusion rules, the Fund does not invest in companies whose principal business is in unconventional oil and gas extraction.
Use of ESG data in the investment analysis: ESG factors are considered in the investment process with the help of data from a third-party ESG service provider. The ESG rating of the Fund is monitored, and the aim is to ensure that it is better than that of the benchmark index.
Violations of international standards: The Fund is screened regularly for non-compliances with international standards. In the event that a non-compliance is detected, an engagement process is initiated with the company. The aim is to make non-compliant companies change their practices and begin to comply with international standards in their operations. If engagement does not bring results, the company may be removed from the Fund portfolio and placed on the exclusion list.
Minimum share of sustainable investments: In accordance with the minimum amount stated below, the Fund allocates investments into companies whose business promotes one or more UN Sustainable Development Goals (SDG) without harming other sustainability factors or objectives. Sustainable investments are determined using OP Asset Management’s analysis model which is based on an external service provider’s SDG and sustainability data.
Shareholders’ meetings: The Fund votes in shareholders’ meetings through a service provider in line with OP Fund Management Company Ltd’s shareholder engagement principles that take responsibility aspects into account.
Assessing good governance practices: Analysing the target company’s governance is an important part of the investment process. To us, good governance is a key foundation for any company’s financial success, regardless of sector. When assessing governance, some of the areas considered include the appropriateness of the target company’s administrative organisation, the target company’s actions in relation to its personnel, and the target company’s rewarding and taxation practices. In assessing good governance, we use an external service provider’s analysis and our own qualitative analysis if no external data is available. We screen the funds regularly to check them against the criteria of good governance. Minimum limits apply for these criteria.
Investments that promote ESG characteristics: 90%, of which 10% are sustainable investments
Others: the Fund may also invest its assets in exchange traded derivatives and OTC derivative contracts in order to hedge against the risk of adverse market movements, to replace direct investments and to otherwise promote effective portfolio management. Sustainability data might not be available for possible derivatives.
The Fund might include investment options which are in line with the EU Taxonomy, but the Fund does not commit to a certain minimum number of investments in line with the EU Taxonomy. Currently, only few investment options in line with the EU Taxonomy are available, and there is a limited amount of reported information on compliance with the EU Taxonomy.
Portfolio managers have access to the Fund’s ESG analysis, which indicates, among other things, the weighted ESG rating, carbon intensity and share of green business of the portfolio.
Investments are regularly screened by ESG specialists for principal adverse impacts (PAI), exclusion criteria and international standard violations.
Fund-specific ESG indicators on top-level environmental and social characteristics related to the Fund are reported on a monthly basis.
Sectors with adverse impacts to the environment and society defined by OP Asset Management are excluded from the Fund. The enforcement of exclusions is monitored regularly by calculating the Fund’s exposure to controversial and harmful operations and by screening the Fund using the criteria in the exclusion list.
The Fund’s investments are also screened regularly for violations of international standards using an external service provider’s analysis. If a standard violation is detected, the preferred option is to influence the company’s behaviour. If that is impossible or unsuccessful, the company may be removed from the Fund portfolio and placed on the list of exclusions. Identified standard violations and their related engagement processes are reported twice a year in connection with shareholder engagement reporting.
ESG factors are considered in the investment process with data from a third-party ESG service provider. The ESG rating of the Fund is monitored, and the aim is to ensure that it is better than that of the benchmark index. The portfolio manager constantly tracks the fund-specific ESG rating against the ESG rating of the benchmark index. The ESG rating indicates how the investee company manages its material sustainability risks and opportunities when compared to peers in the same sector.
The internal model developed by OP Asset Management for defining sustainable investments also provides relevant company-specific ESG data and gives an estimate of the company’s sustainability. Those investment options whose business promotes one or more UN Sustainable Development Goals (SDG) without harming other sustainable factors or goals are considered sustainable investments. The Fund’s proportion of sustainable investments is reported annually in periodic reports, in addition to which portfolio management has access to data updated on a monthly basis on the share of sustainable investments of the Fund’s portfolio.
Portfolio managers have access to fund-specific ESG reports. The reports allow portfolio managers to view the Fund’s weighted ESG rating, carbon intensity and share of green business, among other data. These values are also presented in comparison to the Fund’s benchmark index.
The Fund votes at shareholders’ meetings through a service provider in line with OP Fund Management Company Ltd’s shareholder engagement principles that take responsibility aspects into account. Participation in general meetings of foreign companies takes place in markets where participation is cost-effective, taking into account their proportion of the Fund’s investments. Attendance at shareholders’ meetings and the Fund’s votes are reported twice a year in connection with shareholder engagement reporting.
OP Asset Management uses several data sources from different service providers. Primary data sources are MSCI ESG Research and S&P Trucost, which provide information on topics such as the sustainability risks of investee companies, share of business operations with adverse impacts, climate risks and opportunities, and how the operations of investee companies align with UN Sustainable Development Goals. The service providers use both data reported by companies and estimates based on an assessment model developed by each service provider.
In shareholder meeting votes, we use data and company research by ISS ESG.
The service providers we use have detailed and appropriate processes in place for ensuring data quality and correcting inaccuracies in the data.
When selecting new data packages and service providers, we carefully compare and analyse the data quality, coverage, methodology and reliability of each service provider. We regularly monitor trends in ESG data and service providers on the market to ensure the best possible data to support our investment decisions and client reporting.
Data sources are utilised either directly based on metrics or analysis by the service provider as well as by combining different metrics and using them for internal analyses and assessments by OP Asset Management. A part of the data is imported directly to OP Asset Management’s database, from which it can be used in internal analysis models and reports. Data is also used directly from interfaces offered by the service providers.
The share of data that is assessed depends on sustainability indicators and the sustainability factor under scrutiny, and it is not possible to give a universal definition of the share of assessed data of all ESG data. It is difficult to determine what portion of ESG data are based on reported information and estimates, respectively. In cases where reported data is available, it is used as the primary source. Third-party service providers must specify for each metric whether the data is reported by companies themselves or estimated using the provider’s internal model.
At the moment, ESG data is not fully standardised, and investee companies do not report on the data widely. This makes it challenging to compare investee companies. Service providers may use different methods for compiling, evaluating and analysing data. For these reasons, we carefully review the methodologies of service providers to ensure their suitability for our purposes.
We use several different service providers to enable us to assess certain metrics from multiple sources and fill any gaps in data.
The Fund is subject to exclusion criteria and is screened for international standard violations as described above in part (d) Investment strategy. A party independent of portfolio management oversees that the Fund complies with the criteria. The Fund’s material exclusion criteria are implemented in the trading system.
OP is an active shareholder through its funds by voting in Finnish and international shareholders’ meetings, engaging in direct dialogue with companies and supporting joint initiatives by investors. OP's funds comply with the principles of shareholder engagement that take into account OP Fund Management Company Ltd’s ESG perspectives. These principles and the latest report on the implementation of shareholder engagement principles are available at op.fi/responsible-investing. Participation in general meetings of foreign companies takes place in markets where participation is cost-effective, taking into account their proportion of the Fund’s investments.
This Fund participates in the shareholder meetings of listed companies in accordance with OP Fund Management Company’s principles of shareholder engagement. A detailed list of attended meetings and actions taken and decisions adopted at the meetings can be found at op.fi/responsible-investing. By 2025, OP Asset Management’s climate-related shareholder engagement will cover 70% of financed emissions, as measured by direct equity and bond investments by OP funds in high climate risk sectors (NACE categories A-H and J-L). In practice, shareholder engagement in these companies involves either voting at shareholders’ meetings, direct dialogue or joint initiatives by investors. In addition, the Fund is involved in shareholder engagement more broadly where necessary, such as in relation to good governance, responsible tax practice or business ethics.
The Fund’s benchmark index is not applied to the performance of environmental or social characteristics promoted by the Fund.
Data published on 1 January 2023
ISIN: FI4000088042
Summary
No sustainable investment objective
Environmental or social characteristics of the finance product
Investment strategy
Share of investments
Monitoring of environmental or social characteristics
Methods
Data sources and data processing
Limitations of the methodology and data
Due diligence
Shareholder engagement policy
Designated reference benchmark
The Fund is a passive index fund. It promotes environmental and social characteristics by using an index based on environmental, social and governance (ESG) analysis of ESG offences and selected controversial industries and by excluding certain investments based on this analysis. The Fund places no emphasis on, nor does it prioritise, any single theme or sustainability factor, but it takes sustainability factors into account by excluding selected industries that are controversial and harmful in terms of sustainability and by using a base index that is committed to a carbon intensity 30% lower than the parent index.
This financial product promotes environmental or social characteristics, but sustainable investment is not its primary objective.
To the extent that the Fund engages in sustainable investment by investing in financial activities that promote either environmental or social objectives, steps are taken to ensure that these sustainable investments do not cause significant harm to any sustainable investment objective.
The Fund is based on the MSCI ESG Universal Index, using both the MSCI ESG Rating and the MSCI ESG Rating Trend data. In addition, the Fund uses MSCI data on international standard violations and controversial weapons. The Fund is based on the MSCI ESG Screened Index, which uses Business Involvement Screening data by MSCI ESG Research to exclude controversial industries, data by MSCI ESG Controversies to exclude international norm violations and other very serious ESG offences, and data by MSCI Climate Change Metrics to exclude companies based on climate-related themes and carbon intensity.
This financial product promotes environmental or social characteristics, but sustainable investment is not its primary objective.
To the extent that the Fund engages in sustainable investment by investing in financial activities that promote either environmental or social objectives, steps are taken to ensure that these sustainable investments do not cause significant harm to any sustainable investment objective.
Principal adverse impacts (PAI) on sustainability are regularly analysed by screening all investments for their PAI indicators. If screening reveals investee companies with significant principal adverse impacts on sustainability in comparison to its peers and if the PAI indicator is deemed essential for the investee company, the investee company will be monitored more closely.
More information about how we take adverse sustainability impacts into account can be found in the document “Consideration of Principal Adverse Sustainability Impacts in Investing and Insurance Operations (in Finnish)”, which is available online at op.fi.
The OP Asset Management’s sustainable investment analysis model is used to check whether a company has violated international standards (UN Global Compact and OECD guidelines for multinationals). If a company violates any of the standards, it cannot be classified as a sustainable investment. The definition of international standard violations and company-specific analysis is based on the methodology of a third-party service provider.
The Fund places no emphasise on, nor does it prioritise, any single theme or sustainability factor, but it takes sustainability factors into account by excluding selected controversial industries and companies with reported serious ESG offences and by committing to a carbon intensity that is significantly lower than the parent index.
• The Fund avoids investing in controversial activities and business with adverse environmental or social impacts.
• The Fund is based on an index that is committed to a carbon intensity 30% lower than the parent index.
• The Fund seeks to directly influence its investments, for example through voting at shareholders’ meetings, in order to improve investee companies’ standard of ESG and ability to take sustainability factors into consideration.
The Fund is a passive index fund. It promotes environmental and social characteristics by using an index based on environmental, social and governance (ESG) analysis on ESG offences and certain controversial industries, and by excluding certain investments based on this analysis.
Negative screening: As the Fund is a passive index fund, the Fund manager cannot make individual exclusion decisions. The Fund is based on an index which excludes companies whose business involves the production of controversial weapons or nuclear weapons. The Fund also excludes companies whose business depends on the production of civilian arms, tobacco, palm oil, coal, and energy produced from coal or Arctic oil and gas. The index also excludes companies which have been identified by the methods used by MSCI ESG Research to be in violation of international standards (UN Global Compact and OECD guidelines for multinationals) and companies with other very serious ESG offences. A stricter policy is applied to ESG offences that affect biodiversity and offences discovered in companies' supply chains.
Use of ESG data in the analysis of investment targets: The benchmark index takes into consideration companies' exposure to controversial or harmful industries, international norm violations, and violations of global norms and other very serious ESG offences. Based on the analysis, the index excludes companies that do not meet the requirements of the universe for the MSCI ESG Screened Index. The index is also committed to a carbon intensity 30% lower than the parent index.
Shareholders’ meetings: The Fund votes in shareholders’ meetings through a service provider in line with OP Fund Management Company Ltd’s shareholder engagement principles that take responsibility aspects into account.
Assessing good governance: The Fund is based on the MSCI ESG Universal Index, using both the MSCI ESG Rating and the MSCI ESG Rating Trend data and gives weight to those companies with better ratings. The level of corporate governance is included in the ESG Rating.
Investments that promote ESG characteristics: 90%, of which 3% are sustainable investments
Others: the Fund may also invest its assets in exchange traded derivatives and OTC derivative contracts in order to hedge against the risk of adverse market movements, to replace direct investments and to otherwise promote effective portfolio management. Sustainability data might not be available for possible derivatives.
The Fund might include investment options which are in line with the EU Taxonomy, but the Fund does not commit to a certain minimum number of investments in line with the EU Taxonomy. Currently, only few investment options in line with the EU Taxonomy are available, and there is a limited amount of reported information on compliance with the EU Taxonomy.
The Fund is a passive index fund. This means that the Fund’s investments are split between the countries and companies of the benchmark index in the same proportion as in the index. Changes to the portfolio are basically only made once a year in conjunction with index adjustments.
Portfolio managers have access to the Fund’s ESG analysis, which indicates, among other things, the weighted ESG rating, carbon intensity and share of green business of the portfolio.
Fund-specific ESG indicators on top-level environmental and social characteristics related to the Fund are reported on a monthly basis.
The Fund is a passive index fund. This means that the Fund’s investments are split between the countries and companies of the benchmark index in the same proportion as in the index. Changes to the portfolio are basically only made once a year in conjunction with index adjustments.
The Fund is based on the MSCI ESG Screened Index, which excludes companies whose business involves the production of controversial weapons or nuclear weapons. The Fund also excludes companies whose revenue depends on the production of civilian arms, tobacco, palm oil, coal, and energy produced from coal or Arctic oil and gas. The index also excludes companies which have violated international standards (UN Global Compact and OECD guidelines for multinationals) and companies which have committed very severe ESG violations. A stricter policy is applied to ESG offences that affect biodiversity and offences discovered in companies' supply chains.
The base index of the Fund (MSCI ESG Screened) uses data by MSCI ESG Business Involvement Screening, MSCI ESG Controversy and MSCI Climate Change Metrics to exclude selected companies operating in controversial and harmful industries and commit to a carbon intensity 30% lower than the parent index. Data by MSCI ESG Rating Business Involvement Screening and MSCI ESG Controversy is used to assess whether companies are exposed to controversial industries and the extent of the exposure, as well as whether companies are involved in very serious ESG offences. Data by MSCI Climate Change Metrics is used to exclude companies based on climate themes and for monitoring carbon intensity.
The Fund votes at shareholders’ meetings through a service provider in line with OP Fund Management Company Ltd’s shareholder engagement principles that take responsibility aspects into account. Participation in general meetings of foreign companies takes place in markets where participation is cost-effective, taking into account their proportion of the Fund’s investments. Attendance at shareholders’ meetings and the Fund’s votes are reported twice a year in connection with shareholder engagement reporting.
The Fund is based on the MSCI ESG Screened Index, which uses Business Involvement Screening data by MSCI ESG Research to exclude controversial industries, data by MSCI ESG Controversies to exclude international norm violations and other very serious ESG offences, and data by MSCI Climate Change Metrics to exclude companies based on climate-related themes and carbon intensity.
In shareholder meeting votes, we use data and company research by ISS ESG.
The service providers we use have detailed and appropriate processes in place for ensuring data quality and correcting inaccuracies in the data.
When selecting new data packages and service providers, we carefully compare and analyse the data quality, coverage, methodology and reliability of each service provider. We regularly monitor trends in ESG data and service providers on the market to ensure the best possible data to support our investment decisions and client reporting.
The share of data that is assessed depends on sustainability indicators and the sustainability factor under scrutiny, and it is not possible to give a universal definition of the share of assessed data of all ESG data. The MSCI ESG analysis used as the basis for the data is mainly based on public information reported by companies and information from other public sources. It is difficult to determine what portion of ESG data are based on reported information and estimates, respectively. In cases where reported data is available, it is used as the primary source. Third-party service providers must specify for each metric whether the data is reported by companies themselves or estimated using the provider’s internal model.
At the moment, ESG data is not fully standardised, and investee companies do not report on the data widely. This makes it challenging to compare investee companies. Service providers may use different methods for compiling, evaluating and analysing data. For these reasons, we carefully review the methodologies of service providers to ensure their suitability for our purposes.
The Fund is subject to exclusion criteria and is screened for international standard violations as described above in part (d) Investment strategy. A party independent of portfolio management oversees that the Fund complies with the criteria. The Fund’s material exclusion criteria are implemented in the trading system.
OP is an active shareholder through its funds by voting in Finnish and international shareholders’ meetings, engaging in direct dialogue with companies and supporting joint initiatives by investors. OP's funds comply with the principles of shareholder engagement that take into account OP Fund Management Company Ltd’s ESG perspectives. These principles and the latest report on the implementation of shareholder engagement principles are available at op.fi/responsible-investing. Participation in general meetings of foreign companies takes place in markets where participation is cost-effective, taking into account their proportion of the Fund’s investments.
This Fund participates in the shareholder meetings of listed companies in accordance with OP Fund Management Company’s principles of shareholder engagement. A detailed list of attended meetings and actions taken and decisions adopted at the meetings can be found at op.fi/responsible-investing. By 2025, OP Asset Management’s climate-related shareholder engagement will cover 70% of financed emissions, as measured by direct equity and bond investments by OP funds in high climate risk sectors (NACE categories A-H and J-L). In practice, shareholder engagement in these companies involves either voting at shareholders’ meetings, direct dialogue or joint initiatives by investors. In addition, the Fund is involved in shareholder engagement more broadly where necessary, such as in relation to good governance, responsible tax practice or business ethics.
The Fund is a passive index fund the assets of which are invested in accordance with the index. This means that the Fund’s investments are split between the countries and companies of the benchmark index in the same proportion as in the index. The investment strategy corresponds to the benchmark index on an ongoing basis.
The benchmark index differs from a relevant market index in that it excludes companies and industries based on the above criteria. Companies for which MSCI ESG Controversy data on ESG offences is unavailable are also excluded from the benchmark index.
Data published on 1 January 2023
ISIN: FI4000029327
Updated: 24.8.2023
Summary
No sustainable investment objective
Environmental or social characteristics of the finance product
Investment strategy
Share of investments
Monitoring of environmental or social characteristics
Methods
Data sources and data processing
Limitations of the methodology and data
Due diligence
Shareholder engagement policy
Designated reference benchmark
The Fund promotes environmental and social characteristics using environmental, social and governance (ESG) analysis while excluding certain investments. The Fund does not place emphasis on or prioritise any single theme or sustainability factor, but takes sustainability factors broadly into account by focusing on environmental and social risks, opportunities and impacts relevant for each sector and investee company.
To the extent that the Fund invests in financial activities that promote either environmental or social objectives, steps are taken to ensure that these sustainable investments do not cause significant harm to any sustainable investment objective.
Principal adverse impacts (PAI) on sustainability are regularly analysed by screening all investments for their PAI indicators. If screening reveals investee companies with significant principal adverse impacts on sustainability in comparison to its peers and if the PAI indicator is deemed material for the investee company, the investee company will be monitored more closely and excluded, if necessary. An engagement process to influence the company’s behaviour can be initiated.
OP Asset Management uses several data sources from different service providers. Primary data sources are MSCI ESG Research and S&P Trucost, which provide information on topics such as the sustainability risks of investee companies, share of business operations with adverse impacts, climate risks and opportunities, and how the operations of investee companies align with UN Sustainable Development Goals. The service providers use both data reported by companies and estimates based on an assessment model developed by each service provider.
This financial product promotes environmental or social characteristics, but sustainable investment is not its primary objective.
To the extent that the Fund invests in financial activities that promote either environmental or social objectives, steps are taken to ensure that these sustainable investments do not cause significant harm to any sustainable investment objective.
Principal adverse impacts (PAI) on sustainability are regularly analysed by screening all investments for their PAI indicators. If screening reveals investee companies with significant principal adverse impacts on sustainability in comparison to its peers and if the said PAI indicator is deemed essential for the investee company, the investee company will be monitored more closely and excluded, if necessary. Also, a process to influence the company’s behaviour can be started.
More information about how we take adverse sustainability impacts into account can be found in the document “Consideration of Principal Adverse Sustainability Impacts in Investing and Insurance Operations (in Finnish)”, which is available online at op.fi (LINK)
The OP Asset Management’s sustainable investment analysis model is used to check whether a company has violated international standards (UN Global Compact and OECD guidelines for multinationals). If a violation is identified, the company cannot be determined as a sustainable investment. The definition of international standard violations and company-specific analysis is based on the methodology of a third-party service provider.
The Fund does not place emphasis on or prioritise any single theme or sustainability factor, but takes sustainability factors broadly into account by focusing on environmental and social risks, opportunities and impacts relevant for each sector and investee company.
The Fund promotes environmental and social characteristics and, to ensure it, uses environmental, social and governance (ESG) analysis and excludes certain investments.
Exclusion: The Fund excludes from its active direct investments controversial weapon manufacturers, mining companies producing thermal coal, power companies using thermal coal, tobacco companies, and companies that have breached international standards and where engagement has been unsuccessful. The list of exclusions is public. In addition to general exclusion rules, the Fund does not invest in companies whose principal business is in unconventional oil and gas extraction.
Use of ESG data in the investment analysis: ESG factors are considered in the investment process with the help of data from a third-party ESG service provider. The ESG rating of the Fund is monitored, and the aim is to ensure that it is better than that of the benchmark index.
Violations of international standards: The Fund is screened regularly for non-compliances with international standards. In the event that a non-compliance is detected, an engagement process is initiated with the company. The aim is to make non-compliant companies change their practices and begin to comply with international standards in their operations. If engagement does not bring results, the company may be removed from the Fund portfolio and placed on the exclusion list.
Minimum share of sustainable investments: In accordance with the minimum amount stated below, the Fund allocates investments into companies whose business promotes one or more UN Sustainable Development Goals (SDG) without harming other sustainability factors or objectives. Sustainable investments are determined using OP Asset Management’s analysis model which is based on an external service provider’s SDG and sustainability data.
Shareholders’ meetings: The Fund votes in shareholders’ meetings through a service provider in line with OP Fund Management Company Ltd’s shareholder engagement principles that take responsibility aspects into account.
Assessing good governance practices: Analysing the target company’s governance is an important part of the investment process. To us, good governance is a key foundation for any company’s financial success, regardless of sector. When assessing governance, some of the areas considered include the appropriateness of the target company’s administrative organisation, the target company’s actions in relation to its personnel, and the target company’s rewarding and taxation practices. In assessing good governance, we use an external service provider’s analysis and our own qualitative analysis if no external data is available. We screen the funds regularly to check them against the criteria of good governance. Minimum limits apply for these criteria.
Investments that promote ESG characteristics: 90%, of which 10% are sustainable investments. Others: the Fund may also invest its assets in exchange traded derivatives and OTC derivative contracts in order to hedge against the risk of adverse market movements, to replace direct investments and to otherwise promote effective portfolio management. Sustainability data might not be available for possible derivatives.
The Fund might include investment options which are in line with the EU Taxonomy, but the Fund does not commit to a certain minimum number of investments in line with the EU Taxonomy. Currently, only few investment options in line with the EU Taxonomy are available, and there is a limited amount of reported information on compliance with the EU Taxonomy.
Portfolio managers have access to the Fund’s ESG analysis, which indicates, among other things, the weighted ESG rating, carbon intensity and share of green business of the portfolio.
Investments are regularly screened by ESG specialists for principal adverse impacts (PAI), exclusion criteria and international standard violations.
Fund-specific ESG indicators on top-level environmental and social characteristics related to the Fund are reported on a monthly basis.
Sectors with adverse impacts to the environment and society defined by OP Asset Management are excluded from the Fund. The enforcement of exclusions is monitored regularly by calculating the Fund’s exposure to controversial and harmful operations and by screening the Fund using the criteria in the exclusion list.
The Fund’s investments are also screened regularly for violations of international standards using an external service provider’s analysis. If a standard violation is detected, the preferred option is to influence the company’s behaviour. If that is impossible or unsuccessful, the company may be removed from the Fund portfolio and placed on the list of exclusions. Identified standard violations and their related engagement processes are reported twice a year in connection with shareholder engagement reporting.
ESG factors are considered in the investment process with data from a third-party ESG service provider. The ESG rating of the Fund is monitored, and the aim is to ensure that it is better than that of the benchmark index. The portfolio manager constantly tracks the fund-specific ESG rating against the ESG rating of the benchmark index. The ESG rating indicates how the investee company manages its material sustainability risks and opportunities when compared to peers in the same sector.
The internal model developed by OP Asset Management for defining sustainable investments also provides relevant company-specific ESG data and gives an estimate of the company’s sustainability. Those investment options whose business promotes one or more UN Sustainable Development Goals (SDG) without harming other sustainable factors or goals are considered sustainable investments. The Fund’s proportion of sustainable investments is reported annually in periodic reports, in addition to which portfolio management has access to data updated on a monthly basis on the share of sustainable investments of the Fund’s portfolio.
Portfolio managers have access to fund-specific ESG reports. The reports allow portfolio managers to view the Fund’s weighted ESG rating, carbon intensity and share of green business, among other data. These values are also presented in comparison to the Fund’s benchmark index.
The Fund votes at shareholders’ meetings through a service provider in line with OP Fund Management Company Ltd’s shareholder engagement principles that take responsibility aspects into account. Participation in general meetings of foreign companies takes place in markets where participation is cost-effective, taking into account their proportion of the Fund’s investments. Attendance at shareholders’ meetings and the Fund’s votes are reported twice a year in connection with shareholder engagement reporting.
OP Asset Management uses several data sources from different service providers. Primary data sources are MSCI ESG Research and S&P Trucost, which provide information on topics such as the sustainability risks of investee companies, share of business operations with adverse impacts, climate risks and opportunities, and how the operations of investee companies align with UN Sustainable Development Goals. The service providers use both data reported by companies and estimates based on an assessment model developed by each service provider.
In shareholder meeting votes, we use data and company research by ISS ESG.
The service providers we use have detailed and appropriate processes in place for ensuring data quality and correcting inaccuracies in the data.
When selecting new data packages and service providers, we carefully compare and analyse the data quality, coverage, methodology and reliability of each service provider. We regularly monitor trends in ESG data and service providers on the market to ensure the best possible data to support our investment decisions and client reporting.
Data sources are utilised either directly based on metrics or analysis by the service provider as well as by combining different metrics and using them for internal analyses and assessments by OP Asset Management. A part of the data is imported directly to OP Asset Management’s database, from which it can be used in internal analysis models and reports. Data is also used directly from interfaces offered by the service providers.
The share of data that is assessed depends on sustainability indicators and the sustainability factor under scrutiny, and it is not possible to give a universal definition of the share of assessed data of all ESG data. It is difficult to determine what portion of ESG data are based on reported information and estimates, respectively. In cases where reported data is available, it is used as the primary source. Third-party service providers must specify for each metric whether the data is reported by companies themselves or estimated using the provider’s internal model.
At the moment, ESG data is not fully standardised, and investee companies do not report on the data widely. This makes it challenging to compare investee companies. Service providers may use different methods for compiling, evaluating and analysing data. For these reasons, we carefully review the methodologies of service providers to ensure their suitability for our purposes.
We use several different service providers to enable us to assess certain metrics from multiple sources and fill any gaps in data.
The Fund is subject to exclusion criteria and is screened for international standard violations as described above in part (d) Investment strategy. A party independent of portfolio management oversees that the Fund complies with the criteria. The Fund’s material exclusion criteria are implemented in the trading system.
OP is an active shareholder through its funds by voting in Finnish and international shareholders’ meetings, engaging in direct dialogue with companies and supporting joint initiatives by investors. OP's funds comply with the principles of shareholder engagement that take into account OP Fund Management Company Ltd’s ESG perspectives. These principles and the latest report on the implementation of shareholder engagement principles are available at op.fi/responsible-investing. Participation in general meetings of foreign companies takes place in markets where participation is cost-effective, taking into account their proportion of the Fund’s investments.
This Fund participates in the shareholder meetings of listed companies in accordance with OP Fund Management Company’s principles of shareholder engagement. A detailed list of attended meetings and actions taken and decisions adopted at the meetings can be found at op.fi/responsible-investing. By 2025, OP Asset Management’s climate-related shareholder engagement will cover 70% of financed emissions, as measured by direct equity and bond investments by OP funds in high climate risk sectors (NACE categories A-H and J-L). In practice, shareholder engagement in these companies involves either voting at shareholders’ meetings, direct dialogue or joint initiatives by investors. In addition, the Fund is involved in shareholder engagement more broadly where necessary, such as in relation to good governance, responsible tax practice or business ethics.
The Fund’s benchmark index is not applied to the performance of environmental or social characteristics promoted by the Fund.
Data published on 1 January 2023
ISIN: FI4000066642
Summary
No sustainable investment objective
Environmental or social characteristics of the finance product
Investment strategy
Share of investments
Monitoring of environmental or social characteristics
Methods
Data sources and data processing
Limitations of the methodology and data
Due diligence
Shareholder engagement policy
Designated reference benchmark
The Fund promotes environmental and social characteristics and, to ensure it, uses environmental, social and governance (ESG) analysis and excludes certain investments. The Fund does not place emphasis on or prioritise any single theme or sustainability factor, but takes sustainability factors broadly into account by focusing on environmental and social risks, opportunities and impacts relevant for each sector and investee company.
This financial product promotes environmental or social characteristics, but sustainable investment is not its objective.
OP Asset Management uses several data sources from different service providers. Primary data sources are MSCI ESG Research and S&P Trucost, which provide information on topics such as the sustainability risks of investee companies, share of business operations with adverse impacts, climate risks and opportunities, and how the operations of investee companies align with UN Sustainable Development Goals. The service providers use both data reported by companies and estimates based on an assessment model developed by each service provider.
The sustainability indicators monitored include the average energy class of properties, the use of renewable energy in properties, the number of homes built in the properties invested in, and the number of certified properties.
This financial product promotes environmental or social characteristics, but sustainable investment is not its objective.
The Fund does not place emphasis on or prioritise any single theme or sustainability factor, but takes sustainability factors broadly into account by focusing on environmental and social risks, opportunities and impacts relevant for each sector and investee company.
The Fund promotes environmental and social characteristics and, to ensure it, uses environmental, social and governance (ESG) analysis and excludes certain investments.
Exclusion: The Fund excludes from its active direct investments controversial weapon manufacturers, mining companies producing thermal coal, power companies using thermal coal, tobacco companies, and companies that have breached international standards and where engagement has been unsuccessful. The list of exclusions is public. In addition to general exclusion rules, the Fund does not invest in companies whose principal business is in unconventional oil and gas extraction.
Use of ESG data in the analysis of investments: ESG factors are considered in the investment process with the help of data from a third-party ESG service provider. In connection with investment decisions, investee companies with the poorest ability to manage key sustainability risks compared to peers in the same sector are identified.
Violations of international standards: The Fund is screened regularly for non-compliances with international standards. In the event that a non-compliance is detected, an influencing process is begun with the company in question. The aim is to make non-compliant companies change their practices and begin to comply with international standards in their operations. If influencing proves fruitless, the company may be removed from the Fund portfolio and placed on the exclusion list.
Assessing good governance practices: Analysing the target company’s governance is an important part of the investment process. To us, good governance is a key foundation for any company’s financial success, regardless of sector. When assessing governance, some of the areas considered include the appropriateness of the target company’s administrative organisation, the target company’s actions in relation to its personnel, and the target company’s rewarding and taxation practices. In assessing good governance, we use an external service provider’s analysis and our own qualitative analysis if no external data is available. We screen the funds regularly to check them against the criteria of good governance. Minimum limits apply for these criteria.
Investments that promote ESG characteristics: 90%. Others: the Fund may also invest its assets in exchange traded derivatives and OTC derivative contracts and ETFs in order to hedge against the risk of adverse market movements, to replace direct investments and to otherwise promote effective portfolio management. ESG data may not be available for derivatives and ETFs.
The Fund might include investment options which are in line with the EU Taxonomy, but the Fund does not commit to a certain minimum number of investments in line with the EU Taxonomy. Currently, only few investment options in line with the EU Taxonomy are available, and there is a limited amount of reported information on compliance with the EU Taxonomy.
Portfolio managers have access to the Fund’s ESG analysis, which indicates, among other things, the weighted ESG rating, carbon intensity and share of green business of the portfolio. Portfolio managers also have access to comprehensive company-specific ESG data with which they can monitor the level of sustainability of investee companies.
The ESG rating of the Fund is monitored, and the aim is to ensure that it is better than that of the benchmark index. The ESG rating indicates how the investee company manages its material sustainability risks and opportunities when compared to peers in the same sector.
Investments are regularly screened by ESG specialists for principal adverse impacts (PAI), exclusion criteria and international standard violations.
Fund-specific ESG indicators on environmental and social characteristics are reported on a monthly basis.
Sectors with adverse impacts to the environment and society defined by OP Asset Management are excluded from the Fund. The enforcement of exclusions is monitored regularly by calculating the Fund’s exposure to controversial and harmful operations and by screening the Fund using the criteria in the exclusion list.
The Fund’s investments are also screened regularly for violations of international standards using an external service provider’s analysis. If a standard violation is detected, the preferred option is to influence the company’s behaviour. If that is impossible or unsuccessful, the company may be removed from the Fund portfolio and placed on the list of exclusions. Identified standard violations and their related engagement processes are reported twice a year in connection with shareholder engagement reporting.
Portfolio managers have access to fund-specific reports on ESG issues at the portfolio level. The reports allow portfolio managers to view the Fund’s weighted ESG rating, carbon intensity and share of green business, among other data. These values are also presented in comparison to benchmark indexes.
OP Asset Management uses several data sources from different service providers. Primary data sources are MSCI ESG Research and S&P Trucost, which provide information on topics such as the sustainability risks of investee companies, share of business operations with adverse impacts, climate risks and opportunities, and how the operations of investee companies align with UN Sustainable Development Goals. The service providers use both data reported by companies and estimates based on an assessment model developed by each service provider.
The service providers we use have detailed and appropriate processes in place for ensuring data quality and correcting inaccuracies in the data.
When selecting new data packages and service providers, we carefully compare and analyse the data quality, coverage, methodology and reliability of each service provider. We regularly monitor trends in ESG data and service providers on the market to ensure the best possible data to support our investment decisions and client reporting.
Data sources are utilised either directly based on metrics or analysis by the service provider as well as by combining different metrics and using them for internal analyses and assessments by OP Asset Management. A part of the data is imported directly to OP Asset Management’s database, from which it can be used in internal analysis models and reports. Data is also used directly from interfaces offered by the service providers.
The share of data that is assessed depends on sustainability indicators and the sustainability factor under scrutiny, and it is not possible to give a universal definition of the share of assessed data of all ESG data. It is difficult to determine what portion of ESG data are based on reported information and estimates, respectively. In cases where reported data is available, it is used as the primary source. Third-party service providers must specify for each metric whether the data is reported by companies themselves or estimated using the provider’s internal model.
At the moment, ESG data is not fully standardised, and investee companies do not report on the data widely. This makes it challenging to compare investee companies. Service providers may use different methods for compiling, evaluating and analysing data. For these reasons, we carefully review the methodologies of service providers to ensure their suitability for our purposes.
The availability of ESG data is challenging for companies that operate in emerging markets. To resolve this, it has been decided that where possible, the Fund invests only in companies for whom external ESG data is available.
We also use several different service providers to enable us to assess certain metrics from multiple sources and fill any gaps in data.
The Fund is subject to exclusion criteria and is screened for international standard violations as described above in part (d) Investment strategy. A party independent of portfolio management oversees that the Fund complies with the criteria. The Fund’s material exclusion criteria are implemented in the trading system.
OP is an active shareholder through its funds by voting in Finnish and international shareholders’ meetings, engaging in direct dialogue with companies and supporting joint initiatives by investors. OP's funds comply with the principles of shareholder engagement that take into account OP Fund Management Company Ltd’s ESG perspectives. These principles and the latest report on the implementation of shareholder engagement principles are available at op.fi/responsible-investing. Participation in general meetings of foreign companies takes place in markets where participation is cost-effective, taking into account their proportion of the Fund’s investments.
By 2025, OP Asset Management’s climate-related shareholder engagement will cover 70% of financed emissions, as measured by direct equity and bond investments by OP funds in high climate risk sectors (NACE categories A-H and J-L). In practice, shareholder engagement in these companies involves either voting at shareholders’ meetings, direct dialogue or joint initiatives by investors. In addition, the Fund is involved in shareholder engagement more broadly where necessary, such as in relation to good governance, responsible tax practice or business ethics.
The Fund’s benchmark index is not applied to the performance of environmental or social characteristics promoted by the Fund.
Data published on 1 January 2023
ISIN: FI4000036181
Summary
No sustainable investment objective
Environmental or social characteristics of the finance product
Investment strategy
Share of investments
Monitoring of environmental or social characteristics
Methods
Data sources and data processing
Limitations of the methodology and data
Due diligence
Shareholder engagement policy
Designated reference benchmark
The Fund promotes environmental and social characteristics using environmental, social and governance (ESG) analysis while excluding certain investments. The Fund does not emphasise or prioritise any single theme or sustainability factor, but takes sustainability factors broadly into account by focusing on environmental and social risks, opportunities and impacts relevant for each sector and investee company. To the extent that the Fund investis in financial activities that promote either environmental or social objectives, steps are taken to ensure that these sustainable investments do not cause significant harm to any sustainable investment objective. OP Asset Management uses several data sources from different service providers. Primary data sources are MSCI ESG Research and S&P Trucost, which provide information on topics such as the sustainability risks of investee companies, share of business operations with adverse impacts, climate risks and opportunities, and how the operations of investee companies align with UN Sustainable Development Goals. The service providers use both data reported by companies and estimates based on an assessment model developed by each service provider. Principal adverse impacts (PAI) on sustainability are regularly analysed by screening all investments for their PAI indicators. If screening reveals investee companies with significant principal adverse impacts on sustainability in comparison to its peers and if the said PAI indicator is deemed essential for the investee company, the investee company will be monitored more closely and excluded, if necessary. Also, a process to influence the company’s behaviour can be started.
This finance product promotes environmental or social characteristics, but sustainable investment is not its primary objective.
To the extent that the Fund invests in financial activities that promote either environmental or social objectives, steps are taken to ensure that these sustainable investments do not cause significant harm to any sustainable investment objective.
Principal adverse impacts (PAI) on sustainability are regularly analysed by screening all investments for their PAI indicators. If screening reveals investee companies with significant principal adverse impacts on sustainability in comparison to its peers and if the said PAI indicator is deemed essential for the investee company, the investee company will be monitored more closely and excluded, if necessary. Also, a process to influence the company’s behaviour can be started.
More information about how we take adverse sustainability impacts into account can be found in the document “Consideration of Principal Adverse Sustainability Impacts in Investing and Insurance Operations (in Finnish)”, which is available online at op.fi.
The OP Asset Management’s sustainable investment analysis model is used to check whether a company has violated international standards (UN Global Compact and OECD guidelines for multinationals). If a violation is identified, the company cannot be determined as a sustainable investment. The definition of international standard violations and company-specific analysis is based on the methodology of a third-party service provider.
The Fund does not emphasise or prioritise any single theme or sustainability factor, but takes sustainability factors broadly into account by focusing on environmental and social risks, opportunities and impacts relevant for each sector and investee company
The Fund promotes environmental and social characteristics and, to ensure it, uses environmental, social and governance (ESG) analysis and excludes certain investments.
Exclusion: The Fund excludes from its active direct investments controversial weapon manufacturers, mining companies producing thermal coal, power companies using thermal coal, tobacco companies, and companies that have breached international standards and where engagement has been unsuccessful. The list of exclusions is public. In addition to general exclusion rules, the Fund does not invest in companies whose principal business is in unconventional oil and gas extraction.
Use of ESG data in the investment analysis: ESG factors are considered in the investment process with the help of data by an external ESG service provider and the ESG tool developed internally by OP Asset Management. Considering ESG factors in the investment process means, for example, that the risks and opportunities related to the environment, society and governance are made transparent using selected indicators from each area.
Violations of international standards: The Fund is screened regularly for non-compliances with international standards. In the event that a non-compliance is detected, an influencing process is begun with the company in question. The aim is to make non-compliant companies change their practices and begin to comply with international standards in their operations. If influencing proves fruitless, the company may be removed from the Fund portfolio and placed on the exclusion list.
Minimum share of sustainable investments: In accordance with the minimum amount stated below, the Fund allocates investments into companies whose business promotes one or more UN Sustainable Development Goals (SDG) without harming other sustainability factors or objectives. Sustainable investments are determined using OP Asset Management’s analysis model which is based on an external service provider’s SDG and sustainability data.
Assessing good governance practices: Analysing the target company’s governance is an important part of the investment process. To us, good governance is a key foundation for any company’s financial success, regardless of sector. When assessing governance, some of the areas considered include the appropriateness of the target company’s administrative organisation, the target company’s actions in relation to its personnel, and the target company’s rewarding and taxation practices. In assessing good governance, we use the analysis of third-party service providers and our own qualitative analysis if no external data is available. We screen the funds regularly to check them against the criteria of good governance. Minimum limits apply for these criteria.
Investments that promote ESG characteristics: 90%, of which 10% are sustainable investments. Others: the Fund may also invest its assets in exchange traded derivatives and OTC derivative contracts in order to hedge against the risk of adverse market movements, to replace direct investments and to otherwise promote effective portfolio management. Sustainability data might not be available for possible derivatives.
The Fund might include investment options which are in line with the EU Taxonomy, but the Fund does not commit to a certain minimum number of investments in line with the EU Taxonomy. Currently, only few investment options in line with the EU Taxonomy are available, and there is a limited amount of reported information on compliance with the EU Taxonomy.
Portfolio managers have access to the Fund’s ESG analysis, which indicates, among other things, the weighted ESG rating, carbon intensity and share of green business of the portfolio. Portfolio managers also have access to comprehensive company-specific ESG data with which they can monitor the level of sustainability of investee companies.
Investments are regularly screened by ESG specialists for principal adverse impacts (PAI), exclusion criteria and international standard violations.
Fund-specific ESG indicators on environmental and social characteristics are reported on a monthly basis.
Sectors with adverse impacts to the environment and society defined by OP Asset Management are excluded from the Fund. The enforcement of exclusions is monitored regularly by calculating the Fund’s exposure to controversial and harmful operations and by screening the Fund using the criteria in the exclusion list.
The Fund’s investments are also screened regularly for violations of international standards using an external service provider’s analysis. If a standard violation is detected, the preferred option is to influence the company’s behaviour. If that is impossible or unsuccessful, the company may be removed from the Fund portfolio and placed on the list of exclusions. Identified standard violations and their related engagement processes are reported twice a year in connection with shareholder engagement reporting.
ESG factors are considered in the investment process where possible with the help of data by an external ESG service provider, the ESG tool developed internally by OP Asset Management, and the internal analysis model for assessing sustainable investments. Considering ESG factors in the investment process means, for example, that the risks and opportunities related to the environment, society and governance are made transparent using selected indicators from each area.
The internal ESG tool can be used to assess a company’s current state in relation to its peers in the sector in terms of ESG factors material for the companies as well as the company’s performance in these factors.
External ESG data can be used to examine the investee company’s targets for GHG emission reductions or current state in terms of the green transition.
The internal model developed by OP Asset Management for defining sustainable investments also provides relevant company-specific ESG data and gives an estimate of the company’s sustainability. Those investment options whose business promotes one or more UN Sustainable Development Goals (SDG) without harming other sustainable factors or goals are considered sustainable investments. The Fund’s proportion of sustainable investments is reported annually in periodic reports, in addition to which portfolio management has access to data updated on a monthly basis on the share of sustainable investments of the Fund’s portfolio.
In addition to ESG tools applied to the investee companies, portfolio managers have access to fund-specific reports on ESG issues at the portfolio level. The reports allow portfolio managers to view the Fund’s weighted ESG rating, carbon intensity and share of green business, among other data. These values are also presented in comparison to benchmark indexes.
OP Asset Management uses several data sources from different service providers. Primary data sources are MSCI ESG Research and S&P Trucost, which provide information on topics such as the sustainability risks of investee companies, share of business operations with adverse impacts, climate risks and opportunities, and how the operations of investee companies align with UN Sustainable Development Goals. The service providers use both data reported by companies and estimates based on an assessment model developed by each service provider.
We also use materiality analyses by SASB and Bloomberg data on investee companies, based on which we have developed our own analysis model for investigating investee companies’ current level of sustainability and likely future performance.
In addition, the Fund has access to Moody’s analyses on the ESG factors of investee companies and their impact on the company’s credit risk.
The service providers we use have detailed and appropriate processes in place for ensuring data quality and correcting inaccuracies in the data.
When selecting new data packages and service providers, we carefully compare and analyse the data quality, coverage, methodology and reliability of each service provider. We regularly monitor trends in ESG data and service providers on the market to ensure the best possible data to support our investment decisions and client reporting.
Data sources are utilised either directly based on metrics or analysis by the service provider as well as by combining different metrics and using them for internal analyses and assessments by OP Asset Management. A part of the data is imported directly to OP Asset Management’s database, from which it can be used in internal analysis models and reports. Data is also used directly from interfaces offered by the service providers.
The share of data that is assessed depends on sustainability indicators and the sustainability factor under scrutiny, and it is not possible to give a universal definition of the share of assessed data of all ESG data. It is difficult to determine what portion of ESG data are based on reported information and estimates, respectively. In cases where reported data is available, it is used as the primary source. Third-party service providers must specify for each metric whether the data is reported by companies themselves or estimated using the provider’s internal model.
At the moment, ESG data is not fully standardised, and investee companies do not report on the data widely. This makes it challenging to compare investee companies. Service providers may use different methods for compiling, evaluating and analysing data. For these reasons, we carefully review the methodologies of service providers to ensure their suitability for our purposes.
We use several different service providers to enable us to assess certain metrics from multiple sources and fill any gaps in data.
The Fund is subject to exclusion criteria and is screened for international standard violations as described above in part (d) Investment strategy. A party independent of portfolio management oversees that the Fund complies with the criteria. The Fund’s material exclusion criteria are implemented in the trading system.
OP is an active shareholder through its funds by voting in Finnish and international shareholders’ meetings, engaging in direct dialogue with companies and supporting joint initiatives by investors. OP's funds comply with the principles of shareholder engagement that take into account OP Fund Management Company Ltd’s ESG perspectives. These principles and the latest report on the implementation of shareholder engagement principles are available at op.fi/responsible-investing. Participation in general meetings of foreign companies takes place in markets where participation is cost-effective, taking into account their proportion of the Fund’s investments.
By 2025, OP Asset Management’s climate-related shareholder engagement will cover 70% of financed emissions, as measured by direct equity and bond investments by OP funds in high climate risk sectors (NACE categories A-H and J-L). In practice, shareholder engagement in these companies involves either voting at shareholders’ meetings, direct dialogue or joint initiatives by investors. In addition, the Fund is involved in shareholder engagement more broadly where necessary, such as in relation to good governance, responsible tax practice or business ethics.
The Fund’s benchmark index is not applied to the performance of environmental or social characteristics promoted by the Fund.
Data published on 1 January 2023
ISIN: FI4000197660
Summary
No sustainable investment objective
Environmental or social characteristics of the finance product
Investment strategy
Share of investments
Monitoring of environmental or social characteristics
Methods
Data sources and data processing
Limitations of the methodology and data
Due diligence
Shareholder engagement policy
Designated reference benchmark
The Fund promotes environmental and social characteristics using environmental, social and governance (ESG) analysis while excluding certain investments. The Fund does not place emphasis on or prioritise any single theme or sustainability factor, but takes sustainability factors broadly into account by focusing on environmental and social risks, opportunities and impacts relevant for each sector and investee company.
To the extent that the Fund invests in financial activities that promote either environmental or social objectives, steps are taken to ensure that these sustainable investments do not cause significant harm to any sustainable investment objective.
Principal adverse impacts (PAI) on sustainability are regularly analysed by screening all investments for their PAI indicators. If screening reveals investee companies with significant principal adverse impacts on sustainability in comparison to its peers and if the PAI indicator is deemed material for the investee company, the investee company will be monitored more closely and excluded, if necessary. An engagement process to influence the company’s behaviour can be initiated.
OP Asset Management uses several data sources from different service providers. Primary data sources are MSCI ESG Research and S&P Trucost, which provide information on topics such as the sustainability risks of investee companies, share of business operations with adverse impacts, climate risks and opportunities, and how the operations of investee companies align with UN Sustainable Development Goals. The service providers use both data reported by companies and estimates based on an assessment model developed by each service provider.
This financial product promotes environmental or social characteristics, but sustainable investment is not its primary objective.
To the extent that the Fund invests in financial activities that promote either environmental or social objectives, steps are taken to ensure that these sustainable investments do not cause significant harm to any sustainable investment objective.
Principal adverse impacts (PAI) on sustainability are regularly analysed by screening all investments for their PAI indicators. If screening reveals investee companies with significant principal adverse impacts on sustainability in comparison to its peers and if the said PAI indicator is deemed essential for the investee company, the investee company will be monitored more closely and excluded, if necessary. Also, a process to influence the company’s behaviour can be started.
More information about how we take adverse sustainability impacts into account can be found in the document “Consideration of Principal Adverse Sustainability Impacts in Investing and Insurance Operations (in Finnish)”, which is available online at op.fi (LINK)
The OP Asset Management’s sustainable investment analysis model is used to check whether a company has violated international standards (UN Global Compact and OECD guidelines for multinationals). If a violation is identified, the company cannot be determined as a sustainable investment. The definition of international standard violations and company-specific analysis is based on the methodology of a third-party service provider.
The Fund does not place emphasis on or prioritise any single theme or sustainability factor, but takes sustainability factors broadly into account by focusing on environmental and social risks, opportunities and impacts relevant for each sector and investee company.
The Fund promotes environmental and social characteristics and, to ensure it, uses environmental, social and governance (ESG) analysis and excludes certain investments.
Exclusion: The Fund excludes from its active direct investments controversial weapon manufacturers, mining companies producing thermal coal, power companies using thermal coal, tobacco companies, and companies that have breached international standards and where engagement has been unsuccessful. The list of exclusions is public. In addition to general exclusion rules, the Fund does not invest in companies whose principal business is in unconventional oil and gas extraction.
Use of ESG data in the investment analysis: ESG factors are considered in the investment process with the help of data from a third-party ESG service provider. The ESG rating of the Fund is monitored, and the aim is to ensure that it is better than that of the benchmark index.
Violations of international standards: The Fund is screened regularly for non-compliances with international standards. In the event that a non-compliance is detected, an engagement process is initiated with the company. The aim is to make non-compliant companies change their practices and begin to comply with international standards in their operations. If engagement does not bring results, the company may be removed from the Fund portfolio and placed on the exclusion list.
Minimum share of sustainable investments: In accordance with the minimum amount stated below, the Fund allocates investments into companies whose business promotes one or more UN Sustainable Development Goals (SDG) without harming other sustainability factors or objectives. Sustainable investments are determined using OP Asset Management’s analysis model which is based on an external service provider’s SDG and sustainability data.
Shareholders’ meetings: The Fund votes in shareholders’ meetings through a service provider in line with OP Fund Management Company Ltd’s shareholder engagement principles that take responsibility aspects into account.
Assessing good governance practices: Analysing the target company’s governance is an important part of the investment process. To us, good governance is a key foundation for any company’s financial success, regardless of sector. When assessing governance, some of the areas considered include the appropriateness of the target company’s administrative organisation, the target company’s actions in relation to its personnel, and the target company’s rewarding and taxation practices. In assessing good governance, we use an external service provider’s analysis and our own qualitative analysis if no external data is available. We screen the funds regularly to check them against the criteria of good governance. Minimum limits apply for these criteria.
Investments that promote ESG characteristics: 90%, of which 10% are sustainable investments. Others: the Fund may also invest its assets in exchange traded derivatives and OTC derivative contracts in order to hedge against the risk of adverse market movements, to replace direct investments and to otherwise promote effective portfolio management. Sustainability data might not be available for possible derivatives.
The Fund might include investment options which are in line with the EU Taxonomy, but the Fund does not commit to a certain minimum number of investments in line with the EU Taxonomy. Currently, only few investment options in line with the EU Taxonomy are available, and there is a limited amount of reported information on compliance with the EU Taxonomy.
Portfolio managers have access to the Fund’s ESG analysis, which indicates, among other things, the weighted ESG rating, carbon intensity and share of green business of the portfolio.
Investments are regularly screened by ESG specialists for principal adverse impacts (PAI), exclusion criteria and international standard violations.
Fund-specific ESG indicators on top-level environmental and social characteristics related to the Fund are reported on a monthly basis.
Sectors with adverse impacts to the environment and society defined by OP Asset Management are excluded from the Fund. The enforcement of exclusions is monitored regularly by calculating the Fund’s exposure to controversial and harmful operations and by screening the Fund using the criteria in the exclusion list.
The Fund’s investments are also screened regularly for violations of international standards using an external service provider’s analysis. If a standard violation is detected, the preferred option is to influence the company’s behaviour. If that is impossible or unsuccessful, the company may be removed from the Fund portfolio and placed on the list of exclusions. Identified standard violations and their related engagement processes are reported twice a year in connection with shareholder engagement reporting.
ESG factors are considered in the investment process with data from a third-party ESG service provider. The ESG rating of the Fund is monitored, and the aim is to ensure that it is better than that of the benchmark index. The portfolio manager constantly tracks the fund-specific ESG rating against the ESG rating of the benchmark index. The ESG rating indicates how the investee company manages its material sustainability risks and opportunities when compared to peers in the same sector.
The internal model developed by OP Asset Management for defining sustainable investments also provides relevant company-specific ESG data and gives an estimate of the company’s sustainability. Those investment options whose business promotes one or more UN Sustainable Development Goals (SDG) without harming other sustainable factors or goals are considered sustainable investments. The Fund’s proportion of sustainable investments is reported annually in periodic reports, in addition to which portfolio management has access to data updated on a monthly basis on the share of sustainable investments of the Fund’s portfolio.
Portfolio managers have access to fund-specific ESG reports. The reports allow portfolio managers to view the Fund’s weighted ESG rating, carbon intensity and share of green business, among other data. These values are also presented in comparison to the Fund’s benchmark index.
The Fund votes at shareholders’ meetings through a service provider in line with OP Fund Management Company Ltd’s shareholder engagement principles that take responsibility aspects into account. Participation in general meetings of foreign companies takes place in markets where participation is cost-effective, taking into account their proportion of the Fund’s investments. Attendance at shareholders’ meetings and the Fund’s votes are reported twice a year in connection with shareholder engagement reporting.
OP Asset Management uses several data sources from different service providers. Primary data sources are MSCI ESG Research and S&P Trucost, which provide information on topics such as the sustainability risks of investee companies, share of business operations with adverse impacts, climate risks and opportunities, and how the operations of investee companies align with UN Sustainable Development Goals. The service providers use both data reported by companies and estimates based on an assessment model developed by each service provider.
In shareholder meeting votes, we use data and company research by ISS ESG.
The service providers we use have detailed and appropriate processes in place for ensuring data quality and correcting inaccuracies in the data.
When selecting new data packages and service providers, we carefully compare and analyse the data quality, coverage, methodology and reliability of each service provider. We regularly monitor trends in ESG data and service providers on the market to ensure the best possible data to support our investment decisions and client reporting.
Data sources are utilised either directly based on metrics or analysis by the service provider as well as by combining different metrics and using them for internal analyses and assessments by OP Asset Management. A part of the data is imported directly to OP Asset Management’s database, from which it can be used in internal analysis models and reports. Data is also used directly from interfaces offered by the service providers.
The share of data that is assessed depends on sustainability indicators and the sustainability factor under scrutiny, and it is not possible to give a universal definition of the share of assessed data of all ESG data. It is difficult to determine what portion of ESG data are based on reported information and estimates, respectively. In cases where reported data is available, it is used as the primary source. Third-party service providers must specify for each metric whether the data is reported by companies themselves or estimated using the provider’s internal model.
At the moment, ESG data is not fully standardised, and investee companies do not report on the data widely. This makes it challenging to compare investee companies. Service providers may use different methods for compiling, evaluating and analysing data. For these reasons, we carefully review the methodologies of service providers to ensure their suitability for our purposes.
We use several different service providers to enable us to assess certain metrics from multiple sources and fill any gaps in data.
The Fund is subject to exclusion criteria and is screened for international standard violations as described above in part (d) Investment strategy. A party independent of portfolio management oversees that the Fund complies with the criteria. The Fund’s material exclusion criteria are implemented in the trading system.
OP is an active shareholder through its funds by voting in Finnish and international shareholders’ meetings, engaging in direct dialogue with companies and supporting joint initiatives by investors. OP's funds comply with the principles of shareholder engagement that take into account OP Fund Management Company Ltd’s ESG perspectives. These principles and the latest report on the implementation of shareholder engagement principles are available at op.fi/responsible-investing. Participation in general meetings of foreign companies takes place in markets where participation is cost-effective, taking into account their proportion of the Fund’s investments.
This Fund participates in the shareholder meetings of listed companies in accordance with OP Fund Management Company’s principles of shareholder engagement. A detailed list of attended meetings and actions taken and decisions adopted at the meetings can be found at op.fi/responsible-investing. By 2025, OP Asset Management’s climate-related shareholder engagement will cover 70% of financed emissions, as measured by direct equity and bond investments by OP funds in high climate risk sectors (NACE categories A-H and J-L). In practice, shareholder engagement in these companies involves either voting at shareholders’ meetings, direct dialogue or joint initiatives by investors. In addition, the Fund is involved in shareholder engagement more broadly where necessary, such as in relation to good governance, responsible tax practice or business ethics.
The Fund’s benchmark index is not applied to the performance of environmental or social characteristics promoted by the Fund.
Data published on 1 January 2023
ISIN: FI4000439773
Summary
No sustainable investment objective
Environmental or social characteristics of the finance product
Investment strategy
Share of investments
Monitoring of environmental or social characteristics
Methods
Data sources and data processing
Limitations of the methodology and data
Due diligence
Shareholder engagement policy
Designated reference benchmark
The Fund is a passive index fund. It promotes environmental and social characteristics by using an index based on environmental, social and governance (ESG) analysis of ESG offences and selected controversial industries and by excluding certain investments based on this analysis. The Fund places no emphasis on, nor does it prioritise, any single theme or sustainability factor, but it takes sustainability factors into account by excluding selected industries that are controversial and harmful in terms of sustainability and by using a base index that is committed to a carbon intensity 30% lower than the parent index.
This financial product promotes environmental or social characteristics, but sustainable investment is not its primary objective.
To the extent that the Fund engages in sustainable investment by investing in financial activities that promote either environmental or social objectives, steps are taken to ensure that these sustainable investments do not cause significant harm to any sustainable investment objective.
The Fund is based on the MSCI ESG Universal Index, using both the MSCI ESG Rating and the MSCI ESG Rating Trend data. In addition, the Fund uses MSCI data on international standard violations and controversial weapons. The Fund is based on the MSCI ESG Screened Index, which uses Business Involvement Screening data by MSCI ESG Research to exclude controversial industries, data by MSCI ESG Controversies to exclude international norm violations and other very serious ESG offences, and data by MSCI Climate Change Metrics to exclude companies based on climate-related themes and carbon intensity.
This financial product promotes environmental or social characteristics, but sustainable investment is not its primary objective.
To the extent that the Fund engages in sustainable investment by investing in financial activities that promote either environmental or social objectives, steps are taken to ensure that these sustainable investments do not cause significant harm to any sustainable investment objective.
Principal adverse impacts (PAI) on sustainability are regularly analysed by screening all investments for their PAI indicators. If screening reveals investee companies with significant principal adverse impacts on sustainability in comparison to its peers and if the PAI indicator is deemed essential for the investee company, the investee company will be monitored more closely.
More information about how we take adverse sustainability impacts into account can be found in the document “Consideration of Principal Adverse Sustainability Impacts in Investing and Insurance Operations (in Finnish)”, which is available online at op.fi.
The OP Asset Management’s sustainable investment analysis model is used to check whether a company has violated international standards (UN Global Compact and OECD guidelines for multinationals). If a company violates any of the standards, it cannot be classified as a sustainable investment. The definition of international standard violations and company-specific analysis is based on the methodology of a third-party service provider.
The Fund places no emphasise on, nor does it prioritise, any single theme or sustainability factor, but it takes sustainability factors into account by excluding selected controversial industries and companies with reported serious ESG offences and by committing to a carbon intensity that is significantly lower than the parent index.
• The Fund avoids investing in controversial activities and business with adverse environmental or social impacts.
• The Fund is based on an index that is committed to a carbon intensity 30% lower than the parent index.
• The Fund seeks to directly influence its investments, for example through voting at shareholders’ meetings, in order to improve investee companies’ standard of ESG and ability to take sustainability factors into consideration.
The Fund is a passive index fund. It promotes environmental and social characteristics by using an index based on environmental, social and governance (ESG) analysis on ESG offences and certain controversial industries, and by excluding certain investments based on this analysis.
Negative screening: As the Fund is a passive index fund, the Fund manager cannot make individual exclusion decisions. The Fund is based on an index which excludes companies whose business involves the production of controversial weapons or nuclear weapons. The Fund also excludes companies whose business depends on the production of civilian arms, tobacco, palm oil, coal, and energy produced from coal or Arctic oil and gas. The index also excludes companies which have been identified by the methods used by MSCI ESG Research to be in violation of international standards (UN Global Compact and OECD guidelines for multinationals) and companies with other very serious ESG offences. A stricter policy is applied to ESG offences that affect biodiversity and offences discovered in companies' supply chains.
Use of ESG data in the analysis of investment targets: The benchmark index takes into consideration companies' exposure to controversial or harmful industries, international norm violations, and violations of global norms and other very serious ESG offences. Based on the analysis, the index excludes companies that do not meet the requirements of the universe for the MSCI ESG Screened Index. The index is also committed to a carbon intensity 30% lower than the parent index.
Shareholders’ meetings: The Fund votes in shareholders’ meetings through a service provider in line with OP Fund Management Company Ltd’s shareholder engagement principles that take responsibility aspects into account.
Assessing good governance: The Fund is based on the MSCI ESG Universal Index, using both the MSCI ESG Rating and the MSCI ESG Rating Trend data and gives weight to those companies with better ratings. The level of corporate governance is included in the ESG Rating.
Investments that promote ESG characteristics: 90%, of which 3% are sustainable investments
Others: the Fund may also invest its assets in exchange traded derivatives and OTC derivative contracts in order to hedge against the risk of adverse market movements, to replace direct investments and to otherwise promote effective portfolio management. Sustainability data might not be available for possible derivatives.
The Fund might include investment options which are in line with the EU Taxonomy, but the Fund does not commit to a certain minimum number of investments in line with the EU Taxonomy. Currently, only few investment options in line with the EU Taxonomy are available, and there is a limited amount of reported information on compliance with the EU Taxonomy.
The Fund is a passive index fund. This means that the Fund’s investments are split between the countries and companies of the benchmark index in the same proportion as in the index. Changes to the portfolio are basically only made once a year in conjunction with index adjustments.
Portfolio managers have access to the Fund’s ESG analysis, which indicates, among other things, the weighted ESG rating, carbon intensity and share of green business of the portfolio.
Fund-specific ESG indicators on top-level environmental and social characteristics related to the Fund are reported on a monthly basis.
The Fund is a passive index fund. This means that the Fund’s investments are split between the countries and companies of the benchmark index in the same proportion as in the index. Changes to the portfolio are basically only made once a year in conjunction with index adjustments.
The Fund is based on an index which excludes companies with connections to the production of controversial weapons. The index also excludes companies which have violated international standards (UN Global Compact and OECD guidelines for multinationals) and companies which have committed very severe ESG violations.
The Fund is based on the MSCI ESG Universal Index, using both the MSCI ESG Rating and the MSCI ESG Rating Trend data. Based on these, the weight is placed on companies with better ratings. MSCI ESG Rating indicates how the investee company manages its material sustainability risks and opportunities when compared to peers in the same sector. MSCI ESG Rating Trend indicates change in the company’s ESG Rating. Due to the weighting, the average weighted ESG Rating of the index is always above the corresponding ESG Rating of a normal market index.
The Fund votes at shareholders’ meetings through a service provider in line with OP Fund Management Company Ltd’s shareholder engagement principles that take responsibility aspects into account. Participation in general meetings of foreign companies takes place in markets where participation is cost-effective, taking into account their proportion of the Fund’s investments. Attendance at shareholders’ meetings and the Fund’s votes are reported twice a year in connection with shareholder engagement reporting.
The Fund is based on the MSCI ESG Screened Index, which uses Business Involvement Screening data by MSCI ESG Research to exclude controversial industries, data by MSCI ESG Controversies to exclude international norm violations and other very serious ESG offences, and data by MSCI Climate Change Metrics to exclude companies based on climate-related themes and carbon intensity.
In shareholder meeting votes, we use data and company research by ISS ESG.
The service providers we use have detailed and appropriate processes in place for ensuring data quality and correcting inaccuracies in the data.
When selecting new data packages and service providers, we carefully compare and analyse the data quality, coverage, methodology and reliability of each service provider. We regularly monitor trends in ESG data and service providers on the market to ensure the best possible data to support our investment decisions and client reporting.
The share of data that is assessed depends on sustainability indicators and the sustainability factor under scrutiny, and it is not possible to give a universal definition of the share of assessed data of all ESG data. The MSCI ESG analysis used as the basis for the data is mainly based on public information reported by companies and information from other public sources. It is difficult to determine what portion of ESG data are based on reported information and estimates, respectively. In cases where reported data is available, it is used as the primary source. Third-party service providers must specify for each metric whether the data is reported by companies themselves or estimated using the provider’s internal model.
At the moment, ESG data is not fully standardised, and investee companies do not report on the data widely. This makes it challenging to compare investee companies. Service providers may use different methods for compiling, evaluating and analysing data. For these reasons, we carefully review the methodologies of service providers to ensure their suitability for our purposes.
The Fund is subject to exclusion criteria and is screened for international standard violations as described above in part (d) Investment strategy. A party independent of portfolio management oversees that the Fund complies with the criteria. The Fund’s material exclusion criteria are implemented in the trading system.
OP is an active shareholder through its funds by voting in Finnish and international shareholders’ meetings, engaging in direct dialogue with companies and supporting joint initiatives by investors. OP's funds comply with the principles of shareholder engagement that take into account OP Fund Management Company Ltd’s ESG perspectives. These principles and the latest report on the implementation of shareholder engagement principles are available at op.fi/responsible-investing. Participation in general meetings of foreign companies takes place in markets where participation is cost-effective, taking into account their proportion of the Fund’s investments.
This Fund participates in the shareholder meetings of listed companies in accordance with OP Fund Management Company’s principles of shareholder engagement. A detailed list of attended meetings and actions taken and decisions adopted at the meetings can be found at op.fi/responsible-investing. By 2025, OP Asset Management’s climate-related shareholder engagement will cover 70% of financed emissions, as measured by direct equity and bond investments by OP funds in high climate risk sectors (NACE categories A-H and J-L). In practice, shareholder engagement in these companies involves either voting at shareholders’ meetings, direct dialogue or joint initiatives by investors. In addition, the Fund is involved in shareholder engagement more broadly where necessary, such as in relation to good governance, responsible tax practice or business ethics.
The Fund is a passive index fund the assets of which are invested in accordance with the index. This means that the Fund’s investments are split between the countries and companies of the benchmark index in the same proportion as in the index. The investment strategy corresponds to the benchmark index on an ongoing basis.
The benchmark index differs from a relevant market index in that it excludes companies and industries based on the above criteria. Companies for which MSCI ESG Controversy data on ESG offences is unavailable are also excluded from the benchmark index.
Data published on 1 January 2023
ISIN: FI4000029301
Updated: 24.8.2023
Summary
No sustainable investment objective
Environmental or social characteristics of the finance product
Investment strategy
Share of investments
Monitoring of environmental or social characteristics
Methods
Data sources and data processing
Limitations of the methodology and data
Due diligence
Shareholder engagement policy
Designated reference benchmark
The Fund promotes environmental and social characteristics using environmental, social and governance (ESG) analysis while excluding certain investments. The Fund does not place emphasis on or prioritise any single theme or sustainability factor, but takes sustainability factors broadly into account by focusing on environmental and social risks, opportunities and impacts relevant for each sector and investee company.
To the extent that the Fund invests in financial activities that promote either environmental or social objectives, steps are taken to ensure that these sustainable investments do not cause significant harm to any sustainable investment objective.
Principal adverse impacts (PAI) on sustainability are regularly analysed by screening all investments for their PAI indicators. If screening reveals investee companies with significant principal adverse impacts on sustainability in comparison to its peers and if the PAI indicator is deemed material for the investee company, the investee company will be monitored more closely and excluded, if necessary. An engagement process to influence the company’s behaviour can be initiated.
OP Asset Management uses several data sources from different service providers. Primary data sources are MSCI ESG Research and S&P Trucost, which provide information on topics such as the sustainability risks of investee companies, share of business operations with adverse impacts, climate risks and opportunities, and how the operations of investee companies align with UN Sustainable Development Goals. The service providers use both data reported by companies and estimates based on an assessment model developed by each service provider.
This financial product promotes environmental or social characteristics, but sustainable investment is not its primary objective.
To the extent that the Fund invests in financial activities that promote either environmental or social objectives, steps are taken to ensure that these sustainable investments do not cause significant harm to any sustainable investment objective.
Principal adverse impacts (PAI) on sustainability are regularly analysed by screening all investments for their PAI indicators. If screening reveals investee companies with significant principal adverse impacts on sustainability in comparison to its peers and if the said PAI indicator is deemed essential for the investee company, the investee company will be monitored more closely and excluded, if necessary. Also, a process to influence the company’s behaviour can be started.
More information about how we take adverse sustainability impacts into account can be found in the document “Consideration of Principal Adverse Sustainability Impacts in Investing and Insurance Operations (in Finnish)”, which is available online at op.fi (LINK)
The OP Asset Management’s sustainable investment analysis model is used to check whether a company has violated international standards (UN Global Compact and OECD guidelines for multinationals). If a violation is identified, the company cannot be determined as a sustainable investment. The definition of international standard violations and company-specific analysis is based on the methodology of a third-party service provider.
The Fund does not place emphasis on or prioritise any single theme or sustainability factor, but takes sustainability factors broadly into account by focusing on environmental and social risks, opportunities and impacts relevant for each sector and investee company.
The Fund promotes environmental and social characteristics and, to ensure it, uses environmental, social and governance (ESG) analysis and excludes certain investments.
Exclusion: The Fund excludes from its active direct investments controversial weapon manufacturers, mining companies producing thermal coal, power companies using thermal coal, tobacco companies, and companies that have breached international standards and where engagement has been unsuccessful. The list of exclusions is public. In addition to general exclusion rules, the Fund does not invest in companies whose principal business is in unconventional oil and gas extraction.
Use of ESG data in the investment analysis: ESG factors are considered in the investment process with the help of data from a third-party ESG service provider. The ESG rating of the Fund is monitored, and the aim is to ensure that it is better than that of the benchmark index.
Violations of international standards: The Fund is screened regularly for non-compliances with international standards. In the event that a non-compliance is detected, an engagement process is initiated with the company. The aim is to make non-compliant companies change their practices and begin to comply with international standards in their operations. If engagement does not bring results, the company may be removed from the Fund portfolio and placed on the exclusion list.
Minimum share of sustainable investments: In accordance with the minimum amount stated below, the Fund allocates investments into companies whose business promotes one or more UN Sustainable Development Goals (SDG) without harming other sustainability factors or objectives. Sustainable investments are determined using OP Asset Management’s analysis model which is based on an external service provider’s SDG and sustainability data.
Shareholders’ meetings: The Fund votes in shareholders’ meetings through a service provider in line with OP Fund Management Company Ltd’s shareholder engagement principles that take responsibility aspects into account.
Assessing good governance practices: Analysing the target company’s governance is an important part of the investment process. To us, good governance is a key foundation for any company’s financial success, regardless of sector. When assessing governance, some of the areas considered include the appropriateness of the target company’s administrative organisation, the target company’s actions in relation to its personnel, and the target company’s rewarding and taxation practices. In assessing good governance, we use an external service provider’s analysis and our own qualitative analysis if no external data is available. We screen the funds regularly to check them against the criteria of good governance. Minimum limits apply for these criteria.
Investments that promote ESG characteristics: 90%, of which 10% are sustainable investments. Others: the Fund may also invest its assets in exchange traded derivatives and OTC derivative contracts in order to hedge against the risk of adverse market movements, to replace direct investments and to otherwise promote effective portfolio management. Sustainability data might not be available for possible derivatives.
The Fund might include investment options which are in line with the EU Taxonomy, but the Fund does not commit to a certain minimum number of investments in line with the EU Taxonomy. Currently, only few investment options in line with the EU Taxonomy are available, and there is a limited amount of reported information on compliance with the EU Taxonomy.
Portfolio managers have access to the Fund’s ESG analysis, which indicates, among other things, the weighted ESG rating, carbon intensity and share of green business of the portfolio.
Investments are regularly screened by ESG specialists for principal adverse impacts (PAI), exclusion criteria and international standard violations.
Fund-specific ESG indicators on top-level environmental and social characteristics related to the Fund are reported on a monthly basis.
Sectors with adverse impacts to the environment and society defined by OP Asset Management are excluded from the Fund. The enforcement of exclusions is monitored regularly by calculating the Fund’s exposure to controversial and harmful operations and by screening the Fund using the criteria in the exclusion list.
The Fund’s investments are also screened regularly for violations of international standards using an external service provider’s analysis. If a standard violation is detected, the preferred option is to influence the company’s behaviour. If that is impossible or unsuccessful, the company may be removed from the Fund portfolio and placed on the list of exclusions. Identified standard violations and their related engagement processes are reported twice a year in connection with shareholder engagement reporting.
ESG factors are considered in the investment process with data from a third-party ESG service provider. The ESG rating of the Fund is monitored, and the aim is to ensure that it is better than that of the benchmark index. The portfolio manager constantly tracks the fund-specific ESG rating against the ESG rating of the benchmark index. The ESG rating indicates how the investee company manages its material sustainability risks and opportunities when compared to peers in the same sector.
The internal model developed by OP Asset Management for defining sustainable investments also provides relevant company-specific ESG data and gives an estimate of the company’s sustainability. Those investment options whose business promotes one or more UN Sustainable Development Goals (SDG) without harming other sustainable factors or goals are considered sustainable investments. The Fund’s proportion of sustainable investments is reported annually in periodic reports, in addition to which portfolio management has access to data updated on a monthly basis on the share of sustainable investments of the Fund’s portfolio.
Portfolio managers have access to fund-specific ESG reports. The reports allow portfolio managers to view the Fund’s weighted ESG rating, carbon intensity and share of green business, among other data. These values are also presented in comparison to the Fund’s benchmark index.
The Fund votes at shareholders’ meetings through a service provider in line with OP Fund Management Company Ltd’s shareholder engagement principles that take responsibility aspects into account. Participation in general meetings of foreign companies takes place in markets where participation is cost-effective, taking into account their proportion of the Fund’s investments. Attendance at shareholders’ meetings and the Fund’s votes are reported twice a year in connection with shareholder engagement reporting.
OP Asset Management uses several data sources from different service providers. Primary data sources are MSCI ESG Research and S&P Trucost, which provide information on topics such as the sustainability risks of investee companies, share of business operations with adverse impacts, climate risks and opportunities, and how the operations of investee companies align with UN Sustainable Development Goals. The service providers use both data reported by companies and estimates based on an assessment model developed by each service provider.
In shareholder meeting votes, we use data and company research by ISS ESG.
The service providers we use have detailed and appropriate processes in place for ensuring data quality and correcting inaccuracies in the data.
When selecting new data packages and service providers, we carefully compare and analyse the data quality, coverage, methodology and reliability of each service provider. We regularly monitor trends in ESG data and service providers on the market to ensure the best possible data to support our investment decisions and client reporting.
Data sources are utilised either directly based on metrics or analysis by the service provider as well as by combining different metrics and using them for internal analyses and assessments by OP Asset Management. A part of the data is imported directly to OP Asset Management’s database, from which it can be used in internal analysis models and reports. Data is also used directly from interfaces offered by the service providers.
The share of data that is assessed depends on sustainability indicators and the sustainability factor under scrutiny, and it is not possible to give a universal definition of the share of assessed data of all ESG data. It is difficult to determine what portion of ESG data are based on reported information and estimates, respectively. In cases where reported data is available, it is used as the primary source. Third-party service providers must specify for each metric whether the data is reported by companies themselves or estimated using the provider’s internal model.
At the moment, ESG data is not fully standardised, and investee companies do not report on the data widely. This makes it challenging to compare investee companies. Service providers may use different methods for compiling, evaluating and analysing data. For these reasons, we carefully review the methodologies of service providers to ensure their suitability for our purposes.
We use several different service providers to enable us to assess certain metrics from multiple sources and fill any gaps in data.
The Fund is subject to exclusion criteria and is screened for international standard violations as described above in part (d) Investment strategy. A party independent of portfolio management oversees that the Fund complies with the criteria. The Fund’s material exclusion criteria are implemented in the trading system.
OP is an active shareholder through its funds by voting in Finnish and international shareholders’ meetings, engaging in direct dialogue with companies and supporting joint initiatives by investors. OP's funds comply with the principles of shareholder engagement that take into account OP Fund Management Company Ltd’s ESG perspectives. These principles and the latest report on the implementation of shareholder engagement principles are available at op.fi/responsible-investing. Participation in general meetings of foreign companies takes place in markets where participation is cost-effective, taking into account their proportion of the Fund’s investments.
This Fund participates in the shareholder meetings of listed companies in accordance with OP Fund Management Company’s principles of shareholder engagement. A detailed list of attended meetings and actions taken and decisions adopted at the meetings can be found at op.fi/responsible-investing. By 2025, OP Asset Management’s climate-related shareholder engagement will cover 70% of financed emissions, as measured by direct equity and bond investments by OP funds in high climate risk sectors (NACE categories A-H and J-L). In practice, shareholder engagement in these companies involves either voting at shareholders’ meetings, direct dialogue or joint initiatives by investors. In addition, the Fund is involved in shareholder engagement more broadly where necessary, such as in relation to good governance, responsible tax practice or business ethics.
The Fund’s benchmark index is not applied to the performance of environmental or social characteristics promoted by the Fund.
Data published on 1 January 2023
ISIN: FI4000048780
Summary
No sustainable investment objective
Environmental or social characteristics of the finance product
Investment strategy
Share of investments
Monitoring of environmental or social characteristics
Methods
Data sources and data processing
Limitations of the methodology and data
Due diligence
Shareholder engagement policy
Designated reference benchmark
The Fund promotes environmental and social characteristics using environmental, social and governance (ESG) analysis while excluding certain investments. The Fund does not place emphasis on or prioritise any single theme or sustainability factor, but takes sustainability factors broadly into account by focusing on environmental and social risks, opportunities and impacts relevant for each sector and investee company.
To the extent that the Fund invests in financial activities that promote either environmental or social objectives, steps are taken to ensure that these sustainable investments do not cause significant harm to any sustainable investment objective.
Principal adverse impacts (PAI) on sustainability are regularly analysed by screening all investments for their PAI indicators. If screening reveals investee companies with significant principal adverse impacts on sustainability in comparison to its peers and if the PAI indicator is deemed material for the investee company, the investee company will be monitored more closely and excluded, if necessary. An engagement process to influence the company’s behaviour can be initiated.
OP Asset Management uses several data sources from different service providers. Primary data sources are MSCI ESG Research and S&P Trucost, which provide information on topics such as the sustainability risks of investee companies, share of business operations with adverse impacts, climate risks and opportunities, and how the operations of investee companies align with UN Sustainable Development Goals. The service providers use both data reported by companies and estimates based on an assessment model developed by each service provider.
This financial product promotes environmental or social characteristics, but sustainable investment is not its primary objective.
To the extent that the Fund invests in financial activities that promote either environmental or social objectives, steps are taken to ensure that these sustainable investments do not cause significant harm to any sustainable investment objective.
Principal adverse impacts (PAI) on sustainability are regularly analysed by screening all investments for their PAI indicators. If screening reveals investee companies with significant principal adverse impacts on sustainability in comparison to its peers and if the said PAI indicator is deemed essential for the investee company, the investee company will be monitored more closely and excluded, if necessary. Also, a process to influence the company’s behaviour can be started.
More information about how we take adverse sustainability impacts into account can be found in the document “Consideration of Principal Adverse Sustainability Impacts in Investing and Insurance Operations (in Finnish)”, which is available online at op.fi (LINK)
The OP Asset Management’s sustainable investment analysis model is used to check whether a company has violated international standards (UN Global Compact and OECD guidelines for multinationals). If a violation is identified, the company cannot be determined as a sustainable investment. The definition of international standard violations and company-specific analysis is based on the methodology of a third-party service provider.
The Fund does not place emphasis on or prioritise any single theme or sustainability factor, but takes sustainability factors broadly into account by focusing on environmental and social risks, opportunities and impacts relevant for each sector and investee company.
The Fund promotes environmental and social characteristics and, to ensure it, uses environmental, social and governance (ESG) analysis and excludes certain investments.
Exclusion: The Fund excludes from its active direct investments controversial weapon manufacturers, mining companies producing thermal coal, power companies using thermal coal, tobacco companies, and companies that have breached international standards and where engagement has been unsuccessful. The list of exclusions is public. In addition to general exclusion rules, the Fund does not invest in companies whose principal business is in unconventional oil and gas extraction.
Use of ESG data in the investment analysis: ESG factors are considered in the investment process with the help of data from a third-party ESG service provider. The ESG rating of the Fund is monitored, and the aim is to ensure that it is better than that of the benchmark index.
Violations of international standards: The Fund is screened regularly for non-compliances with international standards. In the event that a non-compliance is detected, an engagement process is initiated with the company. The aim is to make non-compliant companies change their practices and begin to comply with international standards in their operations. If engagement does not bring results, the company may be removed from the Fund portfolio and placed on the exclusion list.
Minimum share of sustainable investments: In accordance with the minimum amount stated below, the Fund allocates investments into companies whose business promotes one or more UN Sustainable Development Goals (SDG) without harming other sustainability factors or objectives. Sustainable investments are determined using OP Asset Management’s analysis model which is based on an external service provider’s SDG and sustainability data.
Shareholders’ meetings: The Fund votes in shareholders’ meetings through a service provider in line with OP Fund Management Company Ltd’s shareholder engagement principles that take responsibility aspects into account.
Assessing good governance practices: Analysing the target company’s governance is an important part of the investment process. To us, good governance is a key foundation for any company’s financial success, regardless of sector. When assessing governance, some of the areas considered include the appropriateness of the target company’s administrative organisation, the target company’s actions in relation to its personnel, and the target company’s rewarding and taxation practices. In assessing good governance, we use an external service provider’s analysis and our own qualitative analysis if no external data is available. We screen the funds regularly to check them against the criteria of good governance. Minimum limits apply for these criteria.
Investments that promote ESG characteristics: 90%, of which 10% are sustainable investments. Others: the Fund may also invest its assets in exchange traded derivatives and OTC derivative contracts in order to hedge against the risk of adverse market movements, to replace direct investments and to otherwise promote effective portfolio management. Sustainability data might not be available for possible derivatives.
The Fund might include investment options which are in line with the EU Taxonomy, but the Fund does not commit to a certain minimum number of investments in line with the EU Taxonomy. Currently, only few investment options in line with the EU Taxonomy are available, and there is a limited amount of reported information on compliance with the EU Taxonomy.
Portfolio managers have access to the Fund’s ESG analysis, which indicates, among other things, the weighted ESG rating, carbon intensity and share of green business of the portfolio.
Investments are regularly screened by ESG specialists for principal adverse impacts (PAI), exclusion criteria and international standard violations.
Fund-specific ESG indicators on top-level environmental and social characteristics related to the Fund are reported on a monthly basis.
Sectors with adverse impacts to the environment and society defined by OP Asset Management are excluded from the Fund. The enforcement of exclusions is monitored regularly by calculating the Fund’s exposure to controversial and harmful operations and by screening the Fund using the criteria in the exclusion list.
The Fund’s investments are also screened regularly for violations of international standards using an external service provider’s analysis. If a standard violation is detected, the preferred option is to influence the company’s behaviour. If that is impossible or unsuccessful, the company may be removed from the Fund portfolio and placed on the list of exclusions. Identified standard violations and their related engagement processes are reported twice a year in connection with shareholder engagement reporting.
ESG factors are considered in the investment process with data from a third-party ESG service provider. The ESG rating of the Fund is monitored, and the aim is to ensure that it is better than that of the benchmark index. The portfolio manager constantly tracks the fund-specific ESG rating against the ESG rating of the benchmark index. The ESG rating indicates how the investee company manages its material sustainability risks and opportunities when compared to peers in the same sector.
The internal model developed by OP Asset Management for defining sustainable investments also provides relevant company-specific ESG data and gives an estimate of the company’s sustainability. Those investment options whose business promotes one or more UN Sustainable Development Goals (SDG) without harming other sustainable factors or goals are considered sustainable investments. The Fund’s proportion of sustainable investments is reported annually in periodic reports, in addition to which portfolio management has access to data updated on a monthly basis on the share of sustainable investments of the Fund’s portfolio.
Portfolio managers have access to fund-specific ESG reports. The reports allow portfolio managers to view the Fund’s weighted ESG rating, carbon intensity and share of green business, among other data. These values are also presented in comparison to the Fund’s benchmark index.
The Fund votes at shareholders’ meetings through a service provider in line with OP Fund Management Company Ltd’s shareholder engagement principles that take responsibility aspects into account. Participation in general meetings of foreign companies takes place in markets where participation is cost-effective, taking into account their proportion of the Fund’s investments. Attendance at shareholders’ meetings and the Fund’s votes are reported twice a year in connection with shareholder engagement reporting.
OP Asset Management uses several data sources from different service providers. Primary data sources are MSCI ESG Research and S&P Trucost, which provide information on topics such as the sustainability risks of investee companies, share of business operations with adverse impacts, climate risks and opportunities, and how the operations of investee companies align with UN Sustainable Development Goals. The service providers use both data reported by companies and estimates based on an assessment model developed by each service provider.
In shareholder meeting votes, we use data and company research by ISS ESG.
The service providers we use have detailed and appropriate processes in place for ensuring data quality and correcting inaccuracies in the data.
When selecting new data packages and service providers, we carefully compare and analyse the data quality, coverage, methodology and reliability of each service provider. We regularly monitor trends in ESG data and service providers on the market to ensure the best possible data to support our investment decisions and client reporting.
Data sources are utilised either directly based on metrics or analysis by the service provider as well as by combining different metrics and using them for internal analyses and assessments by OP Asset Management. A part of the data is imported directly to OP Asset Management’s database, from which it can be used in internal analysis models and reports. Data is also used directly from interfaces offered by the service providers.
The share of data that is assessed depends on sustainability indicators and the sustainability factor under scrutiny, and it is not possible to give a universal definition of the share of assessed data of all ESG data. It is difficult to determine what portion of ESG data are based on reported information and estimates, respectively. In cases where reported data is available, it is used as the primary source. Third-party service providers must specify for each metric whether the data is reported by companies themselves or estimated using the provider’s internal model.
At the moment, ESG data is not fully standardised, and investee companies do not report on the data widely. This makes it challenging to compare investee companies. Service providers may use different methods for compiling, evaluating and analysing data. For these reasons, we carefully review the methodologies of service providers to ensure their suitability for our purposes.
We use several different service providers to enable us to assess certain metrics from multiple sources and fill any gaps in data.
The Fund is subject to exclusion criteria and is screened for international standard violations as described above in part (d) Investment strategy. A party independent of portfolio management oversees that the Fund complies with the criteria. The Fund’s material exclusion criteria are implemented in the trading system.
OP is an active shareholder through its funds by voting in Finnish and international shareholders’ meetings, engaging in direct dialogue with companies and supporting joint initiatives by investors. OP's funds comply with the principles of shareholder engagement that take into account OP Fund Management Company Ltd’s ESG perspectives. These principles and the latest report on the implementation of shareholder engagement principles are available at op.fi/responsible-investing. Participation in general meetings of foreign companies takes place in markets where participation is cost-effective, taking into account their proportion of the Fund’s investments.
This Fund participates in the shareholder meetings of listed companies in accordance with OP Fund Management Company’s principles of shareholder engagement. A detailed list of attended meetings and actions taken and decisions adopted at the meetings can be found at op.fi/responsible-investing. By 2025, OP Asset Management’s climate-related shareholder engagement will cover 70% of financed emissions, as measured by direct equity and bond investments by OP funds in high climate risk sectors (NACE categories A-H and J-L). In practice, shareholder engagement in these companies involves either voting at shareholders’ meetings, direct dialogue or joint initiatives by investors. In addition, the Fund is involved in shareholder engagement more broadly where necessary, such as in relation to good governance, responsible tax practice or business ethics.
The Fund’s benchmark index is not applied to the performance of environmental or social characteristics promoted by the Fund.
Data published on 1 January 2023
ISIN: FI4000171251
Summary
No sustainable investment objective
Environmental or social characteristics of the finance product
Investment strategy
Share of investments
Monitoring of environmental or social characteristics
Methods
Data sources and data processing
Limitations of the methodology and data
Due diligence
Shareholder engagement policy
Designated reference benchmark
The Fund promotes environmental and social characteristics using environmental, social and governance (ESG) analysis while excluding certain investments. The Fund does not emphasise or prioritise any single theme or sustainability factor, but takes sustainability factors broadly into account by focusing on environmental and social risks, opportunities and impacts relevant for each sector and investee company. To the extent that the Fund investis in financial activities that promote either environmental or social objectives, steps are taken to ensure that these sustainable investments do not cause significant harm to any sustainable investment objective. OP Asset Management uses several data sources from different service providers. Primary data sources are MSCI ESG Research and S&P Trucost, which provide information on topics such as the sustainability risks of investee companies, share of business operations with adverse impacts, climate risks and opportunities, and how the operations of investee companies align with UN Sustainable Development Goals. The service providers use both data reported by companies and estimates based on an assessment model developed by each service provider. Principal adverse impacts (PAI) on sustainability are regularly analysed by screening all investments for their PAI indicators. If screening reveals investee companies with significant principal adverse impacts on sustainability in comparison to its peers and if the said PAI indicator is deemed essential for the investee company, the investee company will be monitored more closely and excluded, if necessary. Also, a process to influence the company’s behaviour can be started.
This finance product promotes environmental or social characteristics, but sustainable investment is not its primary objective.
To the extent that the Fund invests in financial activities that promote either environmental or social objectives, steps are taken to ensure that these sustainable investments do not cause significant harm to any sustainable investment objective.
Principal adverse impacts (PAI) on sustainability are regularly analysed by screening all investments for their PAI indicators. If screening reveals investee companies with significant principal adverse impacts on sustainability in comparison to its peers and if the said PAI indicator is deemed essential for the investee company, the investee company will be monitored more closely and excluded, if necessary. Also, a process to influence the company’s behaviour can be started.
More information about how we take adverse sustainability impacts into account can be found in the document “Consideration of Principal Adverse Sustainability Impacts in Investing and Insurance Operations (in Finnish)”, which is available online at op.fi.
The OP Asset Management’s sustainable investment analysis model is used to check whether a company has violated international standards (UN Global Compact and OECD guidelines for multinationals). If a violation is identified, the company cannot be determined as a sustainable investment. The definition of international standard violations and company-specific analysis is based on the methodology of a third-party service provider.
The Fund does not emphasise or prioritise any single theme or sustainability factor, but takes sustainability factors broadly into account by focusing on environmental and social risks, opportunities and impacts relevant for each sector and investee company
The Fund promotes environmental and social characteristics and, to ensure it, uses environmental, social and governance (ESG) analysis and excludes certain investments.
Exclusion: The Fund excludes from its active direct investments controversial weapon manufacturers, mining companies producing thermal coal, power companies using thermal coal, tobacco companies, and companies that have breached international standards and where engagement has been unsuccessful. The list of exclusions is public. In addition to general exclusion rules, the Fund does not invest in companies whose principal business is in unconventional oil and gas extraction.
Use of ESG data in the investment analysis: ESG factors are considered in the investment process with the help of data by an external ESG service provider and the ESG tool developed internally by OP Asset Management. Considering ESG factors in the investment process means, for example, that the risks and opportunities related to the environment, society and governance are made transparent using selected indicators from each area.
Violations of international standards: The Fund is screened regularly for non-compliances with international standards. In the event that a non-compliance is detected, an influencing process is begun with the company in question. The aim is to make non-compliant companies change their practices and begin to comply with international standards in their operations. If influencing proves fruitless, the company may be removed from the Fund portfolio and placed on the exclusion list.
Minimum share of sustainable investments: In accordance with the minimum amount stated below, the Fund allocates investments into companies whose business promotes one or more UN Sustainable Development Goals (SDG) without harming other sustainability factors or objectives. Sustainable investments are determined using OP Asset Management’s analysis model which is based on an external service provider’s SDG and sustainability data.
Assessing good governance practices: Analysing the target company’s governance is an important part of the investment process. To us, good governance is a key foundation for any company’s financial success, regardless of sector. When assessing governance, some of the areas considered include the appropriateness of the target company’s administrative organisation, the target company’s actions in relation to its personnel, and the target company’s rewarding and taxation practices. In assessing good governance, we use the analysis of third-party service providers and our own qualitative analysis if no external data is available. We screen the funds regularly to check them against the criteria of good governance. Minimum limits apply for these criteria.
Investments that promote ESG characteristics: 80%, of which 5% are sustainable investments.
Others: the Fund may also invest its assets in exchange traded derivatives and OTC derivative contracts and ETFs in order to hedge against the risk of adverse market movements, to replace direct investments and to otherwise promote effective portfolio management. ESG data may not be available for derivatives and ETFs.
The Fund might include investment options which are in line with the EU Taxonomy, but the Fund does not commit to a certain minimum number of investments in line with the EU Taxonomy. Currently, only few investment options in line with the EU Taxonomy are available, and there is a limited amount of reported information on compliance with the EU Taxonomy.
Portfolio managers have access to the Fund’s ESG analysis, which indicates, among other things, the weighted ESG rating, carbon intensity and share of green business of the portfolio. Portfolio managers also have access to comprehensive company-specific ESG data with which they can monitor the level of sustainability of investee companies.
Investments are regularly screened by ESG specialists for principal adverse impacts (PAI), exclusion criteria and international standard violations.
Fund-specific ESG indicators on environmental and social characteristics are reported on a monthly basis.
Sectors with adverse impacts to the environment and society defined by OP Asset Management are excluded from the Fund. The enforcement of exclusions is monitored regularly by calculating the Fund’s exposure to controversial and harmful operations and by screening the Fund using the criteria in the exclusion list.
The Fund’s investments are also screened regularly for violations of international standards using an external service provider’s analysis. If a standard violation is detected, the preferred option is to influence the company’s behaviour. If that is impossible or unsuccessful, the company may be removed from the Fund portfolio and placed on the list of exclusions. Identified standard violations and their related engagement processes are reported twice a year in connection with shareholder engagement reporting.
ESG factors are considered in the investment process where possible with the help of data by an external ESG service provider, the ESG tool developed internally by OP Asset Management, and the internal analysis model for assessing sustainable investments. Considering ESG factors in the investment process means, for example, that the risks and opportunities related to the environment, society and governance are made transparent using selected indicators from each area.
The internal ESG tool can be used to assess a company’s current state in relation to its peers in the sector in terms of ESG factors material for the companies as well as the company’s performance in these factors.
External ESG data can be used to examine the investee company’s targets for GHG emission reductions or current state in terms of the green transition.
The internal model developed by OP Asset Management for defining sustainable investments also provides relevant company-specific ESG data and gives an estimate of the company’s sustainability. Those investment options whose business promotes one or more UN Sustainable Development Goals (SDG) without harming other sustainable factors or goals are considered sustainable investments. The Fund’s proportion of sustainable investments is reported annually in periodic reports, in addition to which portfolio management has access to data updated on a monthly basis on the share of sustainable investments of the Fund’s portfolio.
In addition to ESG tools applied to the investee companies, portfolio managers have access to fund-specific reports on ESG issues at the portfolio level. The reports allow portfolio managers to view the Fund’s weighted ESG rating, carbon intensity and share of green business, among other data. These values are also presented in comparison to benchmark indexes.
OP Asset Management uses several data sources from different service providers. In corporate bond investments, the primary data sources are MSCI ESG Research and S&P Trucost, which provide information on topics such as the sustainability risks of investee companies, share of business operations with adverse impacts, climate risks and opportunities, and how the operations of investee companies align with UN Sustainable Development Goals. The service providers use both data reported by companies and estimates based on an assessment model developed by each service provider.
We also use materiality analyses by SASB and Bloomberg data on investee companies, based on which we have developed our own analysis model for investigating investee companies’ current level of sustainability and likely future performance.
The Fund also has access to Moody’s analyses on the ESG factors of investee companies and their impact on the company’s credit risk. In addition, the Fund uses ESG analysis on the ESG risks and opportunities of companies and other factors by Lucror Analytics.
The service providers we use have detailed and appropriate processes in place for ensuring data quality and correcting inaccuracies in the data.
When selecting new data packages and service providers, we carefully compare and analyse the data quality, coverage, methodology and reliability of each service provider. We regularly monitor trends in ESG data and service providers on the market to ensure the best possible data to support our investment decisions and client reporting.
Data sources are utilised either directly based on metrics or analysis by the service provider as well as by combining different metrics and using them for internal analyses and assessments by OP Asset Management. A part of the data is imported directly to OP Asset Management’s database, from which it can be used in internal analysis models and reports. Data is also used directly from interfaces offered by the service providers.
The share of data that is assessed depends on sustainability indicators and the sustainability factor under scrutiny, and it is not possible to give a universal definition of the share of assessed data of all ESG data. It is difficult to determine what portion of ESG data are based on reported information and estimates, respectively. In cases where reported data is available, it is used as the primary source. Third-party service providers must specify for each metric whether the data is reported by companies themselves or estimated using the provider’s internal model.
At the moment, ESG data is not fully standardised, and investee companies do not report on the data widely. This makes it challenging to compare investee companies. Service providers may use different methods for compiling, evaluating and analysing data. For these reasons, we carefully review the methodologies of service providers to ensure their suitability for our purposes.
The availability of ESG data is particularly challenging for companies with a High Yield credit rating, for several reasons. The companies may be smaller in size or not publicly listed. For this reason, several data sources must be used.
We also use several different service providers to enable us to assess certain metrics from multiple sources and fill any gaps in data.
The Fund is subject to exclusion criteria and is screened for international standard violations as described above in part (d) Investment strategy. A party independent of portfolio management oversees that the Fund complies with the criteria. The Fund’s material exclusion criteria are implemented in the trading system.
OP is an active shareholder through its funds by voting in Finnish and international shareholders’ meetings, engaging in direct dialogue with companies and supporting joint initiatives by investors. OP's funds comply with the principles of shareholder engagement that take into account OP Fund Management Company Ltd’s ESG perspectives. These principles and the latest report on the implementation of shareholder engagement principles are available at op.fi/responsible-investing. Participation in general meetings of foreign companies takes place in markets where participation is cost-effective, taking into account their proportion of the Fund’s investments.
By 2025, OP Asset Management’s climate-related shareholder engagement will cover 70% of financed emissions, as measured by direct equity and bond investments by OP funds in high climate risk sectors (NACE categories A-H and J-L). In practice, shareholder engagement in these companies involves either voting at shareholders’ meetings, direct dialogue or joint initiatives by investors. In addition, the Fund is involved in shareholder engagement more broadly where necessary, such as in relation to good governance, responsible tax practice or business ethics.
The Fund’s benchmark index is not applied to the performance of environmental or social characteristics promoted by the Fund.
Data published on 1 January 2023
ISIN: FI0008807615
Summary
No sustainable investment objective
Environmental or social characteristics of the finance product
Investment strategy
Share of investments
Monitoring of environmental or social characteristics
Methods
Data sources and data processing
Limitations of the methodology and data
Due diligence
Shareholder engagement policy
Designated reference benchmark
The Fund’s objective is to make sustainable investments focusing on environmental issues. The Fund invests in sectors that have significant positive impact on climate change adapation and mitigation. The Fund typically invests in companies commercially well-positioned to fight global warming and whose business are related to, for example, energy efficiency and technology, recycling, water and waste management and the related infrastructure.
Principal adverse impacts (PAI) on sustainability are regularly analysed and screened for all investments. If screening reveals investee companies with significant principal adverse impacts on sustainability in comparison to its peers and if the PAI indicator in question is consired material for the investee company, they will be closely monitored and excluded, if necessary. Also, an engagement process can be initiated.
OP Asset Management uses several data sources from different service providers. Primary data sources are MSCI ESG Research and S&P Trucost, which provide information on topics such as the sustainability risks of investee companies, share of business operations with adverse impacts, climate risks and opportunities, and how the operations of investee companies align with UN Sustainable Development Goals. The service providers use both data reported by companies and estimates based on an assessment model developed by each service provider.
Principal adverse impacts (PAI) on sustainability are regularly analysed by screening all investments for their PAI indicators. If screening reveals investee companies with significant principal adverse impacts on sustainability in comparison to its peers and if the said PAI indicator is deemed essential for the investee company, the investee company will be monitored more closely and excluded, if necessary. Also, a process to influence the company’s behaviour can be started.
More information about how we take adverse sustainability impacts into account can be found in the document “Consideration of Principal Adverse Sustainability Impacts in Investing and Insurance Operations (in Finnish)”, which is available online at op.fi.
The OP Asset Management’s sustainable investment analysis model is used to check whether a company has violated international standards (UN Global Compact and OECD guidelines for multinationals). If a violation is identified, the company cannot be determined as a sustainable investment. The definition of international standard violations and company-specific analysis is based on the methodology of a third-party service provider.
The objetive of the Fund is to make sustainable investments. The Fund invests in sectors that have significant positive impact on climate change mitigation and adaptation. The Fund typically invests in companies commercially well-positioned to fight global warming and whose business is related to, for example, energy efficiency and technology, recycling, water and waste management and the related infrastructure.
Those investment options whose business promotes one or more UN Sustainable Development Goals (SDG) without harming other sustainable factors or goals are considered sustainable investments. Sustainable investments are determined using OP Asset Management’s analysis model which is based on an external service provider’s SDG and sustainability data.
The objective of the Fund is also to achieve net zero emissions in accordance with the Paris Agreement by investing in companies whose operations provide solutions to the climate change problem. In addition to combating climate change, the Fund can also make sustainable investments that support other environmental goals. The objective of the Fund is to achieve net zero emissions by 2050, and the Fund tracks the long-term emissions reduction targets of the benchmark index referred to below.
OP-Climate is an equity fund which invests its assets broadly in the global stock market. It may invest both in developed and emerging equity markets with the typical focus on Europe and the USA.
The Fund’s goal is to make sustainable investments. The Fund mainly invests its assets in sectors which have positive impact on climate change mitigation and adaptation The Fund typically invests in companies commercially well-positioned to fight global warming and whose business has to do with, for example, energy efficiency and technology, recycling, water and waste management and the related infrastructure. Investee companies are screened using OP Asset Management’s analysis model, which is based on an external service provider’s SDG and sustainability data. Companies whose business promotes one or more UN Sustainable Development Goals (SDG) without harming other sustainable factors or goals are considered sustainable investments.
Exclusion: The Fund excludes from its active direct investments controversial weapon manufacturers, mining companies producing thermal coal, power companies using thermal coal, tobacco companies, and companies that have breached international standards and where engagement has been unsuccessful. The list of exclusions is public. In addition to general exclusion rules, the Fund does not invest in companies whose principal business is in unconventional oil and gas extraction or other fossil fuels (50% of revenue or more).
Violations of international standards: The Fund is screened regularly for non-compliances with international standards. In the event that a non-compliance is detected, an influencing process is begun with the company in question. The aim is to make non-compliant companies change their practices and begin to comply with international standards in their operations. If influencing proves fruitless, the company may be removed from the Fund portfolio and placed on the exclusion list.
Shareholders’ meetings: The Fund votes in shareholders’ meetings through a service provider in line with OP Fund Management Company Ltd’s shareholder engagement principles that take responsibility aspects into account.
Methods for assessing good governance practices: Analysing the target company’s governance is an important part of the investment process. To us, good governance is a key foundation for any company’s financial success, regardless of sector. When assessing governance, some of the areas considered include the appropriateness of the target company’s administrative organisation, the target company’s actions in relation to its personnel, and the target company’s rewarding and taxation practices. In assessing good governance, we use an external service provider’s analysis and our own qualitative analysis if no external data is available. We screen the funds regularly to check them against the criteria of good governance. Minimum limits apply for these criteria.
All investments of the Fund must have business operations that are considered to promote climate or environmental goals. If necessary, the Fund may also invest its assets in exchange traded derivatives and OTC derivative contracts to hedge against the risk of adverse market movements, to replace direct investments and to otherwise promote effective portfolio management. However, the share of sustainable investments is always at least 75%.
Of the sustainable investments, 3% align with EU taxonomy. Currently, only few investment options in line with the EU Taxonomy are available, and there is a limited amount of reported information on compliance with the EU Taxonomy.
Portfolio managers have access to the Fund’s ESG analysis, which indicates, among other things, the weighted ESG rating, carbon intensity and share of green business of the portfolio. In addition, the portfolio manager regularly monitors the share of sustainable investments in the Fund.
Investments are regularly screened by ESG specialists for principal adverse impacts (PAI), exclusion criteria and international standard violations.
Fund-specific ESG indicators on top-level environmental and social characteristics related to the Fund are reported on a monthly basis.
The internal model developed by OP Asset Management for defining sustainable investments also provides relevant company-specific ESG data and gives an estimate of the company’s sustainability. Those investment options whose business promotes one or more UN Sustainable Development Goals (SDG) without harming other sustainable factors or goals are considered sustainable investments. The Fund’s proportion of sustainable investments is reported annually in periodic reports, in addition to which portfolio management has access to data updated on a monthly basis on the share of sustainable investments of the Fund’s portfolio.
External ESG data can be used to examine the investee company’s targets for GHG emission reductions or current state in terms of the green transition.
Negative screening is used to limit and exclude certain sectors and operations from the Fund’s investments. The Fund excludes from its active direct investments controversial weapon manufacturers, mining companies producing thermal coal, power companies using thermal coal, tobacco companies, and companies that have breached international standards and where engagement has been unsuccessful. The list of exclusions is public. In addition to general exclusion rules, the Fund does not invest in companies whose principal business is in unconventional oil and gas extraction or other fossil fuels (50% of revenue or more).
The Fund’s investments are also screened regularly for violations of international standards using an external service provider’s analysis. If a standard violation is detected, the preferred option is to influence the company’s behaviour. If that is impossible or unsuccessful, the company may be removed from the Fund portfolio and placed on the list of exclusions. Identified standard violations and their related engagement processes are reported twice a year in connection with shareholder engagement reporting.
In addition to ESG tools applied to the investee companies, portfolio managers have access to fund-specific reports on ESG issues at the portfolio level. The reports allow portfolio managers to view the Fund’s weighted ESG rating, carbon intensity and share of green business, among other data. These values are also presented in comparison to benchmark indexes.
The Fund votes in shareholders’ meetings in line with OP Fund Management Company Ltd’s shareholder engagement principles that take responsibility aspects into account. Attendance at meetings is based on the company’s share of the Fund’s investments. Attendance at shareholders’ meetings and the Fund’s votes are reported twice a year in connection with shareholder engagement reporting.
OP Asset Management uses several data sources from different service providers. Primary data sources are MSCI ESG Research and S&P Trucost, which provide information on topics such as the sustainability risks of investee companies, share of business operations with adverse impacts, climate risks and opportunities, and how the operations of investee companies align with UN Sustainable Development Goals. The service providers use both data reported by companies and estimates based on an assessment model developed by each service provider.
In shareholder meeting votes, we use data and company research by ISS ESG.
The service providers we use have detailed and appropriate processes in place for ensuring data quality and correcting inaccuracies in the data.
When selecting new data packages and service providers, we carefully compare and analyse the data quality, coverage, methodology and reliability of each service provider. We regularly monitor trends in ESG data and service providers on the market to ensure the best possible data to support our investment decisions and client reporting.
Data sources are utilised either directly based on metrics or analysis by the service provider as well as by combining different metrics and using them for internal analyses and assessments by OP Asset Management. A part of the data is imported directly to OP Asset Management’s database, from which it can be used in internal analysis models and reports. Data is also used directly from interfaces offered by the service providers.
The share of data that is assessed depends on sustainability indicators and the sustainability factor under scrutiny, and it is not possible to give a universal definition of the share of assessed data of all ESG data. It is difficult to determine what portion of ESG data are based on reported information and estimates, respectively. In cases where reported data is available, it is used as the primary source. Third-party service providers must specify for each metric whether the data is reported by companies themselves or estimated using the provider’s internal model.
ESG data is not yet fully standardised, and investee companies do not widely report on sustainability related metrics. This makes it challenging to compare investee companies. Service providers may use different methods for compiling, evaluating and analysing data. For these reasons, we carefully review the methodologies of service providers to ensure their suitability for our purposes.
We use several different service providers to enable us to assess certain metrics from multiple sources and fill any gaps in data.
The Fund is subject to exclusion criteria and is screened for international standard violations as described above in part (d) Investment strategy. A party independent of portfolio management oversees that the Fund complies with the criteria. The Fund’s material exclusion criteria are implemented in the trading system.
OP is an active shareholder through its funds by voting in Finnish and international shareholders’ meetings, engaging in direct dialogue with companies and supporting joint initiatives by investors. OP's funds comply with the principles of shareholder engagement that take into account OP Fund Management Company Ltd’s ESG perspectives. These principles and the latest report on the implementation of shareholder engagement principles are available at op.fi/responsible-investing. Participation in general meetings of foreign companies takes place in markets where participation is cost-effective, taking into account their proportion of the Fund’s investments.
This Fund participates in the shareholder meetings of listed companies in accordance with OP Fund Management Company’s principles of shareholder engagement. A detailed list of attended meetings and actions taken and decisions adopted at the meetings can be found at op.fi/responsible-investing. By 2025, OP Asset Management’s climate-related shareholder engagement will cover 70% of financed emissions, as measured by direct equity and bond investments by OP funds in high climate risk sectors (NACE categories A-H and J-L). In practice, shareholder engagement in these companies involves either voting at shareholders’ meetings, direct dialogue or joint initiatives by investors. In addition, the Fund is involved in shareholder engagement more broadly where necessary, such as in relation to good governance, responsible tax practice or business ethics.
The Fund’s benchmark index is the MSCI World Climate Paris Aligned Index. The benchmark index will achieve net zero emissions by 2050 by steadily reducing emission intensity over time at a rate of 10% year on year. Compared to the general market index, the index has a greater weight on companies whose products and services provide solutions to climate issues and which have a lower exposure to physical and transition risks.
Data published on 1 January 2023
ISIN: FI0008805254
Summary
No sustainable investment objective
Environmental or social characteristics of the finance product
Investment strategy
Share of investments
Monitoring of environmental or social characteristics
Methods
Data sources and data processing
Limitations of the methodology and data
Due diligence
Shareholder engagement policy
Designated reference benchmark
The Fund promotes environmental and social characteristics using environmental, social and governance (ESG) analysis while excluding certain investments. The Fund does not place emphasis on or prioritise any single theme or sustainability factor, but takes sustainability factors broadly into account by focusing on environmental and social risks, opportunities and impacts relevant for each sector and investee company. This financial product promotes environmental or social characteristics, but sustainable investment is not its objective. OP Asset Management uses several data sources from different service providers. Primary data sources are MSCI ESG Research and S&P Trucost, which provide information on topics such as the sustainability risks of investee companies, share of business operations with adverse impacts, climate risks and opportunities, and how the operations of investee companies align with UN Sustainable Development Goals. The service providers use both data reported by companies and estimates based on an assessment model developed by each service provider.
This financial product promotes environmental or social characteristics, but sustainable investment is not its objective.
The Fund does not place emphasis on or prioritise any single theme or sustainability factor, but takes sustainability factors broadly into account by focusing on environmental and social risks, opportunities and impacts relevant for each sector and investee company.
The Fund promotes environmental and social characteristics and, to ensure it, uses environmental, social and governance (ESG) analysis and excludes certain investments.
Exclusion: The Fund excludes from its active direct investments controversial weapon manufacturers, mining companies producing thermal coal, power companies using thermal coal, tobacco companies, and companies that have breached international standards and where engagement has been unsuccessful. The list of exclusions is public. In addition to general exclusion rules, the Fund does not invest in companies whose principal business is in unconventional oil and gas extraction.
Use of ESG data in the investment analysis: ESG factors are considered in the investment process with the help of data from a third-party ESG service provider. The ESG rating of the Fund is monitored, and the aim is to ensure that it is better than that of the benchmark index.
Violations of international standards: The Fund is screened regularly for non-compliances with international standards. In the event that a non-compliance is detected, an influencing process is begun with the company in question. The aim is to make non-compliant companies change their practices and begin to comply with international standards in their operations. If influencing proves fruitless, the company may be removed from the Fund portfolio and placed on the exclusion list.
Assessing good governance practices: Analysing the target company’s governance is an important part of the investment process. To us, good governance is a key foundation for any company’s financial success, regardless of sector. When assessing governance, some of the areas considered include the appropriateness of the target company’s administrative organisation, the target company’s actions in relation to its personnel, and the target company’s rewarding and taxation practices. In assessing good governance, we use an external service provider’s analysis and our own qualitative analysis if no external data is available. We screen the funds regularly to check them against the criteria of good governance. Minimum limits apply for these criteria.
Investments that promote ESG characteristics: 90%
Others: the Fund may also invest its assets in exchange traded derivatives and OTC derivative contracts in order to hedge against the risk of adverse market movements, to replace direct investments and to otherwise promote effective portfolio management. Sustainability data might not be available for possible derivatives.
The Fund might include investment options which are in line with the EU Taxonomy, but the Fund does not commit to a certain minimum number of investments in line with the EU Taxonomy. Currently, only few investment options in line with the EU Taxonomy are available, and there is a limited amount of reported information on compliance with the EU Taxonomy.
Portfolio managers have access to the Fund’s ESG analysis, which indicates, among other things, the weighted ESG rating, carbon intensity and share of green business of the portfolio.
Fund-specific ESG indicators on environmental and social characteristics are reported on a monthly basis.
Sectors with adverse impacts to the environment and society defined by OP Asset Management are excluded from the Fund. Implementation of the exclusions is monitored regularly by calculating the Fund’s exposure to controversial and harmful operations and by screening the Fund using the criteria in the exclusion list.
The Fund’s investments are also screened regularly for violations of international standards using an external service provider’s analysis. If a standard violation is detected, the preferred option is to influence the company’s behaviour. If that is impossible or unsuccessful, the company may be removed from the Fund portfolio and placed on the list of exclusions. Identified standard violations and their related engagement processes are reported twice a year in connection with shareholder engagement reporting.
ESG factors are considered in the investment process with data from a third-party ESG service provider. The ESG rating of the Fund is monitored, and the aim is to ensure that it is better than that of the benchmark index. The portfolio manager constantly tracks the fund-specific ESG rating against the ESG rating of the benchmark index. The ESG rating indicates how the investee company manages its material sustainability risks and opportunities when compared to peers in the same sector.
Portfolio managers have access to fund-specific reports on ESG issues at the portfolio level. The reports allow portfolio managers to view the Fund’s weighted ESG rating, carbon intensity and share of green business, among other data. These values are also presented in comparison to the Fund’s benchmark index.
OP Asset Management uses several data sources from different service providers. Primary data sources are MSCI ESG Research and S&P Trucost, which provide information on topics such as the sustainability risks of investee companies, share of business operations with adverse impacts, climate risks and opportunities, and how the operations of investee companies align with UN Sustainable Development Goals. The service providers use both data reported by companies and estimates based on an assessment model developed by each service provider.
The service providers we use have detailed and appropriate processes in place for ensuring data quality and correcting inaccuracies in the data.
When selecting new data packages and service providers, we carefully compare and analyse the data quality, coverage, methodology and reliability of each service provider. We regularly monitor trends in ESG data and service providers on the market to ensure the best possible data to support our investment decisions and client reporting.
Data sources are utilised either directly based on metrics or analysis by the service provider as well as by combining different metrics and using them for internal analyses and assessments by OP Asset Management. A part of the data is imported directly to OP Asset Management’s database, from which it can be used in internal analysis models and reports. Data is also used directly from interfaces offered by the service providers.
The share of data that is assessed depends on sustainability indicators and the sustainability factor under scrutiny, and it is not possible to give a universal definition of the share of assessed data of all ESG data. It is difficult to determine what portion of ESG data are based on reported information and estimates, respectively. In cases where reported data is available, it is used as the primary source. Third-party service providers must specify for each metric whether the data is reported by companies themselves or estimated using the provider’s internal model.
At the moment, ESG data is not fully standardised, and investee companies do not report on the data widely. This makes it challenging to compare investee companies. Service providers may use different methods for compiling, evaluating and analysing data. For these reasons, we carefully review the methodologies of service providers to ensure their suitability for our purposes. We use several different service providers to enable us to assess certain metrics from multiple sources and fill any gaps in data.
The Fund is subject to exclusion criteria and is screened for international standard violations as described above in part (d) Investment strategy. A party independent of portfolio management oversees that the Fund complies with the criteria. The Fund’s material exclusion criteria are implemented in the trading system.
OP is an active shareholder through its funds by voting in Finnish and international shareholders’ meetings, engaging in direct dialogue with companies and supporting joint initiatives by investors. OP's funds comply with the principles of shareholder engagement that take into account OP Fund Management Company Ltd’s ESG perspectives. These principles and the latest report on the implementation of shareholder engagement principles are available at op.fi/responsible-investing. Participation in general meetings of foreign companies takes place in markets where participation is cost-effective, taking into account their proportion of the Fund’s investments.
By 2025, OP Asset Management’s climate-related shareholder engagement will cover 70% of financed emissions, as measured by direct equity and bond investments by OP funds in high climate risk sectors (NACE categories A-H and J-L). In practice, shareholder engagement in these companies involves either voting at shareholders’ meetings, direct dialogue or joint initiatives by investors. In addition, the Fund is involved in shareholder engagement more broadly where necessary, such as in relation to good governance, responsible tax practice or business ethics.
The Fund’s benchmark index is not applied to the performance of environmental or social characteristics promoted by the Fund.
Data published on 1 January 2023
ISIN: FI4000006028
Summary
No principal adverse impact on a sustainable investment objective
Sustainable investment objective of the financial product
Investment strategy
Share of investments
Monitoring of sustainable investment objectives
Methods
Data sources and data processing
Limitations of the methodology and data
Due diligence
Shareholder engagement policy
Achieving a sustainable investment objective
The Fund's goal is to make sustainable investments. The Fund invests in sectors that have a significant positive impact on sustainable social wellbeing. The Fund typically invests in companies that develop health and wellbeing services, solutions related to the availability of education, financing and digital services, the circular economy, sustainable traffic and infrastructure solutions, the availability of apartments, improved nutrition, and sustainable agriculture, for example. Companies that are in line with the Fund's sustainable investment goals also include companies which are exemplary employers in terms of selected social questions, such as companies listed as the best places to work in global comparisons, and which otherwise pass OP's sustainable investment analysis.
Those investment options whose business promotes one or more UN Sustainable Development Goals (SDG) without harming other sustainable factors or goals are considered sustainable investments. Sustainable investments are determined using OP Asset Management’s analysis model based on SDG and EU Taxonomy alignment data and green revenues data by external service providers, among other sources. The analysis model used by OP Asset Management is also supplemented by manual analysis used to identify the best-in-class social impact of companies.
Principal adverse impacts (PAI) on sustainability are regularly analysed by screening all investments for their PAI indicators. If the screening reveals investee companies with significant principal adverse impacts on sustainability in comparison to peers and if the said PAI indicator is deemed essential for the investee company, the investee company will be monitored more closely and excluded, if necessary. Also, a process to influence the company’s behaviour can be started.
OP Asset Management uses several data sources from different service providers. Primary data sources are MSCI ESG Research and S&P Trucost, which provide information on topics such as the sustainability risks of investee companies, share of business operations with adverse impacts, climate risks and opportunities, and how the operations of investee companies align with UN Sustainable Development Goals. The service providers use both data reported by companies and estimates based on an assessment model developed by each service provider.
The OP Asset Management’s sustainable investment analysis model is used to check whether a company has violated international standards (UN Global Compact and OECD guidelines for multinationals). If a violation is identified, the company cannot be determined as a sustainable investment. The definition of international standard violations and company-specific analysis is based on the methodology of a third-party service provider.
In addition, principal adverse impacts (PAI) are analysed regularly by screening investments against all PAI indicators listed in Annex 1, Table 1 of the SFDR RTS, as well as additional indicator #4 of Table 2 and additional indicator #14 of Table 3 using OP Asset Management's internal PAI tool based on data from an external service provider. If the screening reveals companies with significant principal adverse impacts on sustainability in comparison to peers, and if the said PAI indicator is deemed essential for the investee company, the investee company will be monitored more closely and excluded if necessary, or a process to influence the company's behaviour can be started. Portfolio managers use the PAI tool to determine the values of the company and line of business, and this data is used when making investment decisions.
More information about how we take adverse sustainability impacts into account can be found in the document “Consideration of Principal Adverse Sustainability Impacts in Investing and Insurance Operations (in Finnish)”, which is available online at op.fi.
The Fund invests its assets broadly in the global equity markets. It may invest both in developed and emerging equity markets, with the typical focus on Europe and the USA.
Sustainable investment: the Fund invests in sectors that have a significant positive impact on sustainable social wellbeing. The Fund typically invests in companies that develop health and wellbeing services, solutions related to the availability of education, financing and digital services, the circular economy, sustainable traffic and infrastructure solutions, the availability of apartments, improved nutrition, and sustainable agriculture, for example. Companies that are in line with the Fund's sustainable investment goals also include companies which are exemplary employers in terms of selected social questions, such as companies listed as the best places to work in global comparisons, and which otherwise pass OP's sustainable investment analysis.
Those investment options whose business promotes one or more UN Sustainable Development Goals (SDG) without harming other sustainable factors or goals are considered sustainable investments. Sustainable investments are determined using OP Asset Management’s analysis model based on SDG and EU Taxonomy alignment data and green revenues data by external service providers, among other sources. The analysis model used by OP Asset Management is also supplemented by manual analysis used to identify the best-in-class social impact of companies.
Exclusion: The Fund excludes from its active direct investments controversial weapon manufacturers, mining companies producing thermal coal, power companies using thermal coal, tobacco companies, and companies that have breached international standards, and where engagement has been unsuccessful. The list of exclusions is public. In addition to general exclusion rules, the Fund does not invest in companies whose principal business is in unconventional oil and gas extraction or other fossil fuels (50% of revenue or more).
Violations of international standards: The Fund is screened regularly for non-compliances with international standards. In the event that a non-compliance is detected, an influencing process is begun with the company in question. The aim is to make non-compliant companies change their practices and begin to comply with international standards in their operations. If influencing proves fruitless, the company may be removed from the Fund portfolio and placed on the exclusion list.
Shareholders’ meetings: The Fund votes at shareholders’ meetings through a service provider in line with OP Fund Management Company Ltd’s shareholder engagement principles that take responsibility aspects into account.
Methods for assessing good governance practices: Analysing the target company’s governance is an important part of the sustainable investment process, and analysis of good governance is part of OP Asset Management's sustainable investment assessment model. For us, good governance is a key foundation for any company’s financial success, regardless of sector. To identify controversies, all companies are screened regularly for international standard violations. This ensures the detection of serious controversies related to governance identified in the external service provider's analysis. If a controversy is detected in the investee company, investing is possible only if an influencing dialogue is launched. If influencing is unsuccessful or impossible, the company is excluded from the investment universe. In assessing the governance of investee companies, the analysis examines the appropriateness of the company's governing structures and general risk management related to ESG factors. In our view, the company's ability to manage ESG risks also provides a comprehensive view of the company's level of governance. Our assessment of sustainable investment in terms of governance includes an estimate of the investee company's actions related to employees and practices concerning remuneration and taxation. In assessing good governance, we use an external service provider’s analysis and our own qualitative analysis if no external data is available. We screen the funds regularly to check them against the criteria of good governance. Minimum limits apply for these criteria.
The Fund invests its assets broadly in the global equity markets. It may invest both in developed and emerging equity markets, with the typical focus on Europe and the USA.
Sustainable investment: the Fund invests in sectors that have a significant positive impact on sustainable social wellbeing. The Fund typically invests in companies that develop health and wellbeing services, solutions related to the availability of education, financing and digital services, the circular economy, sustainable traffic and infrastructure solutions, the availability of apartments, improved nutrition, and sustainable agriculture, for example. Companies that are in line with the Fund's sustainable investment goals also include companies which are exemplary employers in terms of selected social questions, such as companies listed as the best places to work in global comparisons, and which otherwise pass OP's sustainable investment analysis.
Investee companies are screened using OP Asset Management’s analysis model, which is based on an external service provider’s SDG and sustainability data. Companies whose business promotes one or more UN Sustainable Development Goals (SDG) without harming other sustainable factors or goals are considered sustainable investments.
Exclusion: The Fund excludes from its active direct investments controversial weapon manufacturers, mining companies producing thermal coal, power companies using thermal coal, tobacco companies, and companies that have breached international standards, and where engagement has been unsuccessful. The list of exclusions is public. In addition to general exclusion rules, the Fund does not invest in companies whose principal business is in unconventional oil and gas extraction or other fossil fuels (50% of revenue or more).
Violations of international standards: The Fund is screened regularly for non-compliances with international standards. In the event that a non-compliance is detected, an influencing process is begun with the company in question. The aim is to make non-compliant companies change their practices and begin to comply with international standards in their operations. If influencing proves fruitless, the company may be removed from the Fund portfolio and placed on the exclusion list.
Shareholders’ meetings: The Fund votes at shareholders’ meetings through a service provider in line with OP Fund Management Company Ltd’s shareholder engagement principles that take responsibility aspects into account.
Methods for assessing good governance practices: Analysing the target company’s governance is an important part of the investment process. For us, good governance is a key foundation for any company’s financial success, regardless of sector. When assessing governance, some of the areas considered include the appropriateness of the target company’s administrative organisation, the target company’s actions in relation to its personnel, and the target company’s rewarding and taxation practices. In assessing good governance, we use an external service provider’s analysis and our own qualitative analysis if no external data is available. We screen the funds regularly to check them against the criteria of good governance. Minimum limits apply for these criteria.
The Fund engages exclusively in sustainable investments. If necessary, the Fund may also invest its assets in exchange traded derivatives and OTC derivative contracts in order to hedge against the risk of adverse market movements, to replace direct investments and to otherwise promote effective portfolio management. However, the share of sustainable investments is always at least 75%.
The portfolio manager regularly monitors the sustainability criteria of the Fund's investments. All the Fund's investee companies must engage in activities that support sustainable wellbeing for people and societies, while accounting for the environmental impact of the investments’ business operations, such as climate goals. Sustainability indicators include the share of services and goods producing social wellbeing solutions as a proportion of the company's total revenue and/or the company's success as an employer in a given social issue.
Revenue is assessed using indicators by an external service provider regarding the percentage of the company's revenue that is in line with the UN Sustainable Development Goals (SDG). In addition, revenue is assessed based on various lines of business classifications and with the aid of a thematic analysis by an external service provider.
The company's success as an employer in social issues is measured by the company's placement in publicly available global comparisons/rankings, for example, if the company is ranked as ""best employer"" or has the ""best diversity"", etc.
Portfolio managers also have access to the Fund's ESG analysis, which lists the fund's social, environmental and governance scores, among other information. Fund-specific ESG indicators on top-level social and environmental characteristics related to the Fund are reported on a monthly basis.
Investments are regularly screened by ESG specialists for principal adverse impacts (PAI), exclusion criteria and international standard violations.
The internal model developed by OP Asset Management for defining sustainable investments provides relevant company-specific ESG data and gives an estimate of the company's sustainability. Those investment options whose business promotes one or more UN Sustainable Development Goals (SDG) without harming other sustainable factors or goals are considered sustainable investments. To be sustainable, the company must also be well governed. The Fund’s proportion of sustainable investments is reported annually in periodic reports, in addition to which portfolio management has access to data updated on a monthly basis on the share of sustainable investments of the Fund’s portfolio.
To identify companies that excel in social and equality issues, a scoring model has been developed that examines factors such as the company's placement in various employer ranking lists.
Negative screening is used to limit and exclude certain sectors and operations from the Fund’s investments. The Fund excludes from its active direct investments controversial weapon manufacturers, mining companies producing thermal coal, power companies using thermal coal, tobacco companies, and companies that have breached international standards and where engagement has been unsuccessful. The list of exclusions is public. In addition to general exclusion rules, the Fund does not invest in companies whose principal business is in unconventional oil and gas extraction or other fossil fuels (50% of revenue or more).
The Fund’s investments are also screened regularly for violations of international standards using an external service provider’s analysis. If a standard violation is detected, the preferred option is to influence the company’s behaviour. If that is impossible or unsuccessful, the company may be removed from the Fund portfolio and placed on the list of exclusions. Identified standard violations and their related engagement processes are reported twice a year in connection with shareholder engagement reporting.
In addition to ESG tools applied to the investee companies, portfolio managers have access to fund-specific reports on ESG issues at the portfolio level.
The Fund votes at shareholders’ meetings in line with OP Fund Management Company Ltd’s shareholder engagement principles that take responsibility aspects into account. Attendance at meetings is based on the company’s share of the Fund’s investments. Attendance at shareholders’ meetings and the Fund’s votes are reported twice a year in connection with shareholder engagement reporting.
OP Asset Management uses several data sources from different service providers. Primary data sources are MSCI ESG Research and S&P Trucost, which provide information on topics such as the sustainability risks of investee companies, share of business operations with adverse impacts, climate risks and opportunities, and how the operations of investee companies align with UN Sustainable Development Goals. The service providers use both data reported by companies and estimates based on an assessment model developed by each service provider.
In shareholder meeting votes, we use data and company research by ISS ESG.
The service providers we use have detailed and appropriate processes in place for ensuring data quality and correcting inaccuracies in the data.
When selecting new data packages and service providers, we carefully compare and analyse the data quality, coverage, methodology and reliability of each service provider. We regularly monitor trends in ESG data and service providers on the market to ensure the best possible data to support our investment decisions and client reporting.
Data sources are utilised either directly based on metrics or analysis by the service provider as well as by combining different metrics and using them for internal analyses and assessments by OP Asset Management. A part of the data is imported directly to OP Asset Management’s database, from which it can be used in internal analysis models and reports. Data is also used directly from interfaces offered by the service providers.
The share of data that is assessed depends on sustainability indicators and the sustainability factor under scrutiny, and it is not possible to give a universal definition of the share of assessed data of all ESG data. It is difficult to determine what portion of ESG data are based on reported information and estimates, respectively. In cases where reported data is available, it is used as the primary source. Third-party service providers must specify for each metric whether the data is reported by companies themselves or estimated using the provider’s internal model.
At the moment, ESG data is not fully standardised, and investee companies do not report on the data widely. This makes it challenging to compare investee companies. Service providers may use different methods for compiling, evaluating and analysing data. For these reasons, we carefully review the methodologies of service providers to ensure their suitability for our purposes.
We use several different service providers to enable us to assess certain metrics from multiple sources and plug any gaps in data.
The Fund's sustainable investment model is automated, and the manual analysis process is limited in scope in writing and carried out by the portfolio manager in writing. Sustainable investments are screened and reported regularly. The Fund is also subject to exclusion criteria and screened for international standard violations as described above in part (d) Investment strategy. A party independent of portfolio management oversees that the Fund complies with the criteria. The Fund’s material exclusion criteria are implemented in the trading system.
OP is an active shareholder through its funds by voting in Finnish and international shareholders’ meetings, engaging in direct dialogue with companies and supporting joint initiatives by investors. OP's funds comply with the principles of shareholder engagement that take into account OP Fund Management Company Ltd’s ESG perspectives. These principles and the latest report on the implementation of shareholder engagement principles are available at op.fi/responsible-investing. Participation in general meetings of foreign companies takes place in markets where participation is cost-effective, taking into account their proportion of the Fund’s investments.
This Fund participates in the shareholder meetings of listed companies in accordance with OP Fund Management Company’s principles of shareholder engagement. A detailed list of attended meetings and actions taken and decisions adopted at the meetings can be found at op.fi/responsible-investing. By 2025, OP Asset Management’s climate-related shareholder engagement will cover 70% of financed emissions, as measured by direct equity and bond investments by OP funds in high climate risk sectors (NACE categories A-H and J-L). In practice, shareholder engagement in these companies involves either voting at shareholders’ meetings, direct dialogue or joint initiatives by investors. In addition, the Fund is involved in shareholder engagement more broadly where necessary, such as in relation to good governance, responsible tax practice or business ethics.
All the Fund's underlying investments must be sustainable in accordance with the criteria set by OP Asset Management. The portfolio manager regularly monitors the sustainability criteria of the Fund's investments. All the Fund's investee companies must engage in activities that support sustainable wellbeing for people and societies, while accounting for the environmental impact of the investments’ business operations, such as climate goals. Sustainability indicators include the share of services and goods producing social wellbeing solutions as a proportion of the company's total revenue and/or the company's success as an employer in a given social issue.
In addition, the Fund is committed to the climate targets of OP Asset Management and even though these do not constitute the Fund's main investment goal, climate targets are binding on all funds managed by OP Asset Management.
Data published on 16 November 2023
ISIN: FI4000561311
Updated:
Summary
No sustainable investment objective
Environmental or social characteristics of the finance product
Investment strategy
Share of investments
Monitoring of environmental or social characteristics
Methods
Data sources and data processing
Limitations of the methodology and data
Due diligence
Shareholder engagement policy
Designated reference benchmark
The Fund promotes environmental and social characteristics and, to ensure it, uses environmental, social and governance (ESG) analysis and excludes certain investments. The Fund does not place emphasis on or prioritise any single theme or sustainability factor, but takes sustainability factors broadly into account by focusing on environmental and social risks, opportunities and impacts relevant for each sector and investee company.
To the extent that the Fund engages in sustainable investment, in other words investing in financial activities that promote either environmental or social objectives, steps are taken to ensure that these sustainable investments do not cause significant harm to any sustainable investment objective.
Principal adverse impacts (PAI) on sustainability are regularly analysed by screening all investments for their PAI indicators. If screening reveals investee companies with significant principal adverse impacts on sustainability in comparison to its peers and if the said PAI indicator is deemed essential for the investee company, the investee company will be monitored more closely and excluded, if necessary. Also, a process to influence the company’s behaviour can be started.
OP Asset Management uses several data sources from different service providers. Primary data sources are MSCI ESG Research and S&P Trucost, which provide information on topics such as the sustainability risks of investee companies, share of business operations with adverse impacts, climate risks and opportunities, and how the operations of investee companies align with UN Sustainable Development Goals. The service providers use both data reported by companies and estimates based on an assessment model developed by each service provider.
This financial product promotes environmental or social characteristics, but sustainable investment is not its primary objective.
To the extent that the Fund engages in sustainable investment, in other words investing in financial activities that promote either environmental or social objectives, steps are taken to ensure that these sustainable investments do not cause significant harm to any sustainable investment objective.
Principal adverse impacts (PAI) on sustainability are regularly analysed by screening all investments for their PAI indicators. If screening reveals investee companies with significant principal adverse impacts on sustainability in comparison to its peers and if the said PAI indicator is deemed essential for the investee company, the investee company will be monitored more closely and excluded, if necessary. Also, a process to influence the company’s behaviour can be started.
More information about how we take adverse sustainability impacts into account can be found in the document “Consideration of Principal Adverse Sustainability Impacts in Investing and Insurance Operations (in Finnish)”, which is available online at op.fi. The OP Asset Management’s sustainable investment analysis model is used to check whether a company has violated international standards (UN Global Compact and OECD guidelines for multinationals). If a violation is identified, the company cannot be determined as a sustainable investment. The definition of international standard violations and company-specific analysis is based on the methodology of a third-party service provider.
The Fund does not place emphasis on or prioritise any single theme or sustainability factor, but takes sustainability factors broadly into account by focusing on environmental and social risks, opportunities and impacts relevant for each sector and investee company.
The Fund promotes environmental and social characteristics and, to ensure it, uses environmental, social and governance (ESG) analysis and excludes certain investments.
Exclusion: The Fund excludes from its active direct investments controversial weapon manufacturers, mining companies producing thermal coal, power companies using thermal coal, tobacco companies, and companies that have breached international standards and where engagement has been unsuccessful. The list of exclusions is public. In addition to general exclusion rules, the Fund does not invest in companies whose principal business is in unconventional oil and gas extraction, alcohol, gambling, weapons, adult entertainment or nuclear power.
Use of ESG data in the investment analysis: the Fund uses the best-in-class method based on an ESG rating by a third-party service provider. Only companies that are among the best in their sector in terms of ESG issues are selected for inclusion in the Fund.
Violations of international standards: The Fund is screened regularly for non-compliances with international standards. In the event that a non-compliance is detected, an influencing process is begun with the company in question. The aim is to make non-compliant companies change their practices and begin to comply with international standards in their operations. If influencing proves fruitless, the company may be removed from the Fund portfolio and placed on the exclusion list.
Minimum share of sustainable investments: In accordance with the minimum amount stated below, the Fund allocates investments into companies whose business promotes one or more UN Sustainable Development Goals (SDG) without harming other sustainability factors or objectives. Sustainable investments are determined using OP Asset Management’s analysis model which is based on an external service provider’s SDG and sustainability data.
Shareholders’ meetings: The Fund votes in shareholders’ meetings through a service provider in line with OP Fund Management Company Ltd’s shareholder engagement principles that take responsibility aspects into account.
Methods for assessing good governance practices: Analysing the target company’s governance is an important part of the investment process. To us, good governance is a key foundation for any company’s financial success, regardless of sector. When assessing governance, some of the areas considered include the appropriateness of the target company’s administrative organisation, the target company’s actions in relation to its personnel, and the target company’s rewarding and taxation practices. In assessing good governance, we use an external service provider’s analysis and our own qualitative analysis if no external data is available. We screen the funds regularly to check them against the criteria of good governance. Minimum limits apply for these criteria.
Investments that promote ESG characteristics: 90%, of which 20% are sustainable investments. Of the sustainable investments, 3% align with EU taxonomy.
Currently, only few investment options in line with the EU Taxonomy are available, and there is a limited amount of reported information on compliance with the EU Taxonomy. Until reported data is available, we will use information based on estimates by a third-party service provider on alignment with EU taxonomy.
Others: the Fund may also invest its assets in exchange traded derivatives and OTC derivative contracts in order to hedge against the risk of adverse market movements, to replace direct investments and to otherwise promote effective portfolio management. Sustainability data might not be available for possible derivatives.
Portfolio managers have access to the Fund’s ESG analysis, which indicates, among other things, the weighted ESG rating, carbon intensity and share of green business of the portfolio.
Investments are regularly screened by ESG specialists for principal adverse impacts (PAI), exclusion criteria and international standard violations.
Fund-specific ESG indicators on environmental and social characteristics are reported on a monthly basis.
Negative screening is used to limit and exclude certain sectors and operations from the Fund’s investments.
Products and services hazardous to health or causing addition: The Fund does not invest in products or services that are hazardous to health or cause addiction. This category includes alcohol and tobacco production, and gambling companies.
Other social and societal topics: the Fund does not invest in the manufacture of weapons, adult entertainment production and activities that violate UN Global Compact, such as child labour and corruption.
Environment: the Fund excludes producers and users of fossil energy and nuclear power producers.
The Fund’s investments are also screened regularly for violations of international standards using an external service provider’s analysis. If a standard violation is detected, the preferred option is to influence the company’s behaviour. If that is impossible or unsuccessful, the company may be removed from the Fund portfolio and placed on the list of exclusions. Identified standard violations and their related engagement processes are reported twice a year in connection with shareholder engagement reporting.
The Fund applies the best-in-class method using data by a third-party ESG service provider.
The internal model developed by OP Asset Management for defining sustainable investments also provides relevant company-specific ESG data and gives an estimate of the company’s sustainability. Those investment options whose business promotes one or more UN Sustainable Development Goals (SDG) without harming other sustainable factors or goals are considered sustainable investments. The Fund’s proportion of sustainable investments is reported annually in periodic reports, in addition to which portfolio management has access to data updated on a monthly basis on the share of sustainable investments of the Fund’s portfolio.
In addition to ESG tools applied to the investee companies, portfolio managers have access to fund-specific reports on ESG issues at the portfolio level. The reports allow portfolio managers to view the Fund’s weighted ESG rating, carbon intensity and share of green business, among other data. These values are also presented in comparison to benchmark indexes.
The Fund votes in shareholders’ meetings in line with OP Fund Management Company Ltd’s shareholder engagement principles that take responsibility aspects into account. Attendance at meetings is based on the company’s share of the Fund’s investments. Attendance at shareholders’ meetings and the Fund’s votes are reported twice a year in connection with shareholder engagement reporting.
OP Asset Management uses several data sources from different service providers. Primary data sources are MSCI ESG Research and S&P Trucost, which provide information on topics such as the sustainability risks of investee companies, share of business operations with adverse impacts, climate risks and opportunities, and how the operations of investee companies align with UN Sustainable Development Goals. The service providers use both data reported by companies and estimates based on an assessment model developed by each service provider. In shareholder meeting votes, we use data and company research by ISS ESG. The service providers we use have detailed and appropriate processes in place for ensuring data quality and correcting inaccuracies in the data. When selecting new data packages and service providers, we carefully compare and analyse the data quality, coverage, methodology and reliability of each service provider. We regularly monitor trends in ESG data and service providers on the market to ensure the best possible data to support our investment decisions and client reporting.
Data sources are utilised either directly based on metrics or analysis by the service provider as well as by combining different metrics and using them for internal analyses and assessments by OP Asset Management. A part of the data is imported directly to OP Asset Management’s database, from which it can be used in internal analysis models and reports. Data is also used directly from interfaces offered by the service providers. The share of data that is assessed depends on sustainability indicators and the sustainability factor under scrutiny, and it is not possible to give a universal definition of the share of assessed data of all ESG data. It is difficult to determine what portion of ESG data are based on reported information and estimates, respectively. In cases where reported data is available, it is used as the primary source. Third-party service providers must specify for each metric whether the data is reported by companies themselves or estimated using the provider’s internal model.
At the moment, ESG data is not fully standardised, and investee companies do not report on the data widely. This makes it challenging to compare investee companies. Service providers may use different methods for compiling, evaluating and analysing data. For these reasons, we carefully review the methodologies of service providers to ensure their suitability for our purposes. We use several different service providers to enable us to assess certain metrics from multiple sources and fill any gaps in data.
The Fund is subject to exclusion criteria and is screened for international standard violations as described above in part (d) Investment strategy. A party independent of portfolio management oversees that the Fund complies with the criteria. The Fund’s material exclusion criteria are implemented in the trading system.
OP is an active shareholder through its funds by voting in Finnish and international shareholders’ meetings, engaging in direct dialogue with companies and supporting joint initiatives by investors. OP's funds comply with the principles of shareholder engagement that take into account OP Fund Management Company Ltd’s ESG perspectives. These principles and the latest report on the implementation of shareholder engagement principles are available at op.fi/responsible-investing. Participation in general meetings of foreign companies takes place in markets where participation is cost-effective, taking into account their proportion of the Fund’s investments.
This Fund participates in the shareholder meetings of listed companies in accordance with OP Fund Management Company’s principles of shareholder engagement. A detailed list of attended meetings and actions taken and decisions adopted at the meetings can be found at op.fi/responsible-investing. By 2025, OP Asset Management’s climate-related shareholder engagement will cover 70% of financed emissions, as measured by direct equity and bond investments by OP funds in high climate risk sectors (NACE categories A-H and J-L). In practice, shareholder engagement in these companies involves either voting at shareholders’ meetings, direct dialogue or joint initiatives by investors. In addition, the Fund is involved in shareholder engagement more broadly where necessary, such as in relation to good governance, responsible tax practice or business ethics.
The Fund’s benchmark index is not applied to the performance of environmental or social characteristics promoted by the Fund.
Data published on 1 January 2023
ISIN: FI4000210539
Summary
No sustainable investment objective
Environmental or social characteristics of the finance product
Investment strategy
Share of investments
Monitoring of environmental or social characteristics
Methods
Data sources and data processing
Limitations of the methodology and data
Due diligence
Shareholder engagement policy
Designated reference benchmark
The Fund promotes environmental and social characteristics using environmental, social and governance (ESG) analysis while excluding certain investments. The Fund does not emphasise or prioritise any single theme or sustainability factor, but takes sustainability factors broadly into account by focusing on environmental and social risks, opportunities and impacts relevant for each sector and investee company. To the extent that the Fund investis in financial activities that promote either environmental or social objectives, steps are taken to ensure that these sustainable investments do not cause significant harm to any sustainable investment objective. OP Asset Management uses several data sources from different service providers. Primary data sources are MSCI ESG Research and S&P Trucost, which provide information on topics such as the sustainability risks of investee companies, share of business operations with adverse impacts, climate risks and opportunities, and how the operations of investee companies align with UN Sustainable Development Goals. The service providers use both data reported by companies and estimates based on an assessment model developed by each service provider. Principal adverse impacts (PAI) on sustainability are regularly analysed by screening all investments for their PAI indicators. If screening reveals investee companies with significant principal adverse impacts on sustainability in comparison to its peers and if the said PAI indicator is deemed essential for the investee company, the investee company will be monitored more closely and excluded, if necessary. Also, a process to influence the company’s behaviour can be started.
This finance product promotes environmental or social characteristics, but sustainable investment is not its primary objective.
To the extent that the Fund invests in financial activities that promote either environmental or social objectives, steps are taken to ensure that these sustainable investments do not cause significant harm to any sustainable investment objective.
Principal adverse impacts (PAI) on sustainability are regularly analysed by screening all investments for their PAI indicators. If screening reveals investee companies with significant principal adverse impacts on sustainability in comparison to its peers and if the said PAI indicator is deemed essential for the investee company, the investee company will be monitored more closely and excluded, if necessary. Also, a process to influence the company’s behaviour can be started.
More information about how we take adverse sustainability impacts into account can be found in the document “Consideration of Principal Adverse Sustainability Impacts in Investing and Insurance Operations (in Finnish)”, which is available online at op.fi.
The OP Asset Management’s sustainable investment analysis model is used to check whether a company has violated international standards (UN Global Compact and OECD guidelines for multinationals). If a violation is identified, the company cannot be determined as a sustainable investment. The definition of international standard violations and company-specific analysis is based on the methodology of a third-party service provider.
The Fund does not emphasise or prioritise any single theme or sustainability factor, but takes sustainability factors broadly into account by focusing on environmental and social risks, opportunities and impacts relevant for each sector and investee company. In government bond investments, the Fund does not place emphasis on or prioritise any single theme or sustainability factor, but takes sustainability factors into account from the perspective of factors that are generally significant to countries.
The Fund promotes environmental and social characteristics and, to ensure it, uses environmental, social and governance (ESG) analysis and excludes certain investments.
Exclusion: The Fund excludes from its active direct investments controversial weapon manufacturers, mining companies producing thermal coal, power companies using thermal coal, tobacco companies, and companies that have breached international standards and where engagement has been unsuccessful. The list of exclusions is public. In addition to general exclusion rules, the Fund does not invest in companies whose principal business is in unconventional oil and gas extraction.
Use of ESG data in the analysis of investments: ESG factors are considered in the investment process with the help of data by an external ESG service provider and the ESG tool developed internally by OP Asset Management. Considering ESG factors in the investment process means, for example, that the risks and opportunities related to the environment, society and governance are made transparent using selected indicators from each area.
Violations of international standards: The Fund is screened regularly for non-compliances with international standards. In the event that a non-compliance is detected, an influencing process is begun with the company in question. The aim is to make non-compliant companies change their practices and begin to comply with international standards in their operations. If influencing proves fruitless, the company may be removed from the Fund portfolio and placed on the exclusion list.
Minimum proportion of sustainable investments: In accordance with the minimum amount stated below, the Fund allocates investments into companies whose business promotes one or more UN Sustainable Development Goals (SDG) without harming other sustainability factors or objectives. Sustainable investments are determined using OP Asset Management’s analysis model which is based on an external service provider’s SDG and sustainability data.
Methods for assessing good governance practices: Analysing the target company’s governance is an important part of the investment process. To us, good governance is a key foundation for any company’s financial success, regardless of sector. When assessing governance, some of the areas considered include the appropriateness of the target company’s administrative organisation, the target company’s actions in relation to its personnel, and the target company’s rewarding and taxation practices. In assessing good governance, we use the analysis of third-party service providers and our own qualitative analysis if no external data is available. We screen the funds regularly to check them against the criteria of good governance. Minimum limits apply for these criteria.
Investments that promote ESG characteristics: 80%, of which 5% are sustainable investments.
Portfolio managers have access to the Fund’s ESG analysis, which indicates, among other things, the weighted ESG rating of investee companies, carbon intensity and share of green business of the portfolio. Portfolio managers also have access to comprehensive company-specific and country-related ESG data with which they can monitor the level of sustainability of investee companies and countries.
Investments are regularly screened by ESG specialists for principal adverse impacts (PAI), exclusion criteria and international standard violations.
Fund-specific ESG indicators on environmental and social characteristics are reported on a monthly basis.
Sectors with adverse impacts to the environment and society defined by OP Asset Management are excluded from the Fund. In addition, countries on the Financial Action Task Force (FATF) list of High-Risk Jurisdictions subject to a Call for Action and countries subject to European Union sanctions on the Import, Export and Procurement of arms are excluded from the Fund’s investments in government bonds. The enforcement of exclusions is monitored regularly by calculating the Fund’s exposure to controversial and harmful operations and by screening the Fund using the criteria in the exclusion list.
The Fund’s investments are also screened regularly for violations of international standards using an external service provider’s analysis. If a standard violation is detected, the preferred option is to influence the company’s behaviour. If that is impossible or unsuccessful, the company may be removed from the Fund portfolio and placed on the list of exclusions. Identified standard violations and their related engagement processes are reported twice a year in connection with shareholder engagement reporting.
ESG factors are considered in the investment process by using, where available, data by a third-party ESG service provider and an internally developed model for ensuring good governance practices.
To the extent that the Fund makes sustainable investments, the internal model developed by OP Asset Management is used for defining sustainable investments. Those investment options whose business promotes one or more UN Sustainable Development Goals (SDG) without harming other sustainable factors or goals are considered sustainable investments. The Fund’s proportion of sustainable investments is reported annually in periodic reports, in addition to which portfolio management has access to data updated on a monthly basis on the share of sustainable investments of the Fund’s portfolio.
As an environmental indicator for government bond investments, the Fund monitors countries’ greenhouse gas emissions, and various social indicators provide information on income gaps, corruption and fundamental rights.
In addition to ESG tools applied to the investee companies, portfolio managers have access to fund-specific reports on ESG issues related to investments in companies at the portfolio level. The reports allow portfolio managers to view the Fund’s weighted ESG rating, carbon intensity and share of green business, among other data. These values are also presented in comparison to benchmark indexes.
OP Asset Management uses several data sources from different service providers. In corporate bond investments, the primary data sources are MSCI ESG Research and S&P Trucost, which provide information on topics such as the sustainability risks of investee companies, share of business operations with adverse impacts, climate risks and opportunities, and how the operations of investee companies align with UN Sustainable Development Goals. The service providers use both data reported by companies and estimates based on an assessment model developed by each service provider. In government bond investments, a valuable source of data is MSCI ESG Research.
We also use materiality analyses by SASB and Bloomberg data on investee companies, based on which we have developed our own analysis model for investigating investee companies’ current level of sustainability and likely future performance.
The Fund also has access to Moody’s analyses on the ESG factors of investee companies and their impact on the company’s credit risk. In addition, the Fund uses ESG analysis on the ESG risks and opportunities of companies and other factors by Lucror Analytics.
The service providers we use have detailed and appropriate processes in place for ensuring data quality and correcting inaccuracies in the data.
When selecting new data packages and service providers, we carefully compare and analyse the data quality, coverage, methodology and reliability of each service provider. We regularly monitor trends in ESG data and service providers on the market to ensure the best possible data to support our investment decisions and client reporting.
Data sources are utilised either directly based on metrics or analysis by the service provider as well as by combining different metrics and using them for internal analyses and assessments by OP Asset Management. A part of the data is imported directly to OP Asset Management’s database, from which it can be used in internal analysis models and reports. Data is also used directly from interfaces offered by the service providers.
The share of data that is assessed depends on sustainability indicators and the sustainability factor under scrutiny, and it is not possible to give a universal definition of the share of assessed data of all ESG data. It is difficult to determine what portion of ESG data are based on reported information and estimates, respectively. In cases where reported data is available, it is used as the primary source. Third-party service providers must specify for each metric whether the data is reported by companies themselves or estimated using the provider’s internal model.
At the moment, ESG data is not fully standardised, and investee companies do not report on the data widely. This makes it challenging to compare investee companies. Service providers may use different methods for compiling, evaluating and analysing data. For these reasons, we carefully review the methodologies of service providers to ensure their suitability for our purposes.
The availability of ESG data is particularly challenging for companies with a High Yield credit rating, for several reasons. The companies may be smaller in size or not publicly listed. For this reason, several data sources must be used.
We also use several different service providers to enable us to assess certain metrics from multiple sources and fill any gaps in data.
The Fund is subject to exclusion criteria and is screened for international standard violations as described above in part (d) Investment strategy. A party independent of portfolio management oversees that the Fund complies with the criteria. The Fund’s material exclusion criteria are implemented in the trading system.
OP is an active shareholder through its funds by voting in Finnish and international shareholders’ meetings, engaging in direct dialogue with companies and supporting joint initiatives by investors. OP's funds comply with the principles of shareholder engagement that take into account OP Fund Management Company Ltd’s ESG perspectives. These principles and the latest report on the implementation of shareholder engagement principles are available at https://www.op.fi/responsible-investing. Participation in general meetings of foreign companies takes place in markets where participation is cost-effective, taking into account their proportion of the Fund’s investments.
By 2025, OP Asset Management’s climate-related shareholder engagement will cover 70% of financed emissions, as measured by direct equity and bond investments by OP funds in high climate risk sectors (NACE categories A-H and J-L). In practice, shareholder engagement in these companies involves either voting at shareholders’ meetings, direct dialogue or joint initiatives by investors. In addition, the Fund is involved in shareholder engagement more broadly where necessary, such as in relation to good governance, responsible tax practice or business ethics.
The Fund’s benchmark index is not applied to the performance of environmental or social characteristics promoted by the Fund.
Data published on 1 January 2023
ISIN: FI0008800248
Summary
No sustainable investment objective
Environmental or social characteristics of the finance product
Investment strategy
Share of investments
Monitoring of environmental or social characteristics
Methods
Data sources and data processing
Limitations of the methodology and data
Due diligence
Shareholder engagement policy
Designated reference benchmark
The Fund promotes environmental and social characteristics using environmental, social and governance (ESG) analysis while excluding certain investments. The Fund does not emphasise or prioritise any single theme or sustainability factor, but takes sustainability factors broadly into account by focusing on environmental and social risks, opportunities and impacts relevant for each sector and investee company. To the extent that the Fund investis in financial activities that promote either environmental or social objectives, steps are taken to ensure that these sustainable investments do not cause significant harm to any sustainable investment objective. OP Asset Management uses several data sources from different service providers. Primary data sources are MSCI ESG Research and S&P Trucost, which provide information on topics such as the sustainability risks of investee companies, share of business operations with adverse impacts, climate risks and opportunities, and how the operations of investee companies align with UN Sustainable Development Goals. The service providers use both data reported by companies and estimates based on an assessment model developed by each service provider. Principal adverse impacts (PAI) on sustainability are regularly analysed by screening all investments for their PAI indicators. If screening reveals investee companies with significant principal adverse impacts on sustainability in comparison to its peers and if the said PAI indicator is deemed essential for the investee company, the investee company will be monitored more closely and excluded, if necessary. Also, a process to influence the company’s behaviour can be started.
This finance product promotes environmental or social characteristics, but sustainable investment is not its primary objective.
To the extent that the Fund invests in financial activities that promote either environmental or social objectives, steps are taken to ensure that these sustainable investments do not cause significant harm to any sustainable investment objective.
Principal adverse impacts (PAI) on sustainability are regularly analysed by screening all investments for their PAI indicators. If screening reveals investee companies with significant principal adverse impacts on sustainability in comparison to its peers and if the said PAI indicator is deemed essential for the investee company, the investee company will be monitored more closely and excluded, if necessary. Also, a process to influence the company’s behaviour can be started.
More information about how we take adverse sustainability impacts into account can be found in the document “Consideration of Principal Adverse Sustainability Impacts in Investing and Insurance Operations (in Finnish)”, which is available online at op.fi.
The OP Asset Management’s sustainable investment analysis model is used to check whether a company has violated international standards (UN Global Compact and OECD guidelines for multinationals). If a violation is identified, the company cannot be determined as a sustainable investment. The definition of international standard violations and company-specific analysis is based on the methodology of a third-party service provider.
The Fund does not emphasise or prioritise any single theme or sustainability factor, but takes sustainability factors broadly into account by focusing on environmental and social risks, opportunities and impacts relevant for each sector and investee company
The Fund promotes environmental and social characteristics and, to ensure it, uses environmental, social and governance (ESG) analysis and excludes certain investments.
Exclusion: The Fund excludes from its active direct investments controversial weapon manufacturers, mining companies producing thermal coal, power companies using thermal coal, tobacco companies, and companies that have breached international standards and where engagement has been unsuccessful. The list of exclusions is public. In addition to general exclusion rules, the Fund does not invest in companies whose principal business is in unconventional oil and gas extraction.
Use of ESG data in the investment analysis: ESG factors are considered in the investment process with the help of data by an external ESG service provider and the ESG tool developed internally by OP Asset Management. Considering ESG factors in the investment process means, for example, that the risks and opportunities related to the environment, society and governance are made transparent using selected indicators from each area.
Violations of international standards: The Fund is screened regularly for non-compliances with international standards. In the event that a non-compliance is detected, an influencing process is begun with the company in question. The aim is to make non-compliant companies change their practices and begin to comply with international standards in their operations. If influencing proves fruitless, the company may be removed from the Fund portfolio and placed on the exclusion list.
Minimum share of sustainable investments: In accordance with the minimum amount stated below, the Fund allocates investments into companies whose business promotes one or more UN Sustainable Development Goals (SDG) without harming other sustainability factors or objectives. Sustainable investments are determined using OP Asset Management’s analysis model which is based on an external service provider’s SDG and sustainability data.
Assessing good governance practices: Analysing the target company’s governance is an important part of the investment process. To us, good governance is a key foundation for any company’s financial success, regardless of sector. When assessing governance, some of the areas considered include the appropriateness of the target company’s administrative organisation, the target company’s actions in relation to its personnel, and the target company’s rewarding and taxation practices. In assessing good governance, we use the analysis of third-party service providers and our own qualitative analysis if no external data is available. We screen the funds regularly to check them against the criteria of good governance. Minimum limits apply for these criteria.
Investments that promote ESG characteristics: 90%, of which 10% are sustainable investments. Others: the Fund may also invest its assets in exchange traded derivatives and OTC derivative contracts in order to hedge against the risk of adverse market movements, to replace direct investments and to otherwise promote effective portfolio management. Sustainability data might not be available for possible derivatives.
The Fund might include investment options which are in line with the EU Taxonomy, but the Fund does not commit to a certain minimum number of investments in line with the EU Taxonomy. Currently, only few investment options in line with the EU Taxonomy are available, and there is a limited amount of reported information on compliance with the EU Taxonomy.
Portfolio managers have access to the Fund’s ESG analysis, which indicates, among other things, the weighted ESG rating, carbon intensity and share of green business of the portfolio. Portfolio managers also have access to comprehensive company-specific ESG data with which they can monitor the level of sustainability of investee companies.
Investments are regularly screened by ESG specialists for principal adverse impacts (PAI), exclusion criteria and international standard violations.
Fund-specific ESG indicators on environmental and social characteristics are reported on a monthly basis.
Sectors with adverse impacts to the environment and society defined by OP Asset Management are excluded from the Fund. The enforcement of exclusions is monitored regularly by calculating the Fund’s exposure to controversial and harmful operations and by screening the Fund using the criteria in the exclusion list.
The Fund’s investments are also screened regularly for violations of international standards using an external service provider’s analysis. If a standard violation is detected, the preferred option is to influence the company’s behaviour. If that is impossible or unsuccessful, the company may be removed from the Fund portfolio and placed on the list of exclusions. Identified standard violations and their related engagement processes are reported twice a year in connection with shareholder engagement reporting.
ESG factors are considered in the investment process where possible with the help of data by an external ESG service provider, the ESG tool developed internally by OP Asset Management, and the internal analysis model for assessing sustainable investments. Considering ESG factors in the investment process means, for example, that the risks and opportunities related to the environment, society and governance are made transparent using selected indicators from each area.
The internal ESG tool can be used to assess a company’s current state in relation to its peers in the sector in terms of ESG factors material for the companies as well as the company’s performance in these factors.
External ESG data can be used to examine the investee company’s targets for GHG emission reductions or current state in terms of the green transition.
The internal model developed by OP Asset Management for defining sustainable investments also provides relevant company-specific ESG data and gives an estimate of the company’s sustainability. Those investment options whose business promotes one or more UN Sustainable Development Goals (SDG) without harming other sustainable factors or goals are considered sustainable investments. The Fund’s proportion of sustainable investments is reported annually in periodic reports, in addition to which portfolio management has access to data updated on a monthly basis on the share of sustainable investments of the Fund’s portfolio.
In addition to ESG tools applied to the investee companies, portfolio managers have access to fund-specific reports on ESG issues at the portfolio level. The reports allow portfolio managers to view the Fund’s weighted ESG rating, carbon intensity and share of green business, among other data. These values are also presented in comparison to benchmark indexes.
OP Asset Management uses several data sources from different service providers. Primary data sources are MSCI ESG Research and S&P Trucost, which provide information on topics such as the sustainability risks of investee companies, share of business operations with adverse impacts, climate risks and opportunities, and how the operations of investee companies align with UN Sustainable Development Goals. The service providers use both data reported by companies and estimates based on an assessment model developed by each service provider.
We also use materiality analyses by SASB and Bloomberg data on investee companies, based on which we have developed our own analysis model for investigating investee companies’ current level of sustainability and likely future performance.
In addition, the Fund has access to Moody’s analyses on the ESG factors of investee companies and their impact on the company’s credit risk.
The service providers we use have detailed and appropriate processes in place for ensuring data quality and correcting inaccuracies in the data.
When selecting new data packages and service providers, we carefully compare and analyse the data quality, coverage, methodology and reliability of each service provider. We regularly monitor trends in ESG data and service providers on the market to ensure the best possible data to support our investment decisions and client reporting.
Data sources are utilised either directly based on metrics or analysis by the service provider as well as by combining different metrics and using them for internal analyses and assessments by OP Asset Management. A part of the data is imported directly to OP Asset Management’s database, from which it can be used in internal analysis models and reports. Data is also used directly from interfaces offered by the service providers.
The share of data that is assessed depends on sustainability indicators and the sustainability factor under scrutiny, and it is not possible to give a universal definition of the share of assessed data of all ESG data. It is difficult to determine what portion of ESG data are based on reported information and estimates, respectively. In cases where reported data is available, it is used as the primary source. Third-party service providers must specify for each metric whether the data is reported by companies themselves or estimated using the provider’s internal model.
At the moment, ESG data is not fully standardised, and investee companies do not report on the data widely. This makes it challenging to compare investee companies. Service providers may use different methods for compiling, evaluating and analysing data. For these reasons, we carefully review the methodologies of service providers to ensure their suitability for our purposes.
We use several different service providers to enable us to assess certain metrics from multiple sources and fill any gaps in data.
The Fund is subject to exclusion criteria and is screened for international standard violations as described above in part (d) Investment strategy. A party independent of portfolio management oversees that the Fund complies with the criteria. The Fund’s material exclusion criteria are implemented in the trading system.
OP is an active shareholder through its funds by voting in Finnish and international shareholders’ meetings, engaging in direct dialogue with companies and supporting joint initiatives by investors. OP's funds comply with the principles of shareholder engagement that take into account OP Fund Management Company Ltd’s ESG perspectives. These principles and the latest report on the implementation of shareholder engagement principles are available at op.fi/responsible-investing. Participation in general meetings of foreign companies takes place in markets where participation is cost-effective, taking into account their proportion of the Fund’s investments.
By 2025, OP Asset Management’s climate-related shareholder engagement will cover 70% of financed emissions, as measured by direct equity and bond investments by OP funds in high climate risk sectors (NACE categories A-H and J-L). In practice, shareholder engagement in these companies involves either voting at shareholders’ meetings, direct dialogue or joint initiatives by investors. In addition, the Fund is involved in shareholder engagement more broadly where necessary, such as in relation to good governance, responsible tax practice or business ethics.
The Fund’s benchmark index is not applied to the performance of environmental or social characteristics promoted by the Fund.
Data published on 1 January 2023
ISIN: FI4000020375
Summary
No sustainable investment objective
Environmental or social characteristics of the finance product
Investment strategy
Share of investments
Monitoring of environmental or social characteristics
Methods
Data sources and data processing
Limitations of the methodology and data
Due diligence
Shareholder engagement policy
Designated reference benchmark
The Fund is a passive index fund. It promotes environmental and social characteristics by using an index based on environmental, social and governance (ESG) analysis of ESG offences and selected controversial industries and by excluding certain investments based on this analysis. The Fund places no emphasis on, nor does it prioritise, any single theme or sustainability factor, but it takes sustainability factors into account by excluding selected industries that are controversial and harmful in terms of sustainability and by using a base index that is committed to a carbon intensity 30% lower than the parent index.
This financial product promotes environmental or social characteristics, but sustainable investment is not its primary objective.
To the extent that the Fund engages in sustainable investment by investing in financial activities that promote either environmental or social objectives, steps are taken to ensure that these sustainable investments do not cause significant harm to any sustainable investment objective.
The Fund is based on the MSCI ESG Universal Index, using both the MSCI ESG Rating and the MSCI ESG Rating Trend data. In addition, the Fund uses MSCI data on international standard violations and controversial weapons. The Fund is based on the MSCI ESG Screened Index, which uses Business Involvement Screening data by MSCI ESG Research to exclude controversial industries, data by MSCI ESG Controversies to exclude international norm violations and other very serious ESG offences, and data by MSCI Climate Change Metrics to exclude companies based on climate-related themes and carbon intensity.
This financial product promotes environmental or social characteristics, but sustainable investment is not its primary objective.
To the extent that the Fund engages in sustainable investment by investing in financial activities that promote either environmental or social objectives, steps are taken to ensure that these sustainable investments do not cause significant harm to any sustainable investment objective.
Principal adverse impacts (PAI) on sustainability are regularly analysed by screening all investments for their PAI indicators. If screening reveals investee companies with significant principal adverse impacts on sustainability in comparison to its peers and if the PAI indicator is deemed essential for the investee company, the investee company will be monitored more closely.
More information about how we take adverse sustainability impacts into account can be found in the document “Consideration of Principal Adverse Sustainability Impacts in Investing and Insurance Operations (in Finnish)”, which is available online at op.fi.
The OP Asset Management’s sustainable investment analysis model is used to check whether a company has violated international standards (UN Global Compact and OECD guidelines for multinationals). If a company violates any of the standards, it cannot be classified as a sustainable investment. The definition of international standard violations and company-specific analysis is based on the methodology of a third-party service provider.
The Fund places no emphasise on, nor does it prioritise, any single theme or sustainability factor, but it takes sustainability factors into account by excluding selected controversial industries and companies with reported serious ESG offences and by committing to a carbon intensity that is significantly lower than the parent index.
• The Fund avoids investing in controversial activities and business with adverse environmental or social impacts.
• The Fund is based on an index that is committed to a carbon intensity 30% lower than the parent index.
• The Fund seeks to directly influence its investments, for example through voting at shareholders’ meetings, in order to improve investee companies’ standard of ESG and ability to take sustainability factors into consideration.
The Fund is a passive index fund. It promotes environmental and social characteristics by using an index based on environmental, social and governance (ESG) analysis on ESG offences and certain controversial industries, and by excluding certain investments based on this analysis.
Negative screening: As the Fund is a passive index fund, the Fund manager cannot make individual exclusion decisions. The Fund is based on an index which excludes companies whose business involves the production of controversial weapons or nuclear weapons. The Fund also excludes companies whose business depends on the production of civilian arms, tobacco, palm oil, coal, and energy produced from coal or Arctic oil and gas. The index also excludes companies which have been identified by the methods used by MSCI ESG Research to be in violation of international standards (UN Global Compact and OECD guidelines for multinationals) and companies with other very serious ESG offences. A stricter policy is applied to ESG offences that affect biodiversity and offences discovered in companies' supply chains.
Use of ESG data in the analysis of investment targets: The benchmark index takes into consideration companies' exposure to controversial or harmful industries, international norm violations, and violations of global norms and other very serious ESG offences. Based on the analysis, the index excludes companies that do not meet the requirements of the universe for the MSCI ESG Screened Index. The index is also committed to a carbon intensity 30% lower than the parent index.
Shareholders’ meetings: The Fund votes in shareholders’ meetings through a service provider in line with OP Fund Management Company Ltd’s shareholder engagement principles that take responsibility aspects into account.
Assessing good governance: The Fund is based on the MSCI ESG Universal Index, using both the MSCI ESG Rating and the MSCI ESG Rating Trend data and gives weight to those companies with better ratings. The level of corporate governance is included in the ESG Rating.
Investments that promote ESG characteristics: 90%, of which 3% are sustainable investments
Others: the Fund may also invest its assets in exchange traded derivatives and OTC derivative contracts in order to hedge against the risk of adverse market movements, to replace direct investments and to otherwise promote effective portfolio management. Sustainability data might not be available for possible derivatives.
The Fund might include investment options which are in line with the EU Taxonomy, but the Fund does not commit to a certain minimum number of investments in line with the EU Taxonomy. Currently, only few investment options in line with the EU Taxonomy are available, and there is a limited amount of reported information on compliance with the EU Taxonomy.
The Fund is a passive index fund. This means that the Fund’s investments are split between the countries and companies of the benchmark index in the same proportion as in the index. Changes to the portfolio are basically only made once a year in conjunction with index adjustments.
Portfolio managers have access to the Fund’s ESG analysis, which indicates, among other things, the weighted ESG rating, carbon intensity and share of green business of the portfolio.
Fund-specific ESG indicators on top-level environmental and social characteristics related to the Fund are reported on a monthly basis.
The Fund is a passive index fund. This means that the Fund’s investments are split between the countries and companies of the benchmark index in the same proportion as in the index. Changes to the portfolio are basically only made once a year in conjunction with index adjustments.
The Fund is based on the MSCI ESG Screened Index, which excludes companies whose business involves the production of controversial weapons or nuclear weapons. The Fund also excludes companies whose revenue depends on the production of civilian arms, tobacco, palm oil, coal, and energy produced from coal or Arctic oil and gas. The index also excludes companies which have violated international standards (UN Global Compact and OECD guidelines for multinationals) and companies which have committed very severe ESG violations. A stricter policy is applied to ESG offences that affect biodiversity and offences discovered in companies' supply chains.
The base index of the Fund (MSCI ESG Screened) uses data by MSCI ESG Business Involvement Screening, MSCI ESG Controversy and MSCI Climate Change Metrics to exclude selected companies operating in controversial and harmful industries and commit to a carbon intensity 30% lower than the parent index. Data by MSCI ESG Rating Business Involvement Screening and MSCI ESG Controversy is used to assess whether companies are exposed to controversial industries and the extent of the exposure, as well as whether companies are involved in very serious ESG offences. Data by MSCI Climate Change Metrics is used to exclude companies based on climate themes and for monitoring carbon intensity.
The Fund votes at shareholders’ meetings through a service provider in line with OP Fund Management Company Ltd’s shareholder engagement principles that take responsibility aspects into account. Participation in general meetings of foreign companies takes place in markets where participation is cost-effective, taking into account their proportion of the Fund’s investments. Attendance at shareholders’ meetings and the Fund’s votes are reported twice a year in connection with shareholder engagement reporting.
The Fund is based on the MSCI ESG Screened Index, which uses Business Involvement Screening data by MSCI ESG Research to exclude controversial industries, data by MSCI ESG Controversies to exclude international norm violations and other very serious ESG offences, and data by MSCI Climate Change Metrics to exclude companies based on climate-related themes and carbon intensity.
In shareholder meeting votes, we use data and company research by ISS ESG.
The service providers we use have detailed and appropriate processes in place for ensuring data quality and correcting inaccuracies in the data.
When selecting new data packages and service providers, we carefully compare and analyse the data quality, coverage, methodology and reliability of each service provider. We regularly monitor trends in ESG data and service providers on the market to ensure the best possible data to support our investment decisions and client reporting.
The share of data that is assessed depends on sustainability indicators and the sustainability factor under scrutiny, and it is not possible to give a universal definition of the share of assessed data of all ESG data. The MSCI ESG analysis used as the basis for the data is mainly based on public information reported by companies and information from other public sources. It is difficult to determine what portion of ESG data are based on reported information and estimates, respectively. In cases where reported data is available, it is used as the primary source. Third-party service providers must specify for each metric whether the data is reported by companies themselves or estimated using the provider’s internal model.
At the moment, ESG data is not fully standardised, and investee companies do not report on the data widely. This makes it challenging to compare investee companies. Service providers may use different methods for compiling, evaluating and analysing data. For these reasons, we carefully review the methodologies of service providers to ensure their suitability for our purposes.
The Fund is subject to exclusion criteria as described above in part (d) Investment strategy. A party independent of portfolio management oversees that the Fund complies with the criteria. The Fund’s material exclusion criteria are implemented in the trading system.
OP is an active shareholder through its funds by voting in Finnish and international shareholders’ meetings, engaging in direct dialogue with companies and supporting joint initiatives by investors. OP's funds comply with the principles of shareholder engagement that take into account OP Fund Management Company Ltd’s ESG perspectives. These principles and the latest report on the implementation of shareholder engagement principles are available at https://www.op.fi/responsible-investing. Participation in general meetings of foreign companies takes place in markets where participation is cost-effective, taking into account their proportion of the Fund’s investments.
This Fund participates in the shareholder meetings of listed companies in accordance with OP Fund Management Company’s principles of shareholder engagement. A detailed list of attended meetings and actions taken and decisions adopted at the meetings can be found at https://www.op.fi/responsible-investing. By 2025, OP Asset Management’s climate-related shareholder engagement will cover 70% of financed emissions, as measured by direct equity and bond investments by OP funds in high climate risk sectors (NACE categories A-H and J-L). In practice, shareholder engagement in these companies involves either voting at shareholders’ meetings, direct dialogue or joint initiatives by investors.
The Fund is a passive index fund the assets of which are invested in accordance with the index. This means that the Fund’s investments are split between the countries and companies of the benchmark index in the same proportion as in the index. The investment strategy corresponds to the benchmark index on an ongoing basis.
The benchmark index differs from a relevant market index in that it excludes companies and industries based on the above criteria. Companies for which MSCI ESG Controversy data on ESG offences is unavailable are also excluded from the benchmark index.
Data published on 1 January 2023
ISIN: FI4000261151
Updated:24.8.2023
Summary
No principal adverse impact on a sustainable investment objective
Sustainable investment objective of the financial product
Investment strategy
Share of investments
Monitoring of sustainable investment objectives
Methods
Data sources and data processing
Limitations of the methodology and data
Due diligence
Shareholder engagement policy
Achieving a sustainable investment objective
The Fund promotes environmental and social characteristics by integrating fund level as well as fund-look-through analysis and monitoring of sustainability factors into the investment process. The Fund does not emphasise or prioritise any single theme or sustainability factor, but addresses sustainability factors widely, avoiding investments in controversial activities and business with adverse environmental or social impacts and by emphasising funds that promote environmental and/or social characteristics or aim to invest sustainably.
To the extent that the Fund engages in sustainable investment, in other words investing in financial activities that promote either environmental or social objectives, steps are taken to ensure that these sustainable investments do not cause significant harm to any sustainable investment objective. OP Asset Management uses several data sources from different service providers.
The primary data sources are Bloomberg, Morningstar, MSCI ESG Research and S&P Trucost. Data from Bloomberg and Morningstar are mainly used for fund level analyses. MSCI ESG Research and S&P Trucost provide information on topics such as the sustainability risks of investee companies, share of business operations with adverse impacts, climate risks and opportunities, and how the operations of investee companies align with the UN Sustainable Development Goals. Data from these service providers are used to the extent that the Fund invests in mutual funds managed by OP. The service providers use both data reported by the companies and estimates based on an assessment model developed by each service provider.
Regarding mutual funds managed by OP, the principal adverse impacts (PAI) on sustainability are regularly analysed by screening all investments for their PAI indicators. If the screening reveals investee companies with significant principal adverse impacts on sustainability in comparison to peers, and if the said PAI indicator is deemed essential for the investee company, the investee company will be monitored more closely and excluded, if deemed necessary. Also, a process to engage with the company can be started. For investments in funds other than OP funds, the extent to which PAI factors can be addressed depends on the availability of data, and our processes can develop as the availability and quality of data improve.
This finance product promotes environmental or social characteristics, but sustainable investment is not its primary objective.
To the extent that the Fund engages in sustainable investment, in other words investing in financial activities that promote either environmental or social objectives, steps are taken to ensure that these sustainable investments do not cause significant harm to any sustainable investment objective.
For funds managed by OP Fund Management Company, the principal adverse impacts (PAI) on sustainability are regularly analysed by screening all investments for their PAI indicators. If the screening reveals investee companies with significant principal adverse impacts on sustainability in comparison to peers, and if the said PAI indicator is deemed essential for the investee company, the investee company will be monitored more closely and excluded, if deemed necessary. Also, a process to engage with the company can be started. For investments in funds other than OP funds, the extent to which PAI factors can be addressed depends on the availability of data, and our processes can develop as the availability and quality of data improve.
More information about how we take adverse sustainability impacts into account can be found in the document ""Consideration of Principal Adverse Sustainability Impacts in Investing and Insurance Operations (in Finnish)"", which is available online at op.fi.
The OP Asset Management’s sustainable investment analysis model is used to check whether a company has violated international standards (UN Global Compact and OECD guidelines for multinationals). If a violation is identified, the company cannot be defined as a sustainable investment. The definition of international standard violations and company-specific analysis is based on the methodology of a third-party service provider.
The Fund does not emphasise or prioritise any single theme but addresses sustainability factors by integrating fund level as well as fund-look-through analysis and monitoring of sustainability factors into the investment process. The analysis and monitoring consist of exclusions aimed at limiting exposure to certain industries, as well as the consideration of climate factors and active ownership as part of asset managers' investment processes.
The Fund promotes environmental and social characteristics by integrating fund level as well as fund-look-through analysis and monitoring of sustainability factors into the investment process.
Exclusion: The following criteria apply to investments in OP-managed funds. The Fund excludes from its active direct investments any controversial weapon manufacturers, mining companies producing thermal coal, power companies using thermal coal, tobacco companies, and companies that have breached international standards and where engagement has been unsuccessful. The list of exclusions is public.
Use of ESG data in the analysis of investments: ESG factors are considered part of the investment process by using an external service provider’s data and an ESG tool, developed internally by OP Asset Management. Considering ESG factors in the investment process means, for example, that the risks and opportunities related to the environment, society and governance are made transparent using selected indicators from each area. A sustainable investment percentage is calculated for each internally and externally managed fund and ETF. OP monitors that each ETF provider has an ESG policy or that they are committed to responsible investment principles.
Global norms breaches: Investments in OP Funds are screened regularly for non-compliance with global norms. If a non-compliance is detected, an engagement process is begun with the company in question. The aim is to make non-compliant companies change their practices and begin to comply with global norms in their operations. If engagement proves unsuccessful, the company may be removed from the fund portfolio and placed on the exclusion list.
Minimum allocation for sustainable investments: The following description applies to investments in OP-managed funds. Regarding OP-managed funds, the funds allocate a minimum share of investments, as stated below, in companies whose business promotes one or more of the UN Sustainable Development Goals (SDG) without harming other sustainability factors or objectives. Sustainable investments are determined using OP Asset Management’s analysis model which is based on an external service provider’s SDG and sustainability data.
Methods for assessing good governance practices: Analysing the target company’s governance is an important part of the investment process. For us, good governance is a fundamental pillar for any company’s financial success, regardless of the sector. Regarding OP-managed funds, when assessing governance, some of the areas considered include the appropriateness of the target company’s administrative organisation, the target company’s actions in relation to its personnel, and the target company’s rewarding and taxation practices. To assess good governance, we use the analysis of third-party service providers and our own qualitative analysis if no external data are available. We screen the funds regularly against the criteria of good governance, with minimum thresholds in place. We also expect good governance from our external asset managers, and its examination is an essential part of the due diligence process conducted before investment decisions and of the annual survey.
The Fund makes investments that promote environmental and social characteristics, and sustainable investments account for at least 10 % of these.
Others: The Fund may also invest its assets in exchange traded derivatives and OTC derivative contracts in order to hedge against the risk of adverse market movements, to replace direct investments and to otherwise promote effective portfolio management. Sustainability data might not be available for possible derivatives.
The Fund might include investment options which are in line with the EU Taxonomy, but the Fund does not commit to a certain minimum number of investments in line with the EU Taxonomy. Currently, only few investment options in line with the EU Taxonomy are available, and there is a limited amount of reported information on compliance with the EU Taxonomy.
Using data from a third-party service provider, portfolio managers follow whether a specific fund invested in promotes environmental or social characteristics and/or whether the fund aims to make sustainable investments. Portfolio managers also use an internally developed ESG tool for fund level analysis of the degree to which the fund product emphasises investments in funds that promote environmental and social characteristics and aim to invest sustainably. This ESG tool can also be used to ensure that exposure to OP Asset Management's exclusion list is minimised. Portfolio managers can also use the tool to monitor that the fund's minimum allocation to sustainable investment is reached and that any adverse sustainability impacts related to sustainable investments are addressed either through OP Asset Management's principal adverse impact (PAI) analysis or the PAI monitoring of third-party funds.
Investments are regularly screened by ESG specialists for the metrics listed above. Fund-specific ESG indicators on top-level environmental and social characteristics related to the Fund are reported on a monthly basis.
The Fund avoids investing in sectors that OP Asset Management has indicated as having adverse impacts on the environment and society. The enforcement of exclusions is monitored regularly by calculating the Fund’s exposure to controversial and harmful operations and by screening the Fund using the criteria in the exclusion list.
ESG factors are addressed in investment decisions by emphasising funds that promote environmental and/or social characteristics or that aim to invest sustainably. Portfolio managers have access to fund level data provided by both a third-party ESG service provider and an ESG tool internally developed by OP Asset Management. Data from a third-party service provider enables portfolio managers to follow whether a specific fund invested in promotes environmental or social characteristics and/or whether the fund aims to make sustainable investments. The internally developed ESG tool makes it possible to assess the degree to which a financial instrument emphasises investments in funds that promote environmental and social characteristics and aim to invest sustainably, as well as to ensure that any exposure to sectors that OP Asset Management has defined as adverse in terms of sustainability is minimised. Portfolio managers can also use the tool to monitor that the fund's minimum allocation to sustainable investment is reached and that any adverse sustainability impacts related to sustainable investments are addressed either through OP Asset Management's principal adverse impact (PAI) analysis or the PAI monitoring of third-party funds.
External asset managers' ESG operations are comprehensively audited by reviewing their ESG policy, resources and reporting, exclusion principles and consideration of sustainability factors in investment activities. The audit results are scored by OP Asset Management, and the external managers' sustainability work and its development are monitored using an annual survey. The Fund does not invest in external managers' funds that do not have an ESG policy or are not committed to responsible investment principles.
OP Asset Management uses several data sources from different service providers. The primary data sources are Bloomberg, Morningstar, MSCI ESG Research and S&P Trucost. Data from Bloomberg and Morningstar are mainly used for fund level analysis, while data from MSCI ESG Research and S&P Trucost are used for company level analysis regarding investments in OP-managed funds. These service providers provide data on topics including the sustainability risks of investee companies, share of business operations with adverse impacts, climate risks and opportunities, and how the operations of investee companies align with the UN Sustainable Development Goals. The service providers use both data reported by the companies and estimates based on an assessment model developed by each service provider.
Our service providers use detailed and standardised processes for ensuring data quality and correcting inaccuracies in the data.
When selecting new data packages and service providers, we carefully compare and analyse the data quality, coverage, methodology and reliability of each service provider. We regularly monitor trends in ESG data and service providers on the market to ensure we have the best possible data to support our investment decisions and client reporting.
Data sources are used either directly based on the service provider's metrics or analysis or by combining different metrics and using them for OP Asset Management's internal analyses and assessments. Some of the data are imported directly to OP Asset Management’s database, from which it can be used in internal analysis models and reports. Data are also used directly through interfaces offered by the service providers.
The share of data assessed depends on sustainability indicators and the sustainability factor under scrutiny, and it is impossible to give a universal definition of the share of assessed data of all ESG data. It is difficult to determine what portion of ESG data is based on reported information and estimates respectively. In cases where reported data are available, they are used as the primary source. Third-party service providers must specify for each metric whether the data are reported by companies themselves or estimated using the provider's internal model.
At the moment, ESG data are not fully standardised, and they are not necessarily widely reported by fund and asset management companies. This can make comparability challenging. Service providers may use different methods for compiling, evaluating and analysing data. For these reasons, we carefully review the methodologies of service providers to ensure their suitability for our purposes.
We use several different service providers to enable us to assess certain metrics from multiple sources and fill any gaps in data.
The Fund is subject to exclusion criteria as described above in part (d) Investment strategy. A party independent of portfolio management oversees that the Fund complies with the criteria. The Fund’s material exclusion criteria are implemented in the trading system.
To the extent that the Fund invests in OP-managed funds, the funds work as an active owner by participating in shareholder meetings and engaging in direct dialogue with the companies.
The Fund's benchmark index is not applied to the performance of environmental or social characteristics promoted by the Fund.
Summary
No sustainable investment objective
Environmental or social characteristics of the finance product
Investment strategy
Share of investments
Monitoring of environmental or social characteristics
Methods
Data sources and data processing
Limitations of the methodology and data
Due diligence
Shareholder engagement policy
Designated reference benchmark
OP-Forest Owner is a special common fund that invests in forests and targets long-term capital appreciation, by investing sustainably and in compliance with the Fund’s rules. The Fund makes sustainable investments focusing on environmental issues. The Fund prioritises investments that are expected to have a positive impact on climate change, biodiversity and human wellbeing.
The objective of the Fund is to make sustainable investments and thus achieve measurable positive impacts on climate change, biodiversity and human wellbeing. The forest that is invested in acts as a carbon sink, binding greenhouse gas emissions from the atmosphere. The wood raw material sourced from forests replaces fossil products, which in turn reduces the use of fossil raw materials that cause greenhouse gas emissions. In a sustainable investment, in the long term, the tree stand grows quicker than the felling of forests, which increases the forest carbon sink. A sustainable investment promotes the construction of fossil-free electricity production, and forests are leased for wind and solar power generation. When forests are felled, preserving biodiversity is taken into account.
In a sustainable investment, forestry operations are restricted in valuable habitats, endangered species are taken into account, water conservation is ensured, and structural features promoting biodiversity in forests are increased. In a sustainable investment, forest areas are excluded from commercial use and forest conservation areas are established. Operations comply with current legislation, PEFC and FSC certification systems, and the Fund’s own sustainability procedures.
In a sustainable investment, it is ensured that others are allowed to access the forest. The public right of access is promoted, and it is ensured that trails and structures can be created in forests as agreed.
The Fund aims to make only sustainable investments. Forest investments and forestry companies are considered sustainable if they enable either directly or through business operations the increase of the carbon sink and promote biodiversity and recreational use of forests in the long term (10 years).
In connection with each investment, an assessment is made to ensure that sustainable investment goals do not cause significant harm to any of its environmental goals. When making new investment decisions, a sustainable investment is assessed as a whole so that the investment product’s goal to be a sustainable investment is not compromised.
The quantity of carbon sinks, the number of certified forest areas, the number of forest areas outside the scope of commercial use, and the number of wind farm lease agreements are used as sustainability indicators.
In connection with each investment, an assessment is made to ensure that sustainable investment goals do not cause significant harm to any of its environmental goals. When making new investment decisions, a sustainable investment is assessed as a whole so that the investment product’s goal of being a sustainable investment is not compromised.
When assessing significant harm to the environmental goal, principal adverse impacts (PAI) on sustainability are reviewed by considering the PAI indicators applicable to investments in real estate assets. These indicators apply to exposure to risks related to fossil fuels and energy inefficiency. The regulation does not include separate PAI indicators for forests. OP-Forest Owner does not invest in real estate assets related to fossil fuel recovery, storage, transport or manufacture or energy inefficient assets. If an unused residential building is part of the forest estate, it is left uninhabited so it does not use a significant amount of energy or cause a significant amount of CO2 emissions.
When assessing adverse impacts on sustainability, forest investments do not cause significant harm to the environmental goal, taking other PAI indicators of the regulation into account. To the extent that the Fund invests in companies, the PAI indicators applicable to the investee companies are assessed when making the investment decision. A qualitative analysis is also carried out to identify principal adverse impacts on sustainability.
The Fund’s investment assets are mainly direct real estate investments in forest estates. As part of OP Financial Group, we support the UN Global Compact initiative and comply with the OECD’s operating instructions for multinational companies and the UN Guiding Principles on Business and Human Rights. To the extent that the Fund invests in companies, and data is available, these companies are reviewed in terms of quality in accordance with the OECD’s instructions and the UN principles.
OP-Forest Owner is a special common fund investing in forests. The objective of the Fund is to make sustainable investments and thus achieve measurable positive impacts on climate change, biodiversity and human wellbeing. The forest that is invested in acts as a carbon sink, binding greenhouse gas emissions from the atmosphere. The wood raw material sourced from forests replaces fossil products, which in turn reduces the use of fossil raw materials that cause greenhouse gas emissions. In a sustainable investment, in the long term, the tree stand grows quicker than the felling of forests, which increases the forest carbon sink. A sustainable investment promotes the construction of fossil-free electricity production, and forests are leased for wind and solar power generation. When forests are felled, preserving biodiversity is taken into account.
In a sustainable investment, forestry operations are restricted in valuable habitats, endangered species are taken into account, water conservation is ensured, and structural features promoting biodiversity in forests are increased. In a sustainable investment, forest areas are excluded from commercial use and forest conservation areas are established. Operations comply with current legislation, PEFC and FSC certification systems, and the Fund’s own sustainability procedures.
In a sustainable investment, it is ensured that others are allowed to access the forest. The public right of access is promoted, and it is ensured that trails and structures can be created in forests as agreed.
The Fund aims to make only sustainable investments. Forest investments and forestry companies are considered sustainable if they enable either directly or through business operations the increase of the carbon sink and promote biodiversity and recreational use of forests in the long term (10 years).
To the extent that the Fund invests in properties in alignment with the EU Taxonomy, its aim is to promote climate change mitigation.
OP-Forest Owner is a special common fund that invests in forests and targets long-term capital appreciation, by investing sustainably and in compliance with the Fund’s rules. The Fund makes sustainable investments focusing on environmental issues. The Fund prioritises investments that are expected to have a positive impact on climate change, biodiversity and human wellbeing. The Fund mainly invests its assets in forest estates located in Finland. The Fund may also invest in forest estates in the European Economic Area. It may also make indirect investments in forest estates. The Fund aims to make the most of its earnings from the sale of timber growing on its forest estates. The Fund may also try to achieve earnings by developing, parcelling out or zoning the forest estates it owns or by utilising the soil or any leisure-time values.
Insofar as the Fund can invest in companies, a qualitative analysis is made for these based on which the implementation of good governance is assessed. When assessing a company’s governance, some of the areas considered include the appropriateness of the company’s administrative organisation, the company’s actions in relation to its personnel, and the company’s rewarding and taxation practices. In addition, the company’s operations should be transparent.
The Fund aims to make only sustainable investments.
According to the Fund's rules, 60% of the Fund's total assets must always be invested in real property in Finland or real estate securities related to such real property. All investment assets of the Fund are sustainable investments in ways determined by the Fund where the minimum share of sustainable investments is 60%.
Forest investments and investments in forestry companies are considered sustainable if they enable either directly or through business operations the increase of the carbon sink and promote biodiversity and recreational use of forests in the long term (10 years).
An environmental objective has been set for all sustainable investments. In contrast, no social objective has been set for sustainable investments.
Of the environmental goals of the EU Taxonomy, the Fund considers climate change mitigation and forest management criteria. The Fund has a 10% minimum allocation to the EU Taxonomy aligned investments.
Non-sustainable investments may include investments that do not meet the requirements for sustainable investments: the Fund may also invest in fixed income investments for the purpose of cash management and temporary asset investments. Non-sustainable may comprise e.g. short-term net assets such as cash investments and derivatives used for interest rate hedging. Derivatives and cash investments cannot be considered sustainable. The Fund may invest its assets in derivative contracts and OTC derivatives to hedge against the risk of adverse market movements, to replace direct investments and to otherwise promote effective portfolio management. The Fund may invest in fixed income investments either directly or through mutual funds or special common funds, or by making deposits with credit institutions
The quantity of carbon sinks, the number of certified forest areas, the number of forest areas outside the scope of commercial use, and the number of wind farm lease agreements are used as sustainability indicators.
The volume of carbon sinks is monitored based on annual change in the carbon storage of forests. The unit used is CO2 tn. The number of certified assets is monitored based on hectares in proportion to the total area of owned forest estates at the time of the assessment. Certification is monitored for each certificate type (PEFC and FSC). The amount of forest set aside from economic use is monitored based on hectares in proportion to the total area of owned forest estates at the time of the assessment. The number of leases for wind power plants is monitored based on the number of estates leased for wind power production. The review period in the indicators is a cumulative 10-year period and the reporting interval is one year.
The carbon storage volume of forests is obtained from valuation reports prepared on the Fund’s forests. The valuation reports are based on forest asset data collected on the forests and prepared by an external appraiser, who takes into account the forest’s annual growth and loggings in calculating carbon storage. Forest growth is based on growth models of the tree stand and may fluctuate from one year to the next. The number of certified assets is obtained from the Fund’s managers responsible for managing the certification of forests. The calculation of proportional share is done by the Fund. The volume of forest set aside from economic use is obtained from managers, and the calculation of proportional share is done by the Fund. The number of leases for wind power plants is monitored by the Fund.
An external provider audits SFC certified forests on a regular basis.
The calculation of the carbon storage of forests is based on an expert assessment of the forest’s tree assets and growth site classification carried out at the estate’s time of purchase. This baseline data may contain inaccuracies. The calculation of carbon storage takes into account annual forest growth using growth models that may contain inaccuracies at the level of individual estates due to climate change, for example. Data on logging volume is obtained from buyers. In commercial forest patterns, the thinning frequency of the tree stand may fluctuate, causing uncertainty in the volume of future tree stand growth. The effect of the inaccuracies may be either positive or negative depending on the estate, and they do not have significant impact in terms of the overall objective of increased carbon storage.
As part of the acquisition of new investments, an appropriate due diligence is carried out on issues such as the ownership of the investment. The investment decision proposal is based on a visit of the forest estate, during which a forestry expert assesses the forest’s tree assets, growth sites, carbon sequestration capacity, biodiversity, rewilding sites and forest certification. The forestry expert is independent from the Fund. As part of investment decision process, the investment is also screened for predefined exclusion criteria.
As part of the acquisition of new investments, an appropriate due diligence is carried out on issues such as the ownership of the investment. The investment decision proposal is based on a visit of the forest estate, during which a forestry expert assesses the forest’s tree assets, growth sites, carbon sequestration capacity, biodiversity, rewilding sites and forest certification. The forestry expert is independent from the Fund. As part of investment decision process, the investment is also screened for predefined exclusion criteria.
No benchmark has been assigned to achieve the Fund’s goal of sustainable investments, and the Fund does not aim to reduce carbon emissions.
Data published on 1 January 2023
ISIN: FI4000108436
Summary
No sustainable investment objective
Environmental or social characteristics of the finance product
Investment strategy
Share of investments
Monitoring of environmental or social characteristics
Methods
Data sources and data processing
Limitations of the methodology and data
Due diligence
Shareholder engagement policy
Designated reference benchmark
The Fund promotes environmental and social characteristics using environmental, social and governance (ESG) analysis while excluding certain investments. The Fund does not emphasise or prioritise any single theme or sustainability factor, but takes sustainability factors into account from the perspective of factors that are generally significant to countries.
The data sources used include both public lists and the sustainable development frameworks of countries, as well as sustainability data on countries collected by MSCI ESG Research. Analysis and data related to countries is often based on frameworks and studies by various NGOs or organisations. Sources used include Transparency International, Freedom House and World Justice Project. Exclusion criteria are based on lists by the European Union and the Financial Action Task Force.
This financial product promotes environmental or social characteristics, but sustainable investment is not its objective.
The Fund does not emphasise or prioritise any single theme or sustainability factor, but takes sustainability factors into account from the perspective of factors that are generally significant to countries.
The Fund promotes environmental and social characteristics and, to ensure it, uses environmental, social and governance (ESG) analysis and excludes certain investments.
Negative screening: the Fund excludes countries with significant adverse impacts on society from its investments. The Fund does not invest in excluded countries, and if an investment product of the Fund later falls within the scope of the exclusion, the aim is to terminate the investment within a reasonable time period.
Use of ESG data in the analysis of investments: The average values of the sustainability indicators of the Fund’s investments are regularly monitored. The values of the indicators are considered when making investment decisions, and the average values of the portfolio and their development in relation to the benchmark index are monitored.
The investment process of the Fund includes analysing the creditworthiness of the investment products. In analysing creditworthiness, environmental and social characteristics as well as good governance are considered, among other factors.
Investments that promote ESG characteristics: at least 75%. Others: Cash and derivatives, as well as bonds issued by other public sector operators and multinational entities.
The average values of the sustainability indicators of the Fund’s investments are regularly monitored by the portfolio manager. The values of the indicators are considered when making investment decisions, and the average values of the portfolio and their development in relation to the benchmark index are monitored.
The Fund excludes countries with significant adverse impacts on society from its investment products. Exclusions are based on the following listings:
As an environmental indicator, the Fund monitors countries’ greenhouse gas emissions, and various social indicators provide information on income gaps, corruption and fundamental rights.
Principal adverse impacts (PAI) on sustainability are regularly analysed by screening all investments for their PAI indicators defined for countries. The values of the indicators are considered when making investment decisions, and the average values of the portfolio and their development in relation to the benchmark index are monitored.
The data sources used include both public lists and the sustainable development frameworks of countries, as well as sustainability data on countries collected by MSCI ESG Research. Analysis and data related to countries is often based on frameworks and studies by various NGOs or organisations. Sources used include Transparency International, Freedom House and World Justice Project. Exclusion criteria are based on lists by the European Union and the Financial Action Task Force. The service providers we use have detailed and appropriate processes in place for ensuring data quality and correcting inaccuracies in the data. When selecting new data packages and service providers, we carefully compare and analyse the data quality, coverage, methodology and reliability of each service provider. We regularly monitor trends in ESG data and service providers on the market to ensure the best possible data to support our investment decisions and client reporting. Data sources are utilised either directly based on metrics or analysis by the service provider as well as by combining different metrics. A part of the data is imported directly to OP Asset Management’s database, from which it can be used in internal analysis models and reports. Data is also used directly from interfaces offered by the service providers. The share of data that is assessed depends on sustainability indicators and the sustainability factor under scrutiny, and it is not possible to give a universal definition of the share of assessed data of all ESG data.
The GHG emissions of countries are estimated using an intensity metric. The proportion of emissions to GDP does not necessarily give a full picture of a country’s ability to manage its level of emissions. In addition, the metric is retrospective in scope.
In metrics related to society, it is difficult to assess the quality and impartiality of the analysis process and methodology. Government-sourced analyses and data points related to countries in general are updated less frequently than company-specific data.
The Fund is subject to exclusion criteria as described above in part (d) Investment strategy. A party independent of portfolio management oversees that the Fund complies with the criteria. The Fund’s material exclusion criteria are implemented in the trading system.
OP's funds comply with the principles of shareholder engagement that take into account OP Fund Management Company Ltd’s ESG perspectives. These principles and the latest report on the implementation of shareholder engagement principles are available at op.fi/responsible-investing.
The Fund’s benchmark index is not applied to the performance of environmental or social characteristics promoted by the Fund.
Data published on 1 January 2023
ISIN: FI0008805213
Summary
No sustainable investment objective
Environmental or social characteristics of the finance product
Investment strategy
Share of investments
Monitoring of environmental or social characteristics
Methods
Data sources and data processing
Limitations of the methodology and data
Due diligence
Shareholder engagement policy
Designated reference benchmark
The Fund promotes environmental and social characteristics using environmental, social and governance (ESG) analysis while excluding certain investments. The Fund does not emphasise or prioritise any single theme or sustainability factor, but takes sustainability factors into account from the perspective of factors that are generally significant to countries.
The data sources used include both public lists and the sustainable development frameworks of countries, as well as sustainability data on countries collected by MSCI ESG Research. Analysis and data related to countries is often based on frameworks and studies by various NGOs or organisations. Sources used include Transparency International, Freedom House and World Justice Project. Exclusion criteria are based on lists by the European Union and the Financial Action Task Force.
This financial product promotes environmental or social characteristics, but sustainable investment is not its objective.
The Fund does not emphasise or prioritise any single theme or sustainability factor, but takes sustainability factors into account from the perspective of factors that are generally significant to countries.
The Fund promotes environmental and social characteristics and, to ensure it, uses environmental, social and governance (ESG) analysis and excludes certain investments.
Negative screening: the Fund excludes countries with significant adverse impacts on society from its investments. The Fund does not invest in excluded countries, and if an investment product of the Fund later falls within the scope of the exclusion, the aim is to terminate the investment within a reasonable time period.
Use of ESG data in the analysis of investments: The average values of the sustainability indicators of the Fund’s investments are regularly monitored. The values of the indicators are considered when making investment decisions, and the average values of the portfolio and their development in relation to the benchmark index are monitored.
The investment process of the Fund includes analysing the creditworthiness of the investment products. In analysing creditworthiness, environmental and social characteristics as well as good governance are considered, among other factors.
Investments that promote ESG characteristics: at least 75%. Others: Cash and derivatives, as well as bonds issued by other public sector operators and multinational entities.
The average values of the sustainability indicators of the Fund’s investments are regularly monitored by the portfolio manager. The values of the indicators are considered when making investment decisions, and the average values of the portfolio and their development in relation to the benchmark index are monitored.
The Fund excludes countries with significant adverse impacts on society from its investment products. Exclusions are based on the following listings:
As an environmental indicator, the Fund monitors countries’ greenhouse gas emissions, and various social indicators provide information on income gaps, corruption and fundamental rights.
Principal adverse impacts (PAI) on sustainability are regularly analysed by screening all investments for their PAI indicators defined for countries. The values of the indicators are considered when making investment decisions, and the average values of the portfolio and their development in relation to the benchmark index are monitored.
The data sources used include both public lists and the sustainable development frameworks of countries, as well as sustainability data on countries collected by MSCI ESG Research. Analysis and data related to countries is often based on frameworks and studies by various NGOs or organisations. Sources used include Transparency International, Freedom House and World Justice Project. Exclusion criteria are based on lists by the European Union and the Financial Action Task Force. The service providers we use have detailed and appropriate processes in place for ensuring data quality and correcting inaccuracies in the data. When selecting new data packages and service providers, we carefully compare and analyse the data quality, coverage, methodology and reliability of each service provider. We regularly monitor trends in ESG data and service providers on the market to ensure the best possible data to support our investment decisions and client reporting. Data sources are utilised either directly based on metrics or analysis by the service provider as well as by combining different metrics. A part of the data is imported directly to OP Asset Management’s database, from which it can be used in internal analysis models and reports. Data is also used directly from interfaces offered by the service providers. The share of data that is assessed depends on sustainability indicators and the sustainability factor under scrutiny, and it is not possible to give a universal definition of the share of assessed data of all ESG data.
The GHG emissions of countries are estimated using an intensity metric. The proportion of emissions to GDP does not necessarily give a full picture of a country’s ability to manage its level of emissions. In addition, the metric is retrospective in scope.
In metrics related to society, it is difficult to assess the quality and impartiality of the analysis process and methodology. Government-sourced analyses and data points related to countries in general are updated less frequently than company-specific data.
The Fund is subject to exclusion criteria as described above in part (d) Investment strategy. A party independent of portfolio management oversees that the Fund complies with the criteria. The Fund’s material exclusion criteria are implemented in the trading system.
OP's funds comply with the principles of shareholder engagement that take into account OP Fund Management Company Ltd’s ESG perspectives. These principles and the latest report on the implementation of shareholder engagement principles are available at op.fi/responsible-investing.
The Fund’s benchmark index is not applied to the performance of environmental or social characteristics promoted by the Fund.
Data published on 1 January 2023
ISIN: FI4000019088
Summary
No sustainable investment objective
Environmental or social characteristics of the finance product
Investment strategy
Share of investments
Monitoring of environmental or social characteristics
Methods
Data sources and data processing
Limitations of the methodology and data
Due diligence
Shareholder engagement policy
Designated reference benchmark
The Fund is a passive index fund. It promotes environmental and social characteristics by using an index based on environmental, social and governance (ESG) analysis of ESG offences and selected controversial industries and by excluding certain investments based on this analysis. The Fund places no emphasis on, nor does it prioritise, any single theme or sustainability factor, but it takes sustainability factors into account by excluding selected industries that are controversial and harmful in terms of sustainability and by using a base index that is committed to a carbon intensity 30% lower than the parent index.
This financial product promotes environmental or social characteristics, but sustainable investment is not its primary objective.
To the extent that the Fund engages in sustainable investment by investing in financial activities that promote either environmental or social objectives, steps are taken to ensure that these sustainable investments do not cause significant harm to any sustainable investment objective.
The Fund is based on the MSCI ESG Universal Index, using both the MSCI ESG Rating and the MSCI ESG Rating Trend data. In addition, the Fund uses MSCI data on international standard violations and controversial weapons. The Fund is based on the MSCI ESG Screened Index, which uses Business Involvement Screening data by MSCI ESG Research to exclude controversial industries, data by MSCI ESG Controversies to exclude international norm violations and other very serious ESG offences, and data by MSCI Climate Change Metrics to exclude companies based on climate-related themes and carbon intensity.
This financial product promotes environmental or social characteristics, but sustainable investment is not its primary objective.
To the extent that the Fund engages in sustainable investment by investing in financial activities that promote either environmental or social objectives, steps are taken to ensure that these sustainable investments do not cause significant harm to any sustainable investment objective.
Principal adverse impacts (PAI) on sustainability are regularly analysed by screening all investments for their PAI indicators. If screening reveals investee companies with significant principal adverse impacts on sustainability in comparison to its peers and if the PAI indicator is deemed essential for the investee company, the investee company will be monitored more closely.
More information about how we take adverse sustainability impacts into account can be found in the document “Consideration of Principal Adverse Sustainability Impacts in Investing and Insurance Operations (in Finnish)”, which is available online at op.fi.
The OP Asset Management’s sustainable investment analysis model is used to check whether a company has violated international standards (UN Global Compact and OECD guidelines for multinationals). If a company violates any of the standards, it cannot be classified as a sustainable investment. The definition of international standard violations and company-specific analysis is based on the methodology of a third-party service provider.
The Fund places no emphasise on, nor does it prioritise, any single theme or sustainability factor, but it takes sustainability factors into account by excluding selected controversial industries and companies with reported serious ESG offences and by committing to a carbon intensity that is significantly lower than the parent index.
• The Fund avoids investing in controversial activities and business with adverse environmental or social impacts.
• The Fund is based on an index that is committed to a carbon intensity 30% lower than the parent index.
The Fund is a passive index fund. It promotes environmental and social characteristics by using an index based on environmental, social and governance (ESG) analysis on ESG offences and certain controversial industries, and by excluding certain investments based on this analysis.
Negative screening: As the Fund is a passive index fund, the Fund manager cannot make individual exclusion decisions. The Fund is based on an index which excludes companies whose business involves the production of controversial weapons or nuclear weapons. The Fund also excludes companies whose business depends on the production of civilian arms, tobacco, palm oil, coal, and energy produced from coal or Arctic oil and gas. The index also excludes companies which have been identified by the methods used by MSCI ESG Research to be in violation of international standards (UN Global Compact and OECD guidelines for multinationals) and companies with other very serious ESG offences. A stricter policy is applied to ESG offences that affect biodiversity and offences discovered in companies' supply chains.
Use of ESG data in the analysis of investment targets: The benchmark index takes into consideration companies' exposure to controversial or harmful industries, international norm violations, and violations of global norms and other very serious ESG offences. Based on the analysis, the index excludes companies that do not meet the requirements of the universe for the MSCI ESG Screened Index. The index is also committed to a carbon intensity 30% lower than the parent index.
Methods for assessing good governance practices: The Fund is based on the MSCI ESG Screened Index, using both the MSCI ESG Controversies & Global Norms data, which also analyses companies' violations of good governance.
Investments that promote ESG characteristics: 90%, of which 3% are sustainable investments
Others: the Fund may also invest its assets in exchange traded derivatives and OTC derivative contracts in order to hedge against the risk of adverse market movements, to replace direct investments and to otherwise promote effective portfolio management. Sustainability data might not be available for possible derivatives.
The Fund might include investment options which are in line with the EU Taxonomy, but the Fund does not commit to a certain minimum number of investments in line with the EU Taxonomy. Currently, only few investment options in line with the EU Taxonomy are available, and there is a limited amount of reported information on compliance with the EU Taxonomy.
The Fund is a passive index fund. This means that the Fund’s investments are split between the countries and companies of the benchmark index in the same proportion as in the index. Changes to the portfolio are basically only made once a year in conjunction with index adjustments.
Portfolio managers have access to the Fund’s ESG analysis, which indicates, among other things, the weighted ESG rating, carbon intensity and share of green business of the portfolio.
Fund-specific ESG indicators on top-level environmental and social characteristics related to the Fund are reported on a monthly basis.
The Fund is a passive index fund. This means that the Fund’s investments are split between the countries and companies of the benchmark index in the same proportion as in the index. Changes to the portfolio are basically only made once a year in conjunction with index adjustments.
The Fund is based on the MSCI ESG Screened Index, which excludes companies whose business involves the production of controversial weapons or nuclear weapons. The Fund also excludes companies whose revenue depends on the production of civilian arms, tobacco, palm oil, coal, and energy produced from coal or Arctic oil and gas. The index also excludes companies which have violated international standards (UN Global Compact and OECD guidelines for multinationals) and companies which have committed very severe ESG violations. A stricter policy is applied to ESG offences that affect biodiversity and offences discovered in companies' supply chains.
The base index of the Fund (MSCI ESG Screened) uses data by MSCI ESG Business Involvement Screening, MSCI ESG Controversy and MSCI Climate Change Metrics to exclude selected companies operating in controversial and harmful industries and commit to a carbon intensity 30% lower than the parent index. Data by MSCI ESG Rating Business Involvement Screening and MSCI ESG Controversy is used to assess whether companies are exposed to controversial industries and the extent of the exposure, as well as whether companies are involved in very serious ESG offences. Data by MSCI Climate Change Metrics is used to exclude companies based on climate themes and for monitoring carbon intensity.
The Fund is based on the MSCI ESG Screened Index, which uses Business Involvement Screening data by MSCI ESG Research to exclude controversial industries, data by MSCI ESG Controversies to exclude international norm violations and other very serious ESG offences, and data by MSCI Climate Change Metrics to exclude companies based on climate-related themes and carbon intensity.
The service providers we use have detailed and appropriate processes in place for ensuring data quality and correcting inaccuracies in the data.
When selecting new data packages and service providers, we carefully compare and analyse the data quality, coverage, methodology and reliability of each service provider. We regularly monitor trends in ESG data and service providers on the market to ensure the best possible data to support our investment decisions and client reporting.
The share of data that is assessed depends on sustainability indicators and the sustainability factor under scrutiny, and it is not possible to give a universal definition of the share of assessed data of all ESG data. The MSCI ESG analysis used as the basis for the data is mainly based on public information reported by companies and information from other public sources. It is difficult to determine what portion of ESG data are based on reported information and estimates, respectively. In cases where reported data is available, it is used as the primary source. Third-party service providers must specify for each metric whether the data is reported by companies themselves or estimated using the provider’s internal model.
At the moment, ESG data is not fully standardised, and investee companies do not report on the data widely. This makes it challenging to compare investee companies. Service providers may use different methods for compiling, evaluating and analysing data. For these reasons, we carefully review the methodologies of service providers to ensure their suitability for our purposes.
The Fund is subject to exclusion criteria and is screened for international standard violations as described above in part (d) Investment strategy. A party independent of portfolio management oversees that the Fund complies with the criteria. The Fund’s material exclusion criteria are implemented in the trading system.
OP is an active shareholder through its funds by voting in Finnish and international shareholders’ meetings, engaging in direct dialogue with companies and supporting joint initiatives by investors. OP's funds comply with the principles of shareholder engagement that take into account OP Fund Management Company Ltd’s ESG perspectives. These principles and the latest report on the implementation of shareholder engagement principles are available at op.fi/responsible-investing. Participation in general meetings of foreign companies takes place in markets where participation is cost-effective, taking into account their proportion of the Fund’s investments.
A detailed list of attended meetings and actions taken and decisions adopted at the meetings can be found at op.fi/responsible-investing. By 2025, OP Asset Management’s climate-related shareholder engagement will cover 70% of financed emissions, as measured by direct equity and bond investments by OP funds in high climate risk sectors (NACE categories A-H and J-L). In practice, shareholder engagement in these companies involves either voting at shareholders’ meetings, direct dialogue or joint initiatives by investors.
The Fund is a passive index fund the assets of which are invested in accordance with the index. This means that the Fund’s investments are split between the countries and companies of the benchmark index in the same proportion as in the index. The investment strategy corresponds to the benchmark index on an ongoing basis.
The benchmark index differs from a relevant market index in that it excludes companies and industries based on the above criteria. Companies for which MSCI ESG Controversy data on ESG offences is unavailable are also excluded from the benchmark index.
Data published on 1 January 2023
ISIN: FI4000029285
Updated: 24.8.2023
Summary
No sustainable investment objective
Environmental or social characteristics of the finance product
Investment strategy
Share of investments
Monitoring of environmental or social characteristics
Methods
Data sources and data processing
Limitations of the methodology and data
Due diligence
Shareholder engagement policy
Designated reference benchmark
OP-Public Services Real Estate Fund is a non-UCITS fund which invests its assets in the service infrastructure of social education, physical culture and sports, social welfare, and health care services, comprising care services, child daycare, education, multipurpose arenas, and service and hotel living. The Fund also acts as builder of the above-mentioned service infrastructure. The Fund promotes environmental and social characteristics and, to ensure it, uses environmental, social and governance (ESG) analysis and excludes certain investments. The Fund mainly invests directly in commercial property and securities entitling to such property, in shares in limited partnerships engaged in property investment, and in shares in housing cooperatives and real estate companies.
The Fund favours low-carbon options and energy-efficient solutions. The Fund strives for construction in existing urban structures to the extent possible. Possibilities for reserving and converting an old building are examined carefully.
This financial product promotes environmental or social characteristics, but sustainable investment is not its objective. To the extent that the Fund makes sustainable investments, those investments aligned with the EU Taxonomy which have set climate change mitigation as their environmental goals are considered sustainable investments. Climate change mitigation is promoted by investing in the options that meet the requirements of the EU Taxonomy.
Insofar as the Fund makes sustainable investments with climate change mitigation as the environmental goal, it is assessed in line with the EU Taxonomy that the investment does not cause significant harm to other goals following the EU Taxonomy.
The sustainability indicators monitored include the average energy class, the share of renewable energy in the energy required by properties, the production of renewable energy in properties, the amount of wood construction and conversion properties, and the number of beds in early childhood education and nursing facilities.
No sustainable investment objective
This financial product promotes environmental or social characteristics, but sustainable investment is not its objective.
To the extent that the Fund makes sustainable investments, those investments aligned with the EU Taxonomy which have set climate change mitigation as their environmental goals are considered sustainable investments. Climate change mitigation is promoted by investing in the options that meet the requirements of the EU Taxonomy.
Insofar as the Fund makes sustainable investments with climate change mitigation as the environmental goal, it is assessed in line with the EU Taxonomy that the investment does not cause significant harm to other goals following the EU Taxonomy. The “do no significant harm” assessment related to property acquisition and possession comprises the assessment of physical climate risks concerning taxonomy-aligned investments. As part of the assessment, a climate risk analysis is therefore carried out for sustainable investments. This assessment progresses in phases and involves (i) a review of activities to define which physical climate risks may affect the properties during their expected lifetime; (ii) if the activities are assumed to be in danger due to one or more physical climate risks, an assessment of the significance of the climate risk based on the vulnerability of the property; and (iii) a review of adjustment solutions that decrease the identified physical climate risks related to properties.
Principal adverse impacts (PAI) on sustainability are regularly assessed by considering the PAI indicators applicable to investments in real estate assets. These indicators apply to risks related to fossil fuels and energy inefficiency, as well as greenhouse gas emissions.
The Fund invests mainly in housing or real estate companies owned by the Fund for 100% of their shares. As part of OP Financial Group, we support the UN Global Compact initiative and comply with the OECD’s operating instructions for multinational companies and the UN Guiding Principles on Business and Human Rights. Insofar as the Fund may have investments in companies, these companies are reviewed in terms of quality in accordance with the OECD’s instructions and the UN principles.
The Fund promotes environmental and social characteristics by providing healthy and safe facilities for social use in the public and private sectors. The investment products offer comfortable, practical and modern work environments for the nursing, education and service sectors, for example. The Fund favours low-carbon options and energy-efficient solutions. In selecting investments, we place emphasis on the sustainability of the properties’ location and analyse the accessibility and convertibility of the properties.
The Fund promotes environmental and social characteristics by providing healthy and safe facilities for social use in the public and private sectors. The Fund invests its assets in the service infrastructure of social education, physical culture and sports, social welfare, and health care services, comprising care services, child daycare, education, multipurpose arenas, and service and hotel living. The Fund favours low-carbon options and energy-efficient solutions. The Fund strives for construction in existing urban structures to the extent possible. Possibilities for reserving and converting an old building are examined carefully. To the extent that the Fund invests in properties in alignment with the EU Taxonomy, its aim is to promote climate change mitigation.
At least 60% of the assets are invested in real properties in Finland and related real estate securities. These investments promote environmental and social characteristics.
At least 20% of the investments promoting environmental and social characteristics align with EU taxonomy and are thus also sustainable investments.
Other characteristics related to the environment or society cover investments promoting environmental or social characteristics and that are not considered sustainable investments and not aligned with EU Taxonomy.
The Fund’s other assets (up to 40%) cover other investments in the financing product that do not promote environmental or social characteristics, and that are not considered sustainable investments. Other assets may comprise short-term net assets such as cash investments and derivatives used for interest rate hedging. The Fund may invest its assets in derivative contracts and OTC derivatives to hedge against the risk of adverse market movements, to replace direct investments and to otherwise promote effective portfolio management. Sustainability factors cannot be considered separately for derivatives.
The Fund does not have a minimum share of sustainable investments not in line with the EU Taxonomy. Additionally, the Fund has no minimum share of sustainable investments with social targets.
Monitoring of environmental or social characteristics
The sustainability indicators monitored include the average energy class, the share of renewable energy in the energy required by properties, the production of renewable energy in properties, the amount of wood construction and conversion properties, and the number of beds in early childhood education and nursing facilities.
Properties developed by the Fund have capacity for electric vehicle charging stations, and charging stations are installed as required. In addition, the Fund gives preference to in-fill development in existing urban structures or in their immediate vicinity. The design of properties takes into account convertibility, such as the suitability of a care facility for different customer groups or for conversion to homes. The Fund uses a third-party service provider in the certification of properties and drafting of energy performance certificates.
The average energy class of invested properties is tracked annually by calculating the average energy class according to energy performance certificates, with a weighting based on building volume. This indicator does not consider properties for which no energy performance certificate will be drawn up. The share of renewable energy is monitored as the percentage of the energy requirement of the properties, not including net rent properties. The share of renewable energy contains energy production by onsite heat pump systems and solar panels and purchased energy that has been verified by a certificate of origin.The numbers of wooden properties, properties that produce renewable energy and conversion properties are monitored as a percentage in proportion to the total number and value of properties. The number of wooden properties, properties that produce renewable energy and conversion properties includes all completed properties.
Customer capacity is tracked as total volume by segment: customer capacity in care services and ECEC facilities. Sustainability indicators are identified for each investment and reported annually in summary reports.
Data used to assess the materialisation of environmental or social characteristics is received from building permits and contract documents or from the contractor or seller of the property. In addition, data is obtained from official registers and other public sources. Data quality is ensured with a careful DD process. The ESG officer ensures in the investment decision proposal that ESG criteria are met. In addition, third-party service providers are used for monitoring and storing data related to the defined indicators. The assessment is made in the investment decision phase, when data on new developments is based on designs that precede the construction phase.
To the extent that the Fund may invest in other funds or companies, this data is collected in connection with the ESG DD of the investment to determine that the proposed investment takes sustainability risks sufficiently into consideration.
In construction projects, ESG assessment is made during the building permit phase, at which point details such as the building’s energy class are subject to changes at a later time. Possible changes to the building’s construction method are always negotiated with the contractor, and the contractor may not unilaterally make changes to the building’s sustainability factors. The changes may not materially worsen the property.
In turn, ESG analysis of finished potential investments may contain inaccuracies because the seller does not always have access to comprehensive, up-to-date data on the property’s sustainability factors. The data is supplemented by DD audits by third-party experts and information obtained from public sources.
As part of the acquisition of new investments, an appropriate due diligence is carried out. The audit investigates, among other matters, predefined questions related to the investment’s sustainability. The investment decision is based on reports made in the DD audit phase and responses received from the seller or developer. The audit may also involve external technical specialists. Possible changes in construction projects are always discussed with the contractor. As part of the assessment during the investment decision phase, the investment is also screened for predefined exclusion criteria.
The Fund’s portfolio manager, OP Real Estate Asset Management Ltd, does not draw up or publish its shareholder engagement principles. This is because the funds under its management do not invest in the shares of companies traded in a regulated market.
To the extent that the Fund may invest in other funds or companies, the Fund is an active shareholder by appointing a representative in the Fund’s or company’s bodies or meetings of the relevant bodies, such as shareholder’s meetings, and by engaging in direct dialogue with the Fund or company.
No benchmark value has been set to achieve the environmental and social characteristics that the Fund promotes.
Data published on 1 January 2023
ISIN: FI4000281738
Summary
No principal adverse impact on a sustainable investment objective
Sustainable investment objective of the financial product
Investment strategy
Share of investments
Monitoring of sustainable investment objectives
Methods
Data sources and data processing
Limitations of the methodology and data
Due diligence
Shareholder engagement policy
Achieving a sustainable investment objective
The Fund promotes environmental and social characteristics by integrating fund level as well as fund-look-through analysis and monitoring of sustainability factors into the investment process. The Fund does not emphasise or prioritise any single theme or sustainability factor, but addresses sustainability factors widely, avoiding investments in controversial activities and business with adverse environmental or social impacts and by emphasising funds that promote environmental and/or social characteristics or aim to invest sustainably.
To the extent that the Fund engages in sustainable investment, in other words investing in financial activities that promote either environmental or social objectives, steps are taken to ensure that these sustainable investments do not cause significant harm to any sustainable investment objective. OP Asset Management uses several data sources from different service providers.
The primary data sources are Bloomberg, Morningstar, MSCI ESG Research and S&P Trucost. Data from Bloomberg and Morningstar are mainly used for fund level analyses. MSCI ESG Research and S&P Trucost provide information on topics such as the sustainability risks of investee companies, share of business operations with adverse impacts, climate risks and opportunities, and how the operations of investee companies align with the UN Sustainable Development Goals. Data from these service providers are used to the extent that the Fund invests in mutual funds managed by OP. The service providers use both data reported by the companies and estimates based on an assessment model developed by each service provider.
Regarding mutual funds managed by OP, the principal adverse impacts (PAI) on sustainability are regularly analysed by screening all investments for their PAI indicators. If the screening reveals investee companies with significant principal adverse impacts on sustainability in comparison to peers, and if the said PAI indicator is deemed essential for the investee company, the investee company will be monitored more closely and excluded, if deemed necessary. Also, a process to engage with the company can be started. For investments in funds other than OP funds, the extent to which PAI factors can be addressed depends on the availability of data, and our processes can develop as the availability and quality of data improve.
This finance product promotes environmental or social characteristics, but sustainable investment is not its primary objective.
To the extent that the Fund engages in sustainable investment, in other words investing in financial activities that promote either environmental or social objectives, steps are taken to ensure that these sustainable investments do not cause significant harm to any sustainable investment objective.
For funds managed by OP Fund Management Company, the principal adverse impacts (PAI) on sustainability are regularly analysed by screening all investments for their PAI indicators. If the screening reveals investee companies with significant principal adverse impacts on sustainability in comparison to peers, and if the said PAI indicator is deemed essential for the investee company, the investee company will be monitored more closely and excluded, if deemed necessary. Also, a process to engage with the company can be started. For investments in funds other than OP funds, the extent to which PAI factors can be addressed depends on the availability of data, and our processes can develop as the availability and quality of data improve.
More information about how we take adverse sustainability impacts into account can be found in the document ""Consideration of Principal Adverse Sustainability Impacts in Investing and Insurance Operations (in Finnish)"", which is available online at op.fi.
The OP Asset Management’s sustainable investment analysis model is used to check whether a company has violated international standards (UN Global Compact and OECD guidelines for multinationals). If a violation is identified, the company cannot be defined as a sustainable investment. The definition of international standard violations and company-specific analysis is based on the methodology of a third-party service provider.
The Fund does not emphasise or prioritise any single theme but addresses sustainability factors by integrating fund level as well as fund-look-through analysis and monitoring of sustainability factors into the investment process. The analysis and monitoring consist of exclusions aimed at limiting exposure to certain industries, as well as the consideration of climate factors and active ownership as part of asset managers' investment processes.
The Fund promotes environmental and social characteristics by integrating fund level as well as fund-look-through analysis and monitoring of sustainability factors into the investment process.
Exclusion: The following criteria apply to investments in OP-managed funds. The Fund excludes from its active direct investments any controversial weapon manufacturers, mining companies producing thermal coal, power companies using thermal coal, tobacco companies, and companies that have breached international standards and where engagement has been unsuccessful. The list of exclusions is public.
Use of ESG data in the analysis of investments: ESG factors are considered part of the investment process by using an external service provider’s data and an ESG tool, developed internally by OP Asset Management. Considering ESG factors in the investment process means, for example, that the risks and opportunities related to the environment, society and governance are made transparent using selected indicators from each area. A sustainable investment percentage is calculated for each internally and externally managed fund and ETF. OP monitors that each ETF provider has an ESG policy or that they are committed to responsible investment principles.
Global norms breaches: Investments in OP Funds are screened regularly for non-compliance with global norms. If a non-compliance is detected, an engagement process is begun with the company in question. The aim is to make non-compliant companies change their practices and begin to comply with global norms in their operations. If engagement proves unsuccessful, the company may be removed from the fund portfolio and placed on the exclusion list.
Minimum allocation for sustainable investments: The following description applies to investments in OP-managed funds. Regarding OP-managed funds, the funds allocate a minimum share of investments, as stated below, in companies whose business promotes one or more of the UN Sustainable Development Goals (SDG) without harming other sustainability factors or objectives. Sustainable investments are determined using OP Asset Management’s analysis model which is based on an external service provider’s SDG and sustainability data.
Methods for assessing good governance practices: Analysing the target company’s governance is an important part of the investment process. For us, good governance is a fundamental pillar for any company’s financial success, regardless of the sector. Regarding OP-managed funds, when assessing governance, some of the areas considered include the appropriateness of the target company’s administrative organisation, the target company’s actions in relation to its personnel, and the target company’s rewarding and taxation practices. To assess good governance, we use the analysis of third-party service providers and our own qualitative analysis if no external data are available. We screen the funds regularly against the criteria of good governance, with minimum thresholds in place. We also expect good governance from our external asset managers, and its examination is an essential part of the due diligence process conducted before investment decisions and of the annual survey.
The Fund makes investments that promote environmental and social characteristics, and sustainable investments account for at least 5% of these.
Others: The Fund may also invest its assets in exchange traded derivatives and OTC derivative contracts in order to hedge against the risk of adverse market movements, to replace direct investments and to otherwise promote effective portfolio management. Sustainability data might not be available for possible derivatives.
The Fund might include investment options which are in line with the EU Taxonomy, but the Fund does not commit to a certain minimum number of investments in line with the EU Taxonomy. Currently, only few investment options in line with the EU Taxonomy are available, and there is a limited amount of reported information on compliance with the EU Taxonomy.
Using data from a third-party service provider, portfolio managers follow whether a specific fund invested in promotes environmental or social characteristics and/or whether the fund aims to make sustainable investments. Portfolio managers also use an internally developed ESG tool for fund level analysis of the degree to which the fund product emphasises investments in funds that promote environmental and social characteristics and aim to invest sustainably. This ESG tool can also be used to ensure that exposure to OP Asset Management's exclusion list is minimised. Portfolio managers can also use the tool to monitor that the fund's minimum allocation to sustainable investment is reached and that any adverse sustainability impacts related to sustainable investments are addressed either through OP Asset Management's principal adverse impact (PAI) analysis or the PAI monitoring of third-party funds.
Investments are regularly screened by ESG specialists for the metrics listed above. Fund-specific ESG indicators on top-level environmental and social characteristics related to the Fund are reported on a monthly basis.
The Fund avoids investing in sectors that OP Asset Management has indicated as having adverse impacts on the environment and society. The enforcement of exclusions is monitored regularly by calculating the Fund’s exposure to controversial and harmful operations and by screening the Fund using the criteria in the exclusion list.
ESG factors are addressed in investment decisions by emphasising funds that promote environmental and/or social characteristics or that aim to invest sustainably. Portfolio managers have access to fund level data provided by both a third-party ESG service provider and an ESG tool internally developed by OP Asset Management. Data from a third-party service provider enables portfolio managers to follow whether a specific fund invested in promotes environmental or social characteristics and/or whether the fund aims to make sustainable investments. The internally developed ESG tool makes it possible to assess the degree to which a financial instrument emphasises investments in funds that promote environmental and social characteristics and aim to invest sustainably, as well as to ensure that any exposure to sectors that OP Asset Management has defined as adverse in terms of sustainability is minimised. Portfolio managers can also use the tool to monitor that the fund's minimum allocation to sustainable investment is reached and that any adverse sustainability impacts related to sustainable investments are addressed either through OP Asset Management's principal adverse impact (PAI) analysis or the PAI monitoring of third-party funds.
External asset managers' ESG operations are comprehensively audited by reviewing their ESG policy, resources and reporting, exclusion principles and consideration of sustainability factors in investment activities. The audit results are scored by OP Asset Management, and the external managers' sustainability work and its development are monitored using an annual survey. The Fund does not invest in external managers' funds that do not have an ESG policy or are not committed to responsible investment principles.
OP Asset Management uses several data sources from different service providers. The primary data sources are Bloomberg, Morningstar, MSCI ESG Research and S&P Trucost. Data from Bloomberg and Morningstar are mainly used for fund level analysis, while data from MSCI ESG Research and S&P Trucost are used for company level analysis regarding investments in OP-managed funds. These service providers provide data on topics including the sustainability risks of investee companies, share of business operations with adverse impacts, climate risks and opportunities, and how the operations of investee companies align with the UN Sustainable Development Goals. The service providers use both data reported by the companies and estimates based on an assessment model developed by each service provider.
Our service providers use detailed and standardised processes for ensuring data quality and correcting inaccuracies in the data.
When selecting new data packages and service providers, we carefully compare and analyse the data quality, coverage, methodology and reliability of each service provider. We regularly monitor trends in ESG data and service providers on the market to ensure we have the best possible data to support our investment decisions and client reporting.
Data sources are used either directly based on the service provider's metrics or analysis or by combining different metrics and using them for OP Asset Management's internal analyses and assessments. Some of the data are imported directly to OP Asset Management’s database, from which it can be used in internal analysis models and reports. Data are also used directly through interfaces offered by the service providers.
The share of data assessed depends on sustainability indicators and the sustainability factor under scrutiny, and it is impossible to give a universal definition of the share of assessed data of all ESG data. It is difficult to determine what portion of ESG data is based on reported information and estimates respectively. In cases where reported data are available, they are used as the primary source. Third-party service providers must specify for each metric whether the data are reported by companies themselves or estimated using the provider's internal model.
At the moment, ESG data are not fully standardised, and they are not necessarily widely reported by fund and asset management companies. This can make comparability challenging. Service providers may use different methods for compiling, evaluating and analysing data. For these reasons, we carefully review the methodologies of service providers to ensure their suitability for our purposes.
We use several different service providers to enable us to assess certain metrics from multiple sources and fill any gaps in data.
The Fund is subject to exclusion criteria as described above in part (d) Investment strategy. A party independent of portfolio management oversees that the Fund complies with the criteria. The Fund’s material exclusion criteria are implemented in the trading system.
To the extent that the Fund invests in OP-managed funds, the funds work as an active owner by participating in shareholder meetings and engaging in direct dialogue with the companies.
The Fund's benchmark index is not applied to the performance of environmental or social characteristics promoted by the Fund.
Summary
No principal adverse impact on a sustainable investment objective
Sustainable investment objective of the financial product
Investment strategy
Share of investments
Monitoring of sustainable investment objectives
Methods
Data sources and data processing
Limitations of the methodology and data
Due diligence
Shareholder engagement policy
Achieving a sustainable investment objective
The Fund promotes environmental and social characteristics by integrating fund level as well as fund-look-through analysis and monitoring of sustainability factors into the investment process. The Fund does not emphasise or prioritise any single theme or sustainability factor, but addresses sustainability factors widely, avoiding investments in controversial activities and business with adverse environmental or social impacts and by emphasising funds that promote environmental and/or social characteristics or aim to invest sustainably.
To the extent that the Fund engages in sustainable investment, in other words investing in financial activities that promote either environmental or social objectives, steps are taken to ensure that these sustainable investments do not cause significant harm to any sustainable investment objective. OP Asset Management uses several data sources from different service providers.
The primary data sources are Bloomberg, Morningstar, MSCI ESG Research and S&P Trucost. Data from Bloomberg and Morningstar are mainly used for fund level analyses. MSCI ESG Research and S&P Trucost provide information on topics such as the sustainability risks of investee companies, share of business operations with adverse impacts, climate risks and opportunities, and how the operations of investee companies align with the UN Sustainable Development Goals. Data from these service providers are used to the extent that the Fund invests in mutual funds managed by OP. The service providers use both data reported by the companies and estimates based on an assessment model developed by each service provider.
Regarding mutual funds managed by OP, the principal adverse impacts (PAI) on sustainability are regularly analysed by screening all investments for their PAI indicators. If the screening reveals investee companies with significant principal adverse impacts on sustainability in comparison to peers, and if the said PAI indicator is deemed essential for the investee company, the investee company will be monitored more closely and excluded, if deemed necessary. Also, a process to engage with the company can be started. For investments in funds other than OP funds, the extent to which PAI factors can be addressed depends on the availability of data, and our processes can develop as the availability and quality of data improve.
This finance product promotes environmental or social characteristics, but sustainable investment is not its primary objective.
To the extent that the Fund engages in sustainable investment, in other words investing in financial activities that promote either environmental or social objectives, steps are taken to ensure that these sustainable investments do not cause significant harm to any sustainable investment objective.
For funds managed by OP Fund Management Company, the principal adverse impacts (PAI) on sustainability are regularly analysed by screening all investments for their PAI indicators. If the screening reveals investee companies with significant principal adverse impacts on sustainability in comparison to peers, and if the said PAI indicator is deemed essential for the investee company, the investee company will be monitored more closely and excluded, if deemed necessary. Also, a process to engage with the company can be started. For investments in funds other than OP funds, the extent to which PAI factors can be addressed depends on the availability of data, and our processes can develop as the availability and quality of data improve.
More information about how we take adverse sustainability impacts into account can be found in the document ""Consideration of Principal Adverse Sustainability Impacts in Investing and Insurance Operations (in Finnish)"", which is available online at op.fi.
The OP Asset Management’s sustainable investment analysis model is used to check whether a company has violated international standards (UN Global Compact and OECD guidelines for multinationals). If a violation is identified, the company cannot be defined as a sustainable investment. The definition of international standard violations and company-specific analysis is based on the methodology of a third-party service provider.
The Fund does not emphasise or prioritise any single theme but addresses sustainability factors by integrating fund level as well as fund-look-through analysis and monitoring of sustainability factors into the investment process. The analysis and monitoring consist of exclusions aimed at limiting exposure to certain industries, as well as the consideration of climate factors and active ownership as part of asset managers' investment processes.
The Fund promotes environmental and social characteristics by integrating fund level as well as fund-look-through analysis and monitoring of sustainability factors into the investment process.
Exclusion: The following criteria apply to investments in OP-managed funds. The Fund excludes from its active direct investments any controversial weapon manufacturers, mining companies producing thermal coal, power companies using thermal coal, tobacco companies, and companies that have breached international standards and where engagement has been unsuccessful. The list of exclusions is public.
Use of ESG data in the analysis of investments: ESG factors are considered part of the investment process by using an external service provider’s data and an ESG tool, developed internally by OP Asset Management. Considering ESG factors in the investment process means, for example, that the risks and opportunities related to the environment, society and governance are made transparent using selected indicators from each area. A sustainable investment percentage is calculated for each internally and externally managed fund and ETF. OP monitors that each ETF provider has an ESG policy or that they are committed to responsible investment principles.
Global norms breaches: Investments in OP Funds are screened regularly for non-compliance with global norms. If a non-compliance is detected, an engagement process is begun with the company in question. The aim is to make non-compliant companies change their practices and begin to comply with global norms in their operations. If engagement proves unsuccessful, the company may be removed from the fund portfolio and placed on the exclusion list.
Minimum allocation for sustainable investments: The following description applies to investments in OP-managed funds. Regarding OP-managed funds, the funds allocate a minimum share of investments, as stated below, in companies whose business promotes one or more of the UN Sustainable Development Goals (SDG) without harming other sustainability factors or objectives. Sustainable investments are determined using OP Asset Management’s analysis model which is based on an external service provider’s SDG and sustainability data.
Methods for assessing good governance practices: Analysing the target company’s governance is an important part of the investment process. For us, good governance is a fundamental pillar for any company’s financial success, regardless of the sector. Regarding OP-managed funds, when assessing governance, some of the areas considered include the appropriateness of the target company’s administrative organisation, the target company’s actions in relation to its personnel, and the target company’s rewarding and taxation practices. To assess good governance, we use the analysis of third-party service providers and our own qualitative analysis if no external data are available. We screen the funds regularly against the criteria of good governance, with minimum thresholds in place. We also expect good governance from our external asset managers, and its examination is an essential part of the due diligence process conducted before investment decisions and of the annual survey.
The Fund makes investments that promote environmental and social characteristics, and sustainable investments account for at least 10 % of these.
Others: The Fund may also invest its assets in exchange traded derivatives and OTC derivative contracts in order to hedge against the risk of adverse market movements, to replace direct investments and to otherwise promote effective portfolio management. Sustainability data might not be available for possible derivatives.
The Fund might include investment options which are in line with the EU Taxonomy, but the Fund does not commit to a certain minimum number of investments in line with the EU Taxonomy. Currently, only few investment options in line with the EU Taxonomy are available, and there is a limited amount of reported information on compliance with the EU Taxonomy.
Using data from a third-party service provider, portfolio managers follow whether a specific fund invested in promotes environmental or social characteristics and/or whether the fund aims to make sustainable investments. Portfolio managers also use an internally developed ESG tool for fund level analysis of the degree to which the fund product emphasises investments in funds that promote environmental and social characteristics and aim to invest sustainably. This ESG tool can also be used to ensure that exposure to OP Asset Management's exclusion list is minimised. Portfolio managers can also use the tool to monitor that the fund's minimum allocation to sustainable investment is reached and that any adverse sustainability impacts related to sustainable investments are addressed either through OP Asset Management's principal adverse impact (PAI) analysis or the PAI monitoring of third-party funds.
Investments are regularly screened by ESG specialists for the metrics listed above. Fund-specific ESG indicators on top-level environmental and social characteristics related to the Fund are reported on a monthly basis.
The Fund avoids investing in sectors that OP Asset Management has indicated as having adverse impacts on the environment and society. The enforcement of exclusions is monitored regularly by calculating the Fund’s exposure to controversial and harmful operations and by screening the Fund using the criteria in the exclusion list.
ESG factors are addressed in investment decisions by emphasising funds that promote environmental and/or social characteristics or that aim to invest sustainably. Portfolio managers have access to fund level data provided by both a third-party ESG service provider and an ESG tool internally developed by OP Asset Management. Data from a third-party service provider enables portfolio managers to follow whether a specific fund invested in promotes environmental or social characteristics and/or whether the fund aims to make sustainable investments. The internally developed ESG tool makes it possible to assess the degree to which a financial instrument emphasises investments in funds that promote environmental and social characteristics and aim to invest sustainably, as well as to ensure that any exposure to sectors that OP Asset Management has defined as adverse in terms of sustainability is minimised. Portfolio managers can also use the tool to monitor that the fund's minimum allocation to sustainable investment is reached and that any adverse sustainability impacts related to sustainable investments are addressed either through OP Asset Management's principal adverse impact (PAI) analysis or the PAI monitoring of third-party funds.
External asset managers' ESG operations are comprehensively audited by reviewing their ESG policy, resources and reporting, exclusion principles and consideration of sustainability factors in investment activities. The audit results are scored by OP Asset Management, and the external managers' sustainability work and its development are monitored using an annual survey. The Fund does not invest in external managers' funds that do not have an ESG policy or are not committed to responsible investment principles.
OP Asset Management uses several data sources from different service providers. The primary data sources are Bloomberg, Morningstar, MSCI ESG Research and S&P Trucost. Data from Bloomberg and Morningstar are mainly used for fund level analysis, while data from MSCI ESG Research and S&P Trucost are used for company level analysis regarding investments in OP-managed funds. These service providers provide data on topics including the sustainability risks of investee companies, share of business operations with adverse impacts, climate risks and opportunities, and how the operations of investee companies align with the UN Sustainable Development Goals. The service providers use both data reported by the companies and estimates based on an assessment model developed by each service provider.
Our service providers use detailed and standardised processes for ensuring data quality and correcting inaccuracies in the data.
When selecting new data packages and service providers, we carefully compare and analyse the data quality, coverage, methodology and reliability of each service provider. We regularly monitor trends in ESG data and service providers on the market to ensure we have the best possible data to support our investment decisions and client reporting.
Data sources are used either directly based on the service provider's metrics or analysis or by combining different metrics and using them for OP Asset Management's internal analyses and assessments. Some of the data are imported directly to OP Asset Management’s database, from which it can be used in internal analysis models and reports. Data are also used directly through interfaces offered by the service providers.
The share of data assessed depends on sustainability indicators and the sustainability factor under scrutiny, and it is impossible to give a universal definition of the share of assessed data of all ESG data. It is difficult to determine what portion of ESG data is based on reported information and estimates respectively. In cases where reported data are available, they are used as the primary source. Third-party service providers must specify for each metric whether the data are reported by companies themselves or estimated using the provider's internal model.
At the moment, ESG data are not fully standardised, and they are not necessarily widely reported by fund and asset management companies. This can make comparability challenging. Service providers may use different methods for compiling, evaluating and analysing data. For these reasons, we carefully review the methodologies of service providers to ensure their suitability for our purposes.
We use several different service providers to enable us to assess certain metrics from multiple sources and fill any gaps in data.
The Fund is subject to exclusion criteria as described above in part (d) Investment strategy. A party independent of portfolio management oversees that the Fund complies with the criteria. The Fund’s material exclusion criteria are implemented in the trading system.
To the extent that the Fund invests in OP-managed funds, the funds work as an active owner by participating in shareholder meetings and engaging in direct dialogue with the companies.
The Fund's benchmark index is not applied to the performance of environmental or social characteristics promoted by the Fund.
Summary
No principal adverse impact on a sustainable investment objective
Sustainable investment objective of the financial product
Investment strategy
Share of investments
Monitoring of sustainable investment objectives
Methods
Data sources and data processing
Limitations of the methodology and data
Due diligence
Shareholder engagement policy
Achieving a sustainable investment objective
The Fund promotes environmental and social characteristics by integrating fund level as well as fund-look-through analysis and monitoring of sustainability factors into the investment process. The Fund does not emphasise or prioritise any single theme or sustainability factor, but addresses sustainability factors widely, avoiding investments in controversial activities and business with adverse environmental or social impacts and by emphasising funds that promote environmental and/or social characteristics or aim to invest sustainably.
To the extent that the Fund engages in sustainable investment, in other words investing in financial activities that promote either environmental or social objectives, steps are taken to ensure that these sustainable investments do not cause significant harm to any sustainable investment objective. OP Asset Management uses several data sources from different service providers.
The primary data sources are Bloomberg, Morningstar, MSCI ESG Research and S&P Trucost. Data from Bloomberg and Morningstar are mainly used for fund level analyses. MSCI ESG Research and S&P Trucost provide information on topics such as the sustainability risks of investee companies, share of business operations with adverse impacts, climate risks and opportunities, and how the operations of investee companies align with the UN Sustainable Development Goals. Data from these service providers are used to the extent that the Fund invests in mutual funds managed by OP. The service providers use both data reported by the companies and estimates based on an assessment model developed by each service provider.
Regarding mutual funds managed by OP, the principal adverse impacts (PAI) on sustainability are regularly analysed by screening all investments for their PAI indicators. If the screening reveals investee companies with significant principal adverse impacts on sustainability in comparison to peers, and if the said PAI indicator is deemed essential for the investee company, the investee company will be monitored more closely and excluded, if deemed necessary. Also, a process to engage with the company can be started. For investments in funds other than OP funds, the extent to which PAI factors can be addressed depends on the availability of data, and our processes can develop as the availability and quality of data improve.
This finance product promotes environmental or social characteristics, but sustainable investment is not its primary objective.
To the extent that the Fund engages in sustainable investment, in other words investing in financial activities that promote either environmental or social objectives, steps are taken to ensure that these sustainable investments do not cause significant harm to any sustainable investment objective.
For funds managed by OP Fund Management Company, the principal adverse impacts (PAI) on sustainability are regularly analysed by screening all investments for their PAI indicators. If the screening reveals investee companies with significant principal adverse impacts on sustainability in comparison to peers, and if the said PAI indicator is deemed essential for the investee company, the investee company will be monitored more closely and excluded, if deemed necessary. Also, a process to engage with the company can be started. For investments in funds other than OP funds, the extent to which PAI factors can be addressed depends on the availability of data, and our processes can develop as the availability and quality of data improve.
More information about how we take adverse sustainability impacts into account can be found in the document ""Consideration of Principal Adverse Sustainability Impacts in Investing and Insurance Operations (in Finnish)"", which is available online at op.fi.
The OP Asset Management’s sustainable investment analysis model is used to check whether a company has violated international standards (UN Global Compact and OECD guidelines for multinationals). If a violation is identified, the company cannot be defined as a sustainable investment. The definition of international standard violations and company-specific analysis is based on the methodology of a third-party service provider.
The Fund does not emphasise or prioritise any single theme but addresses sustainability factors by integrating fund level as well as fund-look-through analysis and monitoring of sustainability factors into the investment process. The analysis and monitoring consist of exclusions aimed at limiting exposure to certain industries, as well as the consideration of climate factors and active ownership as part of asset managers' investment processes.
The Fund promotes environmental and social characteristics by integrating fund level as well as fund-look-through analysis and monitoring of sustainability factors into the investment process.
Exclusion: The following criteria apply to investments in OP-managed funds. The Fund excludes from its active direct investments any controversial weapon manufacturers, mining companies producing thermal coal, power companies using thermal coal, tobacco companies, and companies that have breached international standards and where engagement has been unsuccessful. The list of exclusions is public.
Use of ESG data in the analysis of investments: ESG factors are considered part of the investment process by using an external service provider’s data and an ESG tool, developed internally by OP Asset Management. Considering ESG factors in the investment process means, for example, that the risks and opportunities related to the environment, society and governance are made transparent using selected indicators from each area. A sustainable investment percentage is calculated for each internally and externally managed fund and ETF. OP monitors that each ETF provider has an ESG policy or that they are committed to responsible investment principles.
Global norms breaches: Investments in OP Funds are screened regularly for non-compliance with global norms. If a non-compliance is detected, an engagement process is begun with the company in question. The aim is to make non-compliant companies change their practices and begin to comply with global norms in their operations. If engagement proves unsuccessful, the company may be removed from the fund portfolio and placed on the exclusion list.
Minimum allocation for sustainable investments: The following description applies to investments in OP-managed funds. Regarding OP-managed funds, the funds allocate a minimum share of investments, as stated below, in companies whose business promotes one or more of the UN Sustainable Development Goals (SDG) without harming other sustainability factors or objectives. Sustainable investments are determined using OP Asset Management’s analysis model which is based on an external service provider’s SDG and sustainability data.
Methods for assessing good governance practices: Analysing the target company’s governance is an important part of the investment process. For us, good governance is a fundamental pillar for any company’s financial success, regardless of the sector. Regarding OP-managed funds, when assessing governance, some of the areas considered include the appropriateness of the target company’s administrative organisation, the target company’s actions in relation to its personnel, and the target company’s rewarding and taxation practices. To assess good governance, we use the analysis of third-party service providers and our own qualitative analysis if no external data are available. We screen the funds regularly against the criteria of good governance, with minimum thresholds in place. We also expect good governance from our external asset managers, and its examination is an essential part of the due diligence process conducted before investment decisions and of the annual survey.
The Fund makes investments that promote environmental and social characteristics, and sustainable investments account for at least 5% of these.
Others: The Fund may also invest its assets in exchange traded derivatives and OTC derivative contracts in order to hedge against the risk of adverse market movements, to replace direct investments and to otherwise promote effective portfolio management. Sustainability data might not be available for possible derivatives.
The Fund might include investment options which are in line with the EU Taxonomy, but the Fund does not commit to a certain minimum number of investments in line with the EU Taxonomy. Currently, only few investment options in line with the EU Taxonomy are available, and there is a limited amount of reported information on compliance with the EU Taxonomy.
Using data from a third-party service provider, portfolio managers follow whether a specific fund invested in promotes environmental or social characteristics and/or whether the fund aims to make sustainable investments. Portfolio managers also use an internally developed ESG tool for fund level analysis of the degree to which the fund product emphasises investments in funds that promote environmental and social characteristics and aim to invest sustainably. This ESG tool can also be used to ensure that exposure to OP Asset Management's exclusion list is minimised. Portfolio managers can also use the tool to monitor that the fund's minimum allocation to sustainable investment is reached and that any adverse sustainability impacts related to sustainable investments are addressed either through OP Asset Management's principal adverse impact (PAI) analysis or the PAI monitoring of third-party funds.
Investments are regularly screened by ESG specialists for the metrics listed above. Fund-specific ESG indicators on top-level environmental and social characteristics related to the Fund are reported on a monthly basis.
The Fund avoids investing in sectors that OP Asset Management has indicated as having adverse impacts on the environment and society. The enforcement of exclusions is monitored regularly by calculating the Fund’s exposure to controversial and harmful operations and by screening the Fund using the criteria in the exclusion list.
ESG factors are addressed in investment decisions by emphasising funds that promote environmental and/or social characteristics or that aim to invest sustainably. Portfolio managers have access to fund level data provided by both a third-party ESG service provider and an ESG tool internally developed by OP Asset Management. Data from a third-party service provider enables portfolio managers to follow whether a specific fund invested in promotes environmental or social characteristics and/or whether the fund aims to make sustainable investments. The internally developed ESG tool makes it possible to assess the degree to which a financial instrument emphasises investments in funds that promote environmental and social characteristics and aim to invest sustainably, as well as to ensure that any exposure to sectors that OP Asset Management has defined as adverse in terms of sustainability is minimised. Portfolio managers can also use the tool to monitor that the fund's minimum allocation to sustainable investment is reached and that any adverse sustainability impacts related to sustainable investments are addressed either through OP Asset Management's principal adverse impact (PAI) analysis or the PAI monitoring of third-party funds.
External asset managers' ESG operations are comprehensively audited by reviewing their ESG policy, resources and reporting, exclusion principles and consideration of sustainability factors in investment activities. The audit results are scored by OP Asset Management, and the external managers' sustainability work and its development are monitored using an annual survey. The Fund does not invest in external managers' funds that do not have an ESG policy or are not committed to responsible investment principles.
OP Asset Management uses several data sources from different service providers. The primary data sources are Bloomberg, Morningstar, MSCI ESG Research and S&P Trucost. Data from Bloomberg and Morningstar are mainly used for fund level analysis, while data from MSCI ESG Research and S&P Trucost are used for company level analysis regarding investments in OP-managed funds. These service providers provide data on topics including the sustainability risks of investee companies, share of business operations with adverse impacts, climate risks and opportunities, and how the operations of investee companies align with the UN Sustainable Development Goals. The service providers use both data reported by the companies and estimates based on an assessment model developed by each service provider.
Our service providers use detailed and standardised processes for ensuring data quality and correcting inaccuracies in the data.
When selecting new data packages and service providers, we carefully compare and analyse the data quality, coverage, methodology and reliability of each service provider. We regularly monitor trends in ESG data and service providers on the market to ensure we have the best possible data to support our investment decisions and client reporting.
Data sources are used either directly based on the service provider's metrics or analysis or by combining different metrics and using them for OP Asset Management's internal analyses and assessments. Some of the data are imported directly to OP Asset Management’s database, from which it can be used in internal analysis models and reports. Data are also used directly through interfaces offered by the service providers.
The share of data assessed depends on sustainability indicators and the sustainability factor under scrutiny, and it is impossible to give a universal definition of the share of assessed data of all ESG data. It is difficult to determine what portion of ESG data is based on reported information and estimates respectively. In cases where reported data are available, they are used as the primary source. Third-party service providers must specify for each metric whether the data are reported by companies themselves or estimated using the provider's internal model.
At the moment, ESG data are not fully standardised, and they are not necessarily widely reported by fund and asset management companies. This can make comparability challenging. Service providers may use different methods for compiling, evaluating and analysing data. For these reasons, we carefully review the methodologies of service providers to ensure their suitability for our purposes.
We use several different service providers to enable us to assess certain metrics from multiple sources and fill any gaps in data.
The Fund is subject to exclusion criteria as described above in part (d) Investment strategy. A party independent of portfolio management oversees that the Fund complies with the criteria. The Fund’s material exclusion criteria are implemented in the trading system.
To the extent that the Fund invests in OP-managed funds, the funds work as an active owner by participating in shareholder meetings and engaging in direct dialogue with the companies.
The Fund's benchmark index is not applied to the performance of environmental or social characteristics promoted by the Fund.
Summary
No principal adverse impact on a sustainable investment objective
Sustainable investment objective of the financial product
Investment strategy
Share of investments
Monitoring of sustainable investment objectives
Methods
Data sources and data processing
Limitations of the methodology and data
Due diligence
Shareholder engagement policy
Achieving a sustainable investment objective
The Fund promotes environmental and social characteristics by integrating fund level as well as fund-look-through analysis and monitoring of sustainability factors into the investment process. The Fund does not emphasise or prioritise any single theme or sustainability factor, but addresses sustainability factors widely, avoiding investments in controversial activities and business with adverse environmental or social impacts and by emphasising funds that promote environmental and/or social characteristics or aim to invest sustainably.
To the extent that the Fund engages in sustainable investment, in other words investing in financial activities that promote either environmental or social objectives, steps are taken to ensure that these sustainable investments do not cause significant harm to any sustainable investment objective. OP Asset Management uses several data sources from different service providers.
The primary data sources are Bloomberg, Morningstar, MSCI ESG Research and S&P Trucost. Data from Bloomberg and Morningstar are mainly used for fund level analyses. MSCI ESG Research and S&P Trucost provide information on topics such as the sustainability risks of investee companies, share of business operations with adverse impacts, climate risks and opportunities, and how the operations of investee companies align with the UN Sustainable Development Goals. Data from these service providers are used to the extent that the Fund invests in mutual funds managed by OP. The service providers use both data reported by the companies and estimates based on an assessment model developed by each service provider.
Regarding mutual funds managed by OP, the principal adverse impacts (PAI) on sustainability are regularly analysed by screening all investments for their PAI indicators. If the screening reveals investee companies with significant principal adverse impacts on sustainability in comparison to peers, and if the said PAI indicator is deemed essential for the investee company, the investee company will be monitored more closely and excluded, if deemed necessary. Also, a process to engage with the company can be started. For investments in funds other than OP funds, the extent to which PAI factors can be addressed depends on the availability of data, and our processes can develop as the availability and quality of data improve.
This finance product promotes environmental or social characteristics, but sustainable investment is not its primary objective.
To the extent that the Fund engages in sustainable investment, in other words investing in financial activities that promote either environmental or social objectives, steps are taken to ensure that these sustainable investments do not cause significant harm to any sustainable investment objective.
For funds managed by OP Fund Management Company, the principal adverse impacts (PAI) on sustainability are regularly analysed by screening all investments for their PAI indicators. If the screening reveals investee companies with significant principal adverse impacts on sustainability in comparison to peers, and if the said PAI indicator is deemed essential for the investee company, the investee company will be monitored more closely and excluded, if deemed necessary. Also, a process to engage with the company can be started. For investments in funds other than OP funds, the extent to which PAI factors can be addressed depends on the availability of data, and our processes can develop as the availability and quality of data improve.
More information about how we take adverse sustainability impacts into account can be found in the document ""Consideration of Principal Adverse Sustainability Impacts in Investing and Insurance Operations (in Finnish)"", which is available online at op.fi.
The OP Asset Management’s sustainable investment analysis model is used to check whether a company has violated international standards (UN Global Compact and OECD guidelines for multinationals). If a violation is identified, the company cannot be defined as a sustainable investment. The definition of international standard violations and company-specific analysis is based on the methodology of a third-party service provider.
The Fund does not emphasise or prioritise any single theme but addresses sustainability factors by integrating fund level as well as fund-look-through analysis and monitoring of sustainability factors into the investment process. The analysis and monitoring consist of exclusions aimed at limiting exposure to certain industries, as well as the consideration of climate factors and active ownership as part of asset managers' investment processes.
The Fund promotes environmental and social characteristics by integrating fund level as well as fund-look-through analysis and monitoring of sustainability factors into the investment process.
Exclusion: The following criteria apply to investments in OP-managed funds. The Fund excludes from its active direct investments any controversial weapon manufacturers, mining companies producing thermal coal, power companies using thermal coal, tobacco companies, and companies that have breached international standards and where engagement has been unsuccessful. The list of exclusions is public.
Use of ESG data in the analysis of investments: ESG factors are considered part of the investment process by using an external service provider’s data and an ESG tool, developed internally by OP Asset Management. Considering ESG factors in the investment process means, for example, that the risks and opportunities related to the environment, society and governance are made transparent using selected indicators from each area. A sustainable investment percentage is calculated for each internally and externally managed fund and ETF. OP monitors that each ETF provider has an ESG policy or that they are committed to responsible investment principles.
Global norms breaches: Investments in OP Funds are screened regularly for non-compliance with global norms. If a non-compliance is detected, an engagement process is begun with the company in question. The aim is to make non-compliant companies change their practices and begin to comply with global norms in their operations. If engagement proves unsuccessful, the company may be removed from the fund portfolio and placed on the exclusion list.
Minimum allocation for sustainable investments: The following description applies to investments in OP-managed funds. Regarding OP-managed funds, the funds allocate a minimum share of investments, as stated below, in companies whose business promotes one or more of the UN Sustainable Development Goals (SDG) without harming other sustainability factors or objectives. Sustainable investments are determined using OP Asset Management’s analysis model which is based on an external service provider’s SDG and sustainability data.
Methods for assessing good governance practices: Analysing the target company’s governance is an important part of the investment process. For us, good governance is a fundamental pillar for any company’s financial success, regardless of the sector. Regarding OP-managed funds, when assessing governance, some of the areas considered include the appropriateness of the target company’s administrative organisation, the target company’s actions in relation to its personnel, and the target company’s rewarding and taxation practices. To assess good governance, we use the analysis of third-party service providers and our own qualitative analysis if no external data are available. We screen the funds regularly against the criteria of good governance, with minimum thresholds in place. We also expect good governance from our external asset managers, and its examination is an essential part of the due diligence process conducted before investment decisions and of the annual survey.
The Fund makes investments that promote environmental and social characteristics, and sustainable investments account for at least 10 % of these.
Others: The Fund may also invest its assets in exchange traded derivatives and OTC derivative contracts in order to hedge against the risk of adverse market movements, to replace direct investments and to otherwise promote effective portfolio management. Sustainability data might not be available for possible derivatives.
The Fund might include investment options which are in line with the EU Taxonomy, but the Fund does not commit to a certain minimum number of investments in line with the EU Taxonomy. Currently, only few investment options in line with the EU Taxonomy are available, and there is a limited amount of reported information on compliance with the EU Taxonomy.
Using data from a third-party service provider, portfolio managers follow whether a specific fund invested in promotes environmental or social characteristics and/or whether the fund aims to make sustainable investments. Portfolio managers also use an internally developed ESG tool for fund level analysis of the degree to which the fund product emphasises investments in funds that promote environmental and social characteristics and aim to invest sustainably. This ESG tool can also be used to ensure that exposure to OP Asset Management's exclusion list is minimised. Portfolio managers can also use the tool to monitor that the fund's minimum allocation to sustainable investment is reached and that any adverse sustainability impacts related to sustainable investments are addressed either through OP Asset Management's principal adverse impact (PAI) analysis or the PAI monitoring of third-party funds.
Investments are regularly screened by ESG specialists for the metrics listed above. Fund-specific ESG indicators on top-level environmental and social characteristics related to the Fund are reported on a monthly basis.
The Fund avoids investing in sectors that OP Asset Management has indicated as having adverse impacts on the environment and society. The enforcement of exclusions is monitored regularly by calculating the Fund’s exposure to controversial and harmful operations and by screening the Fund using the criteria in the exclusion list.
ESG factors are addressed in investment decisions by emphasising funds that promote environmental and/or social characteristics or that aim to invest sustainably. Portfolio managers have access to fund level data provided by both a third-party ESG service provider and an ESG tool internally developed by OP Asset Management. Data from a third-party service provider enables portfolio managers to follow whether a specific fund invested in promotes environmental or social characteristics and/or whether the fund aims to make sustainable investments. The internally developed ESG tool makes it possible to assess the degree to which a financial instrument emphasises investments in funds that promote environmental and social characteristics and aim to invest sustainably, as well as to ensure that any exposure to sectors that OP Asset Management has defined as adverse in terms of sustainability is minimised. Portfolio managers can also use the tool to monitor that the fund's minimum allocation to sustainable investment is reached and that any adverse sustainability impacts related to sustainable investments are addressed either through OP Asset Management's principal adverse impact (PAI) analysis or the PAI monitoring of third-party funds.
External asset managers' ESG operations are comprehensively audited by reviewing their ESG policy, resources and reporting, exclusion principles and consideration of sustainability factors in investment activities. The audit results are scored by OP Asset Management, and the external managers' sustainability work and its development are monitored using an annual survey. The Fund does not invest in external managers' funds that do not have an ESG policy or are not committed to responsible investment principles.
OP Asset Management uses several data sources from different service providers. The primary data sources are Bloomberg, Morningstar, MSCI ESG Research and S&P Trucost. Data from Bloomberg and Morningstar are mainly used for fund level analysis, while data from MSCI ESG Research and S&P Trucost are used for company level analysis regarding investments in OP-managed funds. These service providers provide data on topics including the sustainability risks of investee companies, share of business operations with adverse impacts, climate risks and opportunities, and how the operations of investee companies align with the UN Sustainable Development Goals. The service providers use both data reported by the companies and estimates based on an assessment model developed by each service provider.
Our service providers use detailed and standardised processes for ensuring data quality and correcting inaccuracies in the data.
When selecting new data packages and service providers, we carefully compare and analyse the data quality, coverage, methodology and reliability of each service provider. We regularly monitor trends in ESG data and service providers on the market to ensure we have the best possible data to support our investment decisions and client reporting.
Data sources are used either directly based on the service provider's metrics or analysis or by combining different metrics and using them for OP Asset Management's internal analyses and assessments. Some of the data are imported directly to OP Asset Management’s database, from which it can be used in internal analysis models and reports. Data are also used directly through interfaces offered by the service providers.
The share of data assessed depends on sustainability indicators and the sustainability factor under scrutiny, and it is impossible to give a universal definition of the share of assessed data of all ESG data. It is difficult to determine what portion of ESG data is based on reported information and estimates respectively. In cases where reported data are available, they are used as the primary source. Third-party service providers must specify for each metric whether the data are reported by companies themselves or estimated using the provider's internal model.
At the moment, ESG data are not fully standardised, and they are not necessarily widely reported by fund and asset management companies. This can make comparability challenging. Service providers may use different methods for compiling, evaluating and analysing data. For these reasons, we carefully review the methodologies of service providers to ensure their suitability for our purposes.
We use several different service providers to enable us to assess certain metrics from multiple sources and fill any gaps in data.
The Fund is subject to exclusion criteria as described above in part (d) Investment strategy. A party independent of portfolio management oversees that the Fund complies with the criteria. The Fund’s material exclusion criteria are implemented in the trading system.
To the extent that the Fund invests in OP-managed funds, the funds work as an active owner by participating in shareholder meetings and engaging in direct dialogue with the companies.
The Fund's benchmark index is not applied to the performance of environmental or social characteristics promoted by the Fund.
Summary
No principal adverse impact on a sustainable investment objective
Sustainable investment objective of the financial product
Investment strategy
Share of investments
Monitoring of sustainable investment objectives
Methods
Data sources and data processing
Limitations of the methodology and data
Due diligence
Shareholder engagement policy
Achieving a sustainable investment objective
The Fund promotes environmental and social characteristics by integrating fund level as well as fund-look-through analysis and monitoring of sustainability factors into the investment process. The Fund does not emphasise or prioritise any single theme or sustainability factor, but addresses sustainability factors widely, avoiding investments in controversial activities and business with adverse environmental or social impacts and by emphasising funds that promote environmental and/or social characteristics or aim to invest sustainably.
To the extent that the Fund engages in sustainable investment, in other words investing in financial activities that promote either environmental or social objectives, steps are taken to ensure that these sustainable investments do not cause significant harm to any sustainable investment objective. OP Asset Management uses several data sources from different service providers.
The primary data sources are Bloomberg, Morningstar, MSCI ESG Research and S&P Trucost. Data from Bloomberg and Morningstar are mainly used for fund level analyses. MSCI ESG Research and S&P Trucost provide information on topics such as the sustainability risks of investee companies, share of business operations with adverse impacts, climate risks and opportunities, and how the operations of investee companies align with the UN Sustainable Development Goals. Data from these service providers are used to the extent that the Fund invests in mutual funds managed by OP. The service providers use both data reported by the companies and estimates based on an assessment model developed by each service provider.
Regarding mutual funds managed by OP, the principal adverse impacts (PAI) on sustainability are regularly analysed by screening all investments for their PAI indicators. If the screening reveals investee companies with significant principal adverse impacts on sustainability in comparison to peers, and if the said PAI indicator is deemed essential for the investee company, the investee company will be monitored more closely and excluded, if deemed necessary. Also, a process to engage with the company can be started. For investments in funds other than OP funds, the extent to which PAI factors can be addressed depends on the availability of data, and our processes can develop as the availability and quality of data improve.
This finance product promotes environmental or social characteristics, but sustainable investment is not its primary objective.
To the extent that the Fund engages in sustainable investment, in other words investing in financial activities that promote either environmental or social objectives, steps are taken to ensure that these sustainable investments do not cause significant harm to any sustainable investment objective.
For funds managed by OP Fund Management Company, the principal adverse impacts (PAI) on sustainability are regularly analysed by screening all investments for their PAI indicators. If the screening reveals investee companies with significant principal adverse impacts on sustainability in comparison to peers, and if the said PAI indicator is deemed essential for the investee company, the investee company will be monitored more closely and excluded, if deemed necessary. Also, a process to engage with the company can be started. For investments in funds other than OP funds, the extent to which PAI factors can be addressed depends on the availability of data, and our processes can develop as the availability and quality of data improve.
More information about how we take adverse sustainability impacts into account can be found in the document ""Consideration of Principal Adverse Sustainability Impacts in Investing and Insurance Operations (in Finnish)"", which is available online at op.fi.
The OP Asset Management’s sustainable investment analysis model is used to check whether a company has violated international standards (UN Global Compact and OECD guidelines for multinationals). If a violation is identified, the company cannot be defined as a sustainable investment. The definition of international standard violations and company-specific analysis is based on the methodology of a third-party service provider.
The Fund does not emphasise or prioritise any single theme but addresses sustainability factors by integrating fund level as well as fund-look-through analysis and monitoring of sustainability factors into the investment process. The analysis and monitoring consist of exclusions aimed at limiting exposure to certain industries, as well as the consideration of climate factors and active ownership as part of asset managers' investment processes.
The Fund promotes environmental and social characteristics by integrating fund level as well as fund-look-through analysis and monitoring of sustainability factors into the investment process.
Exclusion: The following criteria apply to investments in OP-managed funds. The Fund excludes from its active direct investments any controversial weapon manufacturers, mining companies producing thermal coal, power companies using thermal coal, tobacco companies, and companies that have breached international standards and where engagement has been unsuccessful. The list of exclusions is public.
Use of ESG data in the analysis of investments: ESG factors are considered part of the investment process by using an external service provider’s data and an ESG tool, developed internally by OP Asset Management. Considering ESG factors in the investment process means, for example, that the risks and opportunities related to the environment, society and governance are made transparent using selected indicators from each area. A sustainable investment percentage is calculated for each internally and externally managed fund and ETF. OP monitors that each ETF provider has an ESG policy or that they are committed to responsible investment principles.
Global norms breaches: Investments in OP Funds are screened regularly for non-compliance with global norms. If a non-compliance is detected, an engagement process is begun with the company in question. The aim is to make non-compliant companies change their practices and begin to comply with global norms in their operations. If engagement proves unsuccessful, the company may be removed from the fund portfolio and placed on the exclusion list.
Minimum allocation for sustainable investments: The following description applies to investments in OP-managed funds. Regarding OP-managed funds, the funds allocate a minimum share of investments, as stated below, in companies whose business promotes one or more of the UN Sustainable Development Goals (SDG) without harming other sustainability factors or objectives. Sustainable investments are determined using OP Asset Management’s analysis model which is based on an external service provider’s SDG and sustainability data.
Methods for assessing good governance practices: Analysing the target company’s governance is an important part of the investment process. For us, good governance is a fundamental pillar for any company’s financial success, regardless of the sector. Regarding OP-managed funds, when assessing governance, some of the areas considered include the appropriateness of the target company’s administrative organisation, the target company’s actions in relation to its personnel, and the target company’s rewarding and taxation practices. To assess good governance, we use the analysis of third-party service providers and our own qualitative analysis if no external data are available. We screen the funds regularly against the criteria of good governance, with minimum thresholds in place. We also expect good governance from our external asset managers, and its examination is an essential part of the due diligence process conducted before investment decisions and of the annual survey.
The Fund makes investments that promote environmental and social characteristics, and sustainable investments account for at least 10 % of these.
Others: The Fund may also invest its assets in exchange traded derivatives and OTC derivative contracts in order to hedge against the risk of adverse market movements, to replace direct investments and to otherwise promote effective portfolio management. Sustainability data might not be available for possible derivatives.
The Fund might include investment options which are in line with the EU Taxonomy, but the Fund does not commit to a certain minimum number of investments in line with the EU Taxonomy. Currently, only few investment options in line with the EU Taxonomy are available, and there is a limited amount of reported information on compliance with the EU Taxonomy.
Using data from a third-party service provider, portfolio managers follow whether a specific fund invested in promotes environmental or social characteristics and/or whether the fund aims to make sustainable investments. Portfolio managers also use an internally developed ESG tool for fund level analysis of the degree to which the fund product emphasises investments in funds that promote environmental and social characteristics and aim to invest sustainably. This ESG tool can also be used to ensure that exposure to OP Asset Management's exclusion list is minimised. Portfolio managers can also use the tool to monitor that the fund's minimum allocation to sustainable investment is reached and that any adverse sustainability impacts related to sustainable investments are addressed either through OP Asset Management's principal adverse impact (PAI) analysis or the PAI monitoring of third-party funds.
Investments are regularly screened by ESG specialists for the metrics listed above. Fund-specific ESG indicators on top-level environmental and social characteristics related to the Fund are reported on a monthly basis.
The Fund avoids investing in sectors that OP Asset Management has indicated as having adverse impacts on the environment and society. The enforcement of exclusions is monitored regularly by calculating the Fund’s exposure to controversial and harmful operations and by screening the Fund using the criteria in the exclusion list.
ESG factors are addressed in investment decisions by emphasising funds that promote environmental and/or social characteristics or that aim to invest sustainably. Portfolio managers have access to fund level data provided by both a third-party ESG service provider and an ESG tool internally developed by OP Asset Management. Data from a third-party service provider enables portfolio managers to follow whether a specific fund invested in promotes environmental or social characteristics and/or whether the fund aims to make sustainable investments. The internally developed ESG tool makes it possible to assess the degree to which a financial instrument emphasises investments in funds that promote environmental and social characteristics and aim to invest sustainably, as well as to ensure that any exposure to sectors that OP Asset Management has defined as adverse in terms of sustainability is minimised. Portfolio managers can also use the tool to monitor that the fund's minimum allocation to sustainable investment is reached and that any adverse sustainability impacts related to sustainable investments are addressed either through OP Asset Management's principal adverse impact (PAI) analysis or the PAI monitoring of third-party funds.
External asset managers' ESG operations are comprehensively audited by reviewing their ESG policy, resources and reporting, exclusion principles and consideration of sustainability factors in investment activities. The audit results are scored by OP Asset Management, and the external managers' sustainability work and its development are monitored using an annual survey. The Fund does not invest in external managers' funds that do not have an ESG policy or are not committed to responsible investment principles.
OP Asset Management uses several data sources from different service providers. The primary data sources are Bloomberg, Morningstar, MSCI ESG Research and S&P Trucost. Data from Bloomberg and Morningstar are mainly used for fund level analysis, while data from MSCI ESG Research and S&P Trucost are used for company level analysis regarding investments in OP-managed funds. These service providers provide data on topics including the sustainability risks of investee companies, share of business operations with adverse impacts, climate risks and opportunities, and how the operations of investee companies align with the UN Sustainable Development Goals. The service providers use both data reported by the companies and estimates based on an assessment model developed by each service provider.
Our service providers use detailed and standardised processes for ensuring data quality and correcting inaccuracies in the data.
When selecting new data packages and service providers, we carefully compare and analyse the data quality, coverage, methodology and reliability of each service provider. We regularly monitor trends in ESG data and service providers on the market to ensure we have the best possible data to support our investment decisions and client reporting.
Data sources are used either directly based on the service provider's metrics or analysis or by combining different metrics and using them for OP Asset Management's internal analyses and assessments. Some of the data are imported directly to OP Asset Management’s database, from which it can be used in internal analysis models and reports. Data are also used directly through interfaces offered by the service providers.
The share of data assessed depends on sustainability indicators and the sustainability factor under scrutiny, and it is impossible to give a universal definition of the share of assessed data of all ESG data. It is difficult to determine what portion of ESG data is based on reported information and estimates respectively. In cases where reported data are available, they are used as the primary source. Third-party service providers must specify for each metric whether the data are reported by companies themselves or estimated using the provider's internal model.
At the moment, ESG data are not fully standardised, and they are not necessarily widely reported by fund and asset management companies. This can make comparability challenging. Service providers may use different methods for compiling, evaluating and analysing data. For these reasons, we carefully review the methodologies of service providers to ensure their suitability for our purposes.
We use several different service providers to enable us to assess certain metrics from multiple sources and fill any gaps in data.
The Fund is subject to exclusion criteria as described above in part (d) Investment strategy. A party independent of portfolio management oversees that the Fund complies with the criteria. The Fund’s material exclusion criteria are implemented in the trading system.
To the extent that the Fund invests in OP-managed funds, the funds work as an active owner by participating in shareholder meetings and engaging in direct dialogue with the companies.
The Fund's benchmark index is not applied to the performance of environmental or social characteristics promoted by the Fund.
Summary
No sustainable investment objective
Environmental or social characteristics of the finance product
Investment strategy
Share of investments
Monitoring of environmental or social characteristics
Methods
Data sources and data processing
Limitations of the methodology and data
Due diligence
Shareholder engagement policy
Designated reference benchmark
The Fund’s goal is to make sustainable investments focusing on environmental issues. The Fund invests in water industry companies whose business is significantly related to securing the sufficiency of water also in the future. This especially means companies focused on supplying water management infrastructure or developing water technology, as well as conglomerates that are market leaders in some water industry sub-sector.
Principal adverse impacts (PAI) on sustainability are regularly analysed by screening all investments for their PAI indicators. If screening reveals investee companies with significant principal adverse impacts on sustainability in comparison to its peers and if the said PAI indicator is deemed essential for the investee company, the investee company will be monitored more closely and excluded, if necessary. Also, a process to influence the company’s behaviour can be started.
OP Asset Management uses several data sources from different service providers. Primary data sources are MSCI ESG Research and S&P Trucost, which provide information on topics such as the sustainability risks of investee companies, share of business operations with adverse impacts, climate risks and opportunities, and how the operations of investee companies align with UN Sustainable Development Goals. The service providers use both data reported by companies and estimates based on an assessment model developed by each service provider.
Principal adverse impacts (PAI) on sustainability are regularly analysed by screening all investments for their PAI indicators. If screening reveals investee companies with significant principal adverse impacts on sustainability in comparison to its peers and if the said PAI indicator is deemed essential for the investee company, the investee company will be monitored more closely and excluded, if necessary. Also, a process to influence the company’s behaviour can be started.
More information about how we take adverse sustainability impacts into account can be found in the document “Consideration of Principal Adverse Sustainability Impacts in Investing and Insurance Operations (in Finnish)”, which is available online at op.fi.
The OP Asset Management’s sustainable investment analysis model is used to check whether a company has violated international standards (UN Global Compact and OECD guidelines for multinationals). If a violation is identified, the company cannot be determined as a sustainable investment. The definition of international standard violations and company-specific analysis is based on the methodology of a third-party service provider.
The Fund’s goal is to make sustainable investments. The Fund invests in water industry companies whose business is significantly related to securing the sufficiency of water also in the future. This especially means companies focused on supplying water management infrastructure or developing water technology, as well as conglomerates that are market leaders in some water industry sub-sector.
Sustainable investments are those investments company's business promotes one or more UN Sustainable Development Goals (SDG) without harming other sustainable factors. Sustainable investments are determined using OP Asset Management’s analysis model which is based on an external service provider’s SDG and sustainability data.
The Fund invests its assets broadly in the global equity markets. Investments may be made both in developed and emerging equity markets.
Sustainable investments: the Fund invests in water industry companies whose business is in large part related to securing the water resources also in the future. This especially means companies focused on supplying water management infrastructure or developing water technology, as well as conglomerates that are market leaders in some water industry sub-sector. Investee companies are screened using OP Asset Management’s analysis model, which is based on an external service provider’s SDG and sustainability data. Companies whose business promotes one or more UN Sustainable Development Goals (SDG) without harming other sustainable factors or goals are considered sustainable investments.
Exclusion: The Fund excludes from its active direct investments controversial weapon manufacturers, mining companies producing thermal coal, power companies using thermal coal, tobacco companies, and companies that have breached international standards and where engagement has been unsuccessful. The list of excluded companies is public. In addition to general exclusion rules, the Fund does not invest in companies whose principal business is in unconventional oil and gas extraction or other fossil fuels (50% of revenue or more).
Violations of international standards: The Fund is screened regularly for non-compliances with international standards. If the company does not pass the screening, an engagement process is initiated with the company. The aim is to make non-compliant companies change their practices and begin to comply with international standards in their operations. If engagement does not bring results, the company may be removed from the Fund portfolio and placed on the exclusion list.
Shareholders’ meetings: The Fund votes in shareholders’ meetings through a service provider in line with OP Fund Management Company Ltd’s shareholder engagement principles that take responsibility aspects into account.
Methods for assessing good governance practices: Analysing the target company’s governance is an important part of the investment process. To us, good governance is a key foundation for any company’s financial success, regardless of sector. When assessing governance, some of the areas considered include the appropriateness company’s administrative organisation, actions in relation to its personnel, and company’s reward and taxation practices. In assessing good governance, we use an external service provider’s analysis and our own qualitative analysis if no external data is available. We screen the funds regularly to check them against the criteria of good governance. Minimum limits apply for these criteria.
The Fund engages exclusively in sustainable investments. If necessary, the Fund may also invest its assets in exchange traded derivatives and OTC derivative contracts in order to hedge against the risk of adverse market movements, to replace direct investments and to otherwise promote effective portfolio management. However, the share of sustainable investments is always at least 75%.
Of the sustainable investments, 3% align with EU taxonomy. Currently, only few investment options in line with the EU Taxonomy are available, and there is a limited amount of reported information on compliance with the EU Taxonomy.
Portfolio managers have access to the Fund’s ESG analysis, which indicates, among other things, the weighted ESG rating, carbon intensity and share of green business of the portfolio. In addition, the portfolio manager regularly monitors the share of sustainable investments in the Fund.
Investments are regularly screened by ESG specialists for principal adverse impacts (PAI), exclusion criteria and international standard violations.
Fund-specific ESG indicators on top-level environmental and social characteristics related to the Fund are reported on a monthly basis.
The internal model developed by OP Asset Management for defining sustainable investments also provides relevant company-specific ESG data and gives an estimate of the company’s sustainability. Those investment options whose business promotes one or more UN Sustainable Development Goals (SDG) without harming other sustainable factors or goals are considered sustainable investments. The Fund’s proportion of sustainable investments is reported annually in periodic reports, in addition to which portfolio management has access to data updated on a monthly basis on the share of sustainable investments of the Fund’s portfolio.
External ESG data can be used to examine the investee company’s targets for GHG emission reductions or current state in terms of the green transition.
Negative screening is used to limit and exclude certain sectors and operations from the Fund’s investments. The Fund excludes from its active direct investments controversial weapon manufacturers, mining companies producing thermal coal, power companies using thermal coal, tobacco companies, and companies that have breached international standards and where engagement has been unsuccessful. The list of exclusions is public. In addition to general exclusion rules, the Fund does not invest in companies whose principal business is in unconventional oil and gas extraction or other fossil fuels (50% of revenue or more).
The Fund’s investments are also screened regularly for violations of international standards using an external service provider’s analysis. If a standard violation is detected, the preferred option is to influence the company’s behaviour. If that is impossible or unsuccessful, the company may be removed from the Fund portfolio and placed on the list of exclusions. Identified standard violations and their related engagement processes are reported twice a year in connection with shareholder engagement reporting.
In addition to ESG tools applied to the investee companies, portfolio managers have access to fund-specific reports on ESG issues at the portfolio level. The reports allow portfolio managers to view the Fund’s weighted ESG rating, carbon intensity and share of green business, among other data. These values are also presented in comparison to benchmark indexes.
The Fund votes in shareholders’ meetings in line with OP Fund Management Company Ltd’s shareholder engagement principles that take responsibility aspects into account. Attendance at meetings is based on the company’s share of the Fund’s investments. Attendance at shareholders’ meetings and the Fund’s votes are reported twice a year in connection with shareholder engagement reporting.
OP Asset Management uses several data sources from different service providers. Primary data sources are MSCI ESG Research and S&P Trucost, which provide information on topics such as the sustainability risks of investee companies, share of business operations with adverse impacts, climate risks and opportunities, and how the operations of investee companies align with UN Sustainable Development Goals. The service providers use both data reported by companies and estimates based on an assessment model developed by each service provider.
In shareholder meeting votes, we use data and company research by ISS ESG. The service providers we use have detailed and appropriate processes in place for ensuring data quality and correcting inaccuracies in the data.
When selecting new data packages and service providers, we carefully compare and analyse the data quality, coverage, methodology and reliability of each service provider. We regularly monitor trends in ESG data and service providers on the market to ensure the best possible data to support our investment decisions and client reporting.
Data sources are utilised either directly based on metrics or analysis by the service provider as well as by combining different metrics and using them for internal analyses and assessments by OP Asset Management. A part of the data is imported directly to OP Asset Management’s database, from which it can be used in internal analysis models and reports. Data is also used directly from interfaces offered by the service providers.
The share of data that is assessed depends on sustainability indicators and the sustainability factor under scrutiny, and it is not possible to give a universal definition of the share of assessed data of all ESG data. It is difficult to determine what portion of ESG data are based on reported information and estimates, respectively. In cases where reported data is available, it is used as the primary source. Third-party service providers must specify for each metric whether the data is reported by companies themselves or estimated using the provider’s internal model.
ESG data is not yet fully standardised, and investee companies do not widely report on sustainability related metrics. This makes it challenging to compare investee companies. Service providers may use different methods for compiling, evaluating and analysing data. For these reasons, we carefully review the methodologies of service providers to ensure their suitability for our purposes.
We use several different service providers to enable us to assess certain metrics from multiple sources and fill any gaps in data.
The Fund is subject to exclusion criteria and is screened for international standard violations as described above in part (d) Investment strategy. A party independent of portfolio management oversees that the Fund complies with the criteria. The Fund’s material exclusion criteria are implemented in the trading system.
OP is an active shareholder through its funds by voting in Finnish and international shareholders’ meetings, engaging in direct dialogue with companies and supporting joint initiatives by investors. OP's funds comply with the principles of shareholder engagement that take into account OP Fund Management Company Ltd’s ESG perspectives. These principles and the latest report on the implementation of shareholder engagement principles are available at op.fi/responsible-investing. Participation in general meetings of foreign companies takes place in markets where participation is cost-effective, taking into account their proportion of the Fund’s investments.
This Fund participates in the shareholder meetings of listed companies in accordance with OP Fund Management Company’s principles of shareholder engagement. A detailed list of attended meetings and actions taken and decisions adopted at the meetings can be found at op.fi/responsible-investing. By 2025, OP Asset Management’s climate-related shareholder engagement will cover 70% of financed emissions, as measured by direct equity and bond investments by OP funds in high climate risk sectors (NACE categories A-H and J-L). In practice, shareholder engagement in these companies involves either voting at shareholders’ meetings, direct dialogue or joint initiatives by investors. In addition, the Fund is involved in shareholder engagement more broadly where necessary, such as in relation to good governance, responsible tax practice or business ethics.
The benchmark index for the Fund is the S&P Global Water NTR Index. It supports the objective of OP-Clean Water fund to invest in companies that provide solutions to ensure the availability and sufficiency of clean water worldwide. The index consists of 50 liquid companies. The index has a balanced diversification, both globally and within water related businesses, and includes both water utilities and infrastructure companies and companies that provide water equipment and materials.
Data published on 1 January 2023
ISIN: FI4000048442
Summary
No sustainable investment objective
Environmental or social characteristics of the finance product
Investment strategy
Share of investments
Monitoring of environmental or social characteristics
Methods
Data sources and data processing
Limitations of the methodology and data
Due diligence
Shareholder engagement policy
Designated reference benchmark
The Fund promotes environmental and social characteristics using environmental, social and governance (ESG) analysis while excluding certain investments. The Fund does not place emphasis on or prioritise any single theme or sustainability factor, but takes sustainability factors broadly into account by focusing on environmental and social risks, opportunities and impacts relevant for each sector and investee company.
This financial product promotes environmental or social characteristics, but sustainable investment is not its objective.
To the extent that the Fund invests in financial activities that promote either environmental or social objectives, steps are taken to ensure that these sustainable investments do not cause significant harm to any sustainable investment objective.
OP Asset Management uses several data sources from different service providers. Primary data sources are MSCI ESG Research and S&P Trucost, which provide information on topics such as the sustainability risks of investee companies, share of business operations with adverse impacts, climate risks and opportunities, and how the operations of investee companies align with UN Sustainable Development Goals. The service providers use both data reported by companies and estimates based on an assessment model developed by each service provider.
This financial product promotes environmental or social characteristics, but sustainable investment is not its objective. To the extent that the Fund invests in financial activities that promote either environmental or social objectives, steps are taken to ensure that these sustainable investments do not cause significant harm to any sustainable investment objective.
Principal adverse impacts (PAI) on sustainability are regularly analysed by screening all investments for their PAI indicators. If screening reveals investee companies with significant principal adverse impacts on sustainability in comparison to its peers and if the said PAI indicator is deemed essential for the investee company, the investee company will be monitored more closely and excluded, if necessary. Also, a process to influence the company’s behaviour can be started.
More information about how we take adverse sustainability impacts into account can be found in the document “Consideration of Principal Adverse Sustainability Impacts in Investing and Insurance Operations (in Finnish)”, which is available online at op.fi.
The OP Asset Management’s sustainable investment analysis model is used to check whether a company has violated international standards (UN Global Compact and OECD guidelines for multinationals). If a violation is identified, the company cannot be determined as a sustainable investment. The definition of international standard violations and company-specific analysis is based on the methodology of a third-party service provider.
The Fund does not emphasise or prioritise any single theme or sustainability factor, but takes sustainability factors broadly into account by focusing on environmental and social risks, opportunities and impacts relevant for each sector and investee company.
The Fund promotes environmental and social characteristics and, to ensure it, uses environmental, social and governance (ESG) analysis and excludes certain investments.
Exclusion: The Fund excludes from its active direct investments controversial weapon manufacturers, mining companies producing thermal coal, power companies using thermal coal, tobacco companies, and companies that have breached international standards and where engagement has been unsuccessful. The list of exclusions is public. In addition to general exclusion rules, the Fund does not invest in companies whose principal business is in unconventional oil and gas extraction.
Use of ESG data in the investment analysis: ESG factors are considered in the investment process with the help of data by an external ESG service provider and the ESG tool developed internally by OP Asset Management. Considering ESG factors in the investment process means, for example, that the risks and opportunities related to the environment, society and governance are made transparent using selected indicators from each area.
Violations of international standards: The Fund is screened regularly for non-compliances with international standards. In the event that a non-compliance is detected, an influencing process is begun with the company in question. The aim is to make non-compliant companies change their practices and begin to comply with international standards in their operations. If influencing proves fruitless, the company may be removed from the Fund portfolio and placed on the exclusion list.
Minimum share of sustainable investments: In accordance with the minimum amount stated below, the Fund allocates investments into companies whose business promotes one or more UN Sustainable Development Goals (SDG) without harming other sustainability factors or objectives. Sustainable investments are determined using OP Asset Management’s analysis model which is based on an external service provider’s SDG and sustainability data.
Shareholders’ meetings: The Fund votes in shareholders’ meetings through a service provider in line with OP Fund Management Company Ltd’s shareholder engagement principles that take responsibility aspects into account.
Assessing good governance practices: Analysing the target company’s governance is an important part of the investment process. To us, good governance is a key foundation for any company’s financial success, regardless of sector. When assessing governance, some of the areas considered include the appropriateness of the target company’s administrative organisation, the target company’s actions in relation to its personnel, and the target company’s rewarding and taxation practices. In assessing good governance, we use an external service provider’s analysis and our own qualitative analysis if no external data is available. We screen the funds regularly to check them against the criteria of good governance. Minimum limits apply for these criteria.
Investments that promote ESG characteristics: 90%, of which 20% are sustainable investments. Of the sustainable investments, 3% align with EU taxonomy. Others: the Fund may also invest its assets in exchange traded derivatives and OTC derivative contracts in order to hedge against the risk of adverse market movements, to replace direct investments and to otherwise promote effective portfolio management. Sustainability data might not be available for possible derivatives.
Portfolio managers have access to the Fund’s ESG analysis, which indicates, among other things, the weighted ESG rating, carbon intensity and share of green business of the portfolio.
Investments are regularly screened by ESG specialists for principal adverse impacts (PAI), exclusion criteria and international standard violations.
Fund-specific ESG indicators on environmental and social characteristics are reported on a monthly basis.
Sectors with adverse impacts to the environment and society defined by OP Asset Management are excluded from the Fund. The enforcement of exclusions is monitored regularly by calculating the Fund’s exposure to controversial and harmful operations and by screening the Fund using the criteria in the exclusion list.
The Fund’s investments are also screened regularly for violations of international standards using an external service provider’s analysis. If a standard violation is detected, the preferred option is to influence the company’s behaviour. If that is impossible or unsuccessful, the company may be removed from the Fund portfolio and placed on the list of exclusions. Identified standard violations and their related engagement processes are reported twice a year in connection with shareholder engagement reporting.
ESG factors are considered in the investment process where possible with the help of data by an external ESG service provider, the ESG tool developed internally by OP Asset Management, and the internal analysis model for assessing sustainable investments. Considering ESG factors in the investment process means, for example, that the risks and opportunities related to the environment, society and governance are made transparent using selected indicators from each area.
The internal ESG tool can be used to assess a company’s current state in relation to its peers in the sector in terms of ESG factors material for the companies as well as the company’s performance in these factors.
External ESG data can be used to examine the investee company’s targets for GHG emission reductions or current state in terms of the green transition.
The internal model developed by OP Asset Management for defining sustainable investments also provides relevant company-specific ESG data and gives an estimate of the company’s sustainability. Those investment options whose business promotes one or more UN Sustainable Development Goals (SDG) without harming other sustainable factors or goals are considered sustainable investments. The Fund’s proportion of sustainable investments is reported annually in periodic reports, in addition to which portfolio management has access to data updated on a monthly basis on the share of sustainable investments of the Fund’s portfolio.
In addition to ESG tools applied to the investee companies, portfolio managers have access to fund-specific reports on ESG issues at the portfolio level. The reports allow portfolio managers to view the Fund’s weighted ESG rating, carbon intensity and share of green business, among other data. These values are also presented in comparison to benchmark indexes.
The Fund votes in shareholders’ meetings in line with OP Fund Management Company Ltd’s shareholder engagement principles that take responsibility aspects into account. Attendance at meetings is based on the company’s share of the Fund’s investments. Attendance at shareholders’ meetings and the Fund’s votes are reported twice a year in connection with shareholder engagement reporting.
OP Asset Management uses several data sources from different service providers. Primary data sources are MSCI ESG Research and S&P Trucost, which provide information on topics such as the sustainability risks of investee companies, share of business operations with adverse impacts, climate risks and opportunities, and how the operations of investee companies align with UN Sustainable Development Goals. The service providers use both data reported by companies and estimates based on an assessment model developed by each service provider.
We also use materiality analyses by SSAB and Bloomberg data on investee companies, based on which we have developed our own analysis model for investigating investee companies’ current level of sustainability and likely future performance.
In shareholder meeting votes, we use data and company research by ISS ESG.
The service providers we use have detailed and appropriate processes in place for ensuring data quality and correcting inaccuracies in the data.
When selecting new data packages and service providers, we carefully compare and analyse the data quality, coverage, methodology and reliability of each service provider. We regularly monitor trends in ESG data and service providers on the market to ensure the best possible data to support our investment decisions and client reporting.
Data sources are utilised either directly based on metrics or analysis by the service provider as well as by combining different metrics and using them for internal analyses and assessments by OP Asset Management. A part of the data is imported directly to OP Asset Management’s database, from which it can be used in internal analysis models and reports. Data is also used directly from interfaces offered by the service providers.
The share of data that is assessed depends on sustainability indicators and the sustainability factor under scrutiny, and it is not possible to give a universal definition of the share of assessed data of all ESG data. It is difficult to determine what portion of ESG data are based on reported information and estimates, respectively. In cases where reported data is available, it is used as the primary source. Third-party service providers must specify for each metric whether the data is reported by companies themselves or estimated using the provider’s internal model.
At the moment, ESG data is not fully standardised, and investee companies do not report on the data widely. This makes it challenging to compare investee companies. Service providers may use different methods for compiling, evaluating and analysing data. For these reasons, we carefully review the methodologies of service providers to ensure their suitability for our purposes.
We use several different service providers to enable us to assess certain metrics from multiple sources and fill any gaps in data.
The Fund is subject to exclusion criteria and is screened for international standard violations as described above in part (d) Investment strategy. A party independent of portfolio management oversees that the Fund complies with the criteria. The Fund’s material exclusion criteria are implemented in the trading system.
OP is an active shareholder through its funds by voting in Finnish and international shareholders’ meetings, engaging in direct dialogue with companies and supporting joint initiatives by investors. OP's funds comply with the principles of shareholder engagement that take into account OP Fund Management Company Ltd’s ESG perspectives. These principles and the latest report on the implementation of shareholder engagement principles are available at op.fi/responsible-investing. Participation in general meetings of foreign companies takes place in markets where participation is cost-effective, taking into account their proportion of the Fund’s investments.
This Fund participates in the shareholder meetings of listed companies in accordance with OP Fund Management Company’s principles of shareholder engagement. A detailed list of attended meetings and actions taken and decisions adopted at the meetings can be found at op.fi/responsible-investing. By 2025, OP Asset Management’s climate-related shareholder engagement will cover 70% of financed emissions, as measured by direct equity and bond investments by OP funds in high climate risk sectors (NACE categories A-H and J-L). In practice, shareholder engagement in these companies involves either voting at shareholders’ meetings, direct dialogue or joint initiatives by investors. In addition, the Fund is involved in shareholder engagement more broadly where necessary, such as in relation to good governance, responsible tax practice or business ethics.
The Fund’s benchmark index is not applied to the performance of environmental or social characteristics promoted by the Fund.
Data published on 1 January 2023
ISIN: FI0008807573
Summary
No sustainable investment objective
Environmental or social characteristics of the finance product
Investment strategy
Share of investments
Monitoring of environmental or social characteristics
Methods
Data sources and data processing
Limitations of the methodology and data
Due diligence
Shareholder engagement policy
Designated reference benchmark
The Fund promotes environmental and social characteristics using environmental, social and governance (ESG) analysis while excluding certain investments. The Fund does not emphasise or prioritise any single theme or sustainability factor, but takes sustainability factors into account from the perspective of factors that are generally significant to countries.
The data sources used include both public lists and the sustainable development frameworks of countries, as well as sustainability data on countries collected by MSCI ESG Research. Analysis and data related to countries is often based on frameworks and studies by various NGOs or organisations. Sources used include Transparency International, Freedom House and World Justice Project. Exclusion criteria are based on lists by the European Union and the Financial Action Task Force.
This financial product promotes environmental or social characteristics, but sustainable investment is not its objective.
The Fund does not emphasise or prioritise any single theme or sustainability factor, but takes sustainability factors into account from the perspective of factors that are generally significant to countries.
The Fund promotes environmental and social characteristics and, to ensure it, uses environmental, social and governance (ESG) analysis and excludes certain investments.
Negative screening: the Fund excludes countries with significant adverse impacts on society from its investments. The Fund does not invest in excluded countries, and if an investment product of the Fund later falls within the scope of the exclusion, the aim is to terminate the investment within a reasonable time period.
Use of ESG data in the analysis of investments: The average values of the sustainability indicators of the Fund’s investments are regularly monitored. The values of the indicators are considered when making investment decisions, and the average values of the portfolio and their development in relation to the benchmark index are monitored.
The investment process of the Fund includes analysing the creditworthiness of the investment products. In analysing creditworthiness, environmental and social characteristics as well as good governance are considered, among other factors.
Investments that promote ESG characteristics: at least 75%. Others: Cash and derivatives, as well as bonds issued by other public sector operators and multinational entities.
The average values of the sustainability indicators of the Fund’s investments are regularly monitored by the portfolio manager. The values of the indicators are considered when making investment decisions, and the average values of the portfolio and their development in relation to the benchmark index are monitored.
The Fund excludes countries with significant adverse impacts on society from its investment products. Exclusions are based on the following listings:
As an environmental indicator, the Fund monitors countries’ greenhouse gas emissions, and various social indicators provide information on income gaps, corruption and fundamental rights.
Principal adverse impacts (PAI) on sustainability are regularly analysed by screening all investments for their PAI indicators defined for countries. The values of the indicators are considered when making investment decisions, and the average values of the portfolio and their development in relation to the benchmark index are monitored.
The data sources used include both public lists and the sustainable development frameworks of countries, as well as sustainability data on countries collected by MSCI ESG Research. Analysis and data related to countries is often based on frameworks and studies by various NGOs or organisations. Sources used include Transparency International, Freedom House and World Justice Project. Exclusion criteria are based on lists by the European Union and the Financial Action Task Force. The service providers we use have detailed and appropriate processes in place for ensuring data quality and correcting inaccuracies in the data. When selecting new data packages and service providers, we carefully compare and analyse the data quality, coverage, methodology and reliability of each service provider. We regularly monitor trends in ESG data and service providers on the market to ensure the best possible data to support our investment decisions and client reporting. Data sources are utilised either directly based on metrics or analysis by the service provider as well as by combining different metrics. A part of the data is imported directly to OP Asset Management’s database, from which it can be used in internal analysis models and reports. Data is also used directly from interfaces offered by the service providers. The share of data that is assessed depends on sustainability indicators and the sustainability factor under scrutiny, and it is not possible to give a universal definition of the share of assessed data of all ESG data.
The GHG emissions of countries are estimated using an intensity metric. The proportion of emissions to GDP does not necessarily give a full picture of a country’s ability to manage its level of emissions. In addition, the metric is retrospective in scope.
In metrics related to society, it is difficult to assess the quality and impartiality of the analysis process and methodology. Government-sourced analyses and data points related to countries in general are updated less frequently than company-specific data.
The Fund is subject to exclusion criteria as described above in part (d) Investment strategy. A party independent of portfolio management oversees that the Fund complies with the criteria. The Fund’s material exclusion criteria are implemented in the trading system.
OP's funds comply with the principles of shareholder engagement that take into account OP Fund Management Company Ltd’s ESG perspectives. These principles and the latest report on the implementation of shareholder engagement principles are available at op.fi/responsible-investing.
The Fund’s benchmark index is not applied to the performance of environmental or social characteristics promoted by the Fund.
Data published on 1 January 2023
ISIN: FI0008811120
Summary
No principal adverse impact on a sustainable investment objective
Sustainable investment objective of the financial product
Investment strategy
Share of investments
Monitoring of sustainable investment objectives
Methods
Data sources and data processing
Limitations of the methodology and data
Due diligence
Shareholder engagement policy
Achieving a sustainable investment objective
The Fund promotes environmental and social characteristics by integrating fund level as well as fund-look-through analysis and monitoring of sustainability factors into the investment process. The Fund does not emphasise or prioritise any single theme or sustainability factor, but addresses sustainability factors widely, avoiding investments in controversial activities and business with adverse environmental or social impacts and by emphasising funds that promote environmental and/or social characteristics or aim to invest sustainably.
To the extent that the Fund engages in sustainable investment, in other words investing in financial activities that promote either environmental or social objectives, steps are taken to ensure that these sustainable investments do not cause significant harm to any sustainable investment objective. OP Asset Management uses several data sources from different service providers.
The primary data sources are Bloomberg, Morningstar, MSCI ESG Research and S&P Trucost. Data from Bloomberg and Morningstar are mainly used for fund level analyses. MSCI ESG Research and S&P Trucost provide information on topics such as the sustainability risks of investee companies, share of business operations with adverse impacts, climate risks and opportunities, and how the operations of investee companies align with the UN Sustainable Development Goals. Data from these service providers are used to the extent that the Fund invests in mutual funds managed by OP. The service providers use both data reported by the companies and estimates based on an assessment model developed by each service provider.
Regarding mutual funds managed by OP, the principal adverse impacts (PAI) on sustainability are regularly analysed by screening all investments for their PAI indicators. If the screening reveals investee companies with significant principal adverse impacts on sustainability in comparison to peers, and if the said PAI indicator is deemed essential for the investee company, the investee company will be monitored more closely and excluded, if deemed necessary. Also, a process to engage with the company can be started. For investments in funds other than OP funds, the extent to which PAI factors can be addressed depends on the availability of data, and our processes can develop as the availability and quality of data improve.
This finance product promotes environmental or social characteristics, but sustainable investment is not its primary objective.
To the extent that the Fund engages in sustainable investment, in other words investing in financial activities that promote either environmental or social objectives, steps are taken to ensure that these sustainable investments do not cause significant harm to any sustainable investment objective.
For funds managed by OP Fund Management Company, the principal adverse impacts (PAI) on sustainability are regularly analysed by screening all investments for their PAI indicators. If the screening reveals investee companies with significant principal adverse impacts on sustainability in comparison to peers, and if the said PAI indicator is deemed essential for the investee company, the investee company will be monitored more closely and excluded, if deemed necessary. Also, a process to engage with the company can be started. For investments in funds other than OP funds, the extent to which PAI factors can be addressed depends on the availability of data, and our processes can develop as the availability and quality of data improve.
More information about how we take adverse sustainability impacts into account can be found in the document ""Consideration of Principal Adverse Sustainability Impacts in Investing and Insurance Operations (in Finnish)"", which is available online at op.fi.
The OP Asset Management’s sustainable investment analysis model is used to check whether a company has violated international standards (UN Global Compact and OECD guidelines for multinationals). If a violation is identified, the company cannot be defined as a sustainable investment. The definition of international standard violations and company-specific analysis is based on the methodology of a third-party service provider.
The Fund does not emphasise or prioritise any single theme but addresses sustainability factors by integrating fund level as well as fund-look-through analysis and monitoring of sustainability factors into the investment process. The analysis and monitoring consist of exclusions aimed at limiting exposure to certain industries, as well as the consideration of climate factors and active ownership as part of asset managers' investment processes.
The Fund promotes environmental and social characteristics by integrating fund level as well as fund-look-through analysis and monitoring of sustainability factors into the investment process.
Exclusion: The following criteria apply to investments in OP-managed funds. The Fund excludes from its active direct investments any controversial weapon manufacturers, mining companies producing thermal coal, power companies using thermal coal, tobacco companies, and companies that have breached international standards and where engagement has been unsuccessful. The list of exclusions is public.
Use of ESG data in the analysis of investments: ESG factors are considered part of the investment process by using an external service provider’s data and an ESG tool, developed internally by OP Asset Management. Considering ESG factors in the investment process means, for example, that the risks and opportunities related to the environment, society and governance are made transparent using selected indicators from each area. A sustainable investment percentage is calculated for each internally and externally managed fund and ETF. OP monitors that each ETF provider has an ESG policy or that they are committed to responsible investment principles.
Global norms breaches: Investments in OP Funds are screened regularly for non-compliance with global norms. If a non-compliance is detected, an engagement process is begun with the company in question. The aim is to make non-compliant companies change their practices and begin to comply with global norms in their operations. If engagement proves unsuccessful, the company may be removed from the fund portfolio and placed on the exclusion list.
Minimum allocation for sustainable investments: The following description applies to investments in OP-managed funds. Regarding OP-managed funds, the funds allocate a minimum share of investments, as stated below, in companies whose business promotes one or more of the UN Sustainable Development Goals (SDG) without harming other sustainability factors or objectives. Sustainable investments are determined using OP Asset Management’s analysis model which is based on an external service provider’s SDG and sustainability data.
Methods for assessing good governance practices: Analysing the target company’s governance is an important part of the investment process. For us, good governance is a fundamental pillar for any company’s financial success, regardless of the sector. Regarding OP-managed funds, when assessing governance, some of the areas considered include the appropriateness of the target company’s administrative organisation, the target company’s actions in relation to its personnel, and the target company’s rewarding and taxation practices. To assess good governance, we use the analysis of third-party service providers and our own qualitative analysis if no external data are available. We screen the funds regularly against the criteria of good governance, with minimum thresholds in place. We also expect good governance from our external asset managers, and its examination is an essential part of the due diligence process conducted before investment decisions and of the annual survey.
The Fund makes investments that promote environmental and social characteristics, and sustainable investments account for at least 10 % of these.
Others: The Fund may also invest its assets in exchange traded derivatives and OTC derivative contracts in order to hedge against the risk of adverse market movements, to replace direct investments and to otherwise promote effective portfolio management. Sustainability data might not be available for possible derivatives.
The Fund might include investment options which are in line with the EU Taxonomy, but the Fund does not commit to a certain minimum number of investments in line with the EU Taxonomy. Currently, only few investment options in line with the EU Taxonomy are available, and there is a limited amount of reported information on compliance with the EU Taxonomy.
Using data from a third-party service provider, portfolio managers follow whether a specific fund invested in promotes environmental or social characteristics and/or whether the fund aims to make sustainable investments. Portfolio managers also use an internally developed ESG tool for fund level analysis of the degree to which the fund product emphasises investments in funds that promote environmental and social characteristics and aim to invest sustainably. This ESG tool can also be used to ensure that exposure to OP Asset Management's exclusion list is minimised. Portfolio managers can also use the tool to monitor that the fund's minimum allocation to sustainable investment is reached and that any adverse sustainability impacts related to sustainable investments are addressed either through OP Asset Management's principal adverse impact (PAI) analysis or the PAI monitoring of third-party funds.
Investments are regularly screened by ESG specialists for the metrics listed above. Fund-specific ESG indicators on top-level environmental and social characteristics related to the Fund are reported on a monthly basis.
The Fund avoids investing in sectors that OP Asset Management has indicated as having adverse impacts on the environment and society. The enforcement of exclusions is monitored regularly by calculating the Fund’s exposure to controversial and harmful operations and by screening the Fund using the criteria in the exclusion list.
ESG factors are addressed in investment decisions by emphasising funds that promote environmental and/or social characteristics or that aim to invest sustainably. Portfolio managers have access to fund level data provided by both a third-party ESG service provider and an ESG tool internally developed by OP Asset Management. Data from a third-party service provider enables portfolio managers to follow whether a specific fund invested in promotes environmental or social characteristics and/or whether the fund aims to make sustainable investments. The internally developed ESG tool makes it possible to assess the degree to which a financial instrument emphasises investments in funds that promote environmental and social characteristics and aim to invest sustainably, as well as to ensure that any exposure to sectors that OP Asset Management has defined as adverse in terms of sustainability is minimised. Portfolio managers can also use the tool to monitor that the fund's minimum allocation to sustainable investment is reached and that any adverse sustainability impacts related to sustainable investments are addressed either through OP Asset Management's principal adverse impact (PAI) analysis or the PAI monitoring of third-party funds.
External asset managers' ESG operations are comprehensively audited by reviewing their ESG policy, resources and reporting, exclusion principles and consideration of sustainability factors in investment activities. The audit results are scored by OP Asset Management, and the external managers' sustainability work and its development are monitored using an annual survey. The Fund does not invest in external managers' funds that do not have an ESG policy or are not committed to responsible investment principles.
OP Asset Management uses several data sources from different service providers. The primary data sources are Bloomberg, Morningstar, MSCI ESG Research and S&P Trucost. Data from Bloomberg and Morningstar are mainly used for fund level analysis, while data from MSCI ESG Research and S&P Trucost are used for company level analysis regarding investments in OP-managed funds. These service providers provide data on topics including the sustainability risks of investee companies, share of business operations with adverse impacts, climate risks and opportunities, and how the operations of investee companies align with the UN Sustainable Development Goals. The service providers use both data reported by the companies and estimates based on an assessment model developed by each service provider.
Our service providers use detailed and standardised processes for ensuring data quality and correcting inaccuracies in the data.
When selecting new data packages and service providers, we carefully compare and analyse the data quality, coverage, methodology and reliability of each service provider. We regularly monitor trends in ESG data and service providers on the market to ensure we have the best possible data to support our investment decisions and client reporting.
Data sources are used either directly based on the service provider's metrics or analysis or by combining different metrics and using them for OP Asset Management's internal analyses and assessments. Some of the data are imported directly to OP Asset Management’s database, from which it can be used in internal analysis models and reports. Data are also used directly through interfaces offered by the service providers.
The share of data assessed depends on sustainability indicators and the sustainability factor under scrutiny, and it is impossible to give a universal definition of the share of assessed data of all ESG data. It is difficult to determine what portion of ESG data is based on reported information and estimates respectively. In cases where reported data are available, they are used as the primary source. Third-party service providers must specify for each metric whether the data are reported by companies themselves or estimated using the provider's internal model.
At the moment, ESG data are not fully standardised, and they are not necessarily widely reported by fund and asset management companies. This can make comparability challenging. Service providers may use different methods for compiling, evaluating and analysing data. For these reasons, we carefully review the methodologies of service providers to ensure their suitability for our purposes.
We use several different service providers to enable us to assess certain metrics from multiple sources and fill any gaps in data.
The Fund is subject to exclusion criteria as described above in part (d) Investment strategy. A party independent of portfolio management oversees that the Fund complies with the criteria. The Fund’s material exclusion criteria are implemented in the trading system.
To the extent that the Fund invests in OP-managed funds, the funds work as an active owner by participating in shareholder meetings and engaging in direct dialogue with the companies.
The Fund's benchmark index is not applied to the performance of environmental or social characteristics promoted by the Fund.
Summary
No sustainable investment objective
Environmental or social characteristics of the finance product
Investment strategy
Share of investments
Monitoring of environmental or social characteristics
Methods
Data sources and data processing
Limitations of the methodology and data
Due diligence
Shareholder engagement policy
Designated reference benchmark
The Fund promotes environmental and social characteristics using environmental, social and governance (ESG) analysis while excluding certain investments. The Fund does not place emphasis on or prioritise any single theme or sustainability factor, but takes sustainability factors broadly into account by focusing on environmental and social risks, opportunities and impacts relevant for each sector and investee company.
This financial product promotes environmental or social characteristics, but sustainable investment is not its objective.
To the extent that the Fund invests in financial activities that promote either environmental or social objectives, steps are taken to ensure that these sustainable investments do not cause significant harm to any sustainable investment objective.
OP Asset Management uses several data sources from different service providers. Primary data sources are MSCI ESG Research and S&P Trucost, which provide information on topics such as the sustainability risks of investee companies, share of business operations with adverse impacts, climate risks and opportunities, and how the operations of investee companies align with UN Sustainable Development Goals. The service providers use both data reported by companies and estimates based on an assessment model developed by each service provider.
This financial product promotes environmental or social characteristics, but sustainable investment is not its objective. To the extent that the Fund invests in financial activities that promote either environmental or social objectives, steps are taken to ensure that these sustainable investments do not cause significant harm to any sustainable investment objective.
Principal adverse impacts (PAI) on sustainability are regularly analysed by screening all investments for their PAI indicators. If screening reveals investee companies with significant principal adverse impacts on sustainability in comparison to its peers and if the said PAI indicator is deemed essential for the investee company, the investee company will be monitored more closely and excluded, if necessary. Also, a process to influence the company’s behaviour can be started.
More information about how we take adverse sustainability impacts into account can be found in the document “Consideration of Principal Adverse Sustainability Impacts in Investing and Insurance Operations (in Finnish)”, which is available online at op.fi.
The OP Asset Management’s sustainable investment analysis model is used to check whether a company has violated international standards (UN Global Compact and OECD guidelines for multinationals). If a violation is identified, the company cannot be determined as a sustainable investment. The definition of international standard violations and company-specific analysis is based on the methodology of a third-party service provider.
The Fund does not emphasise or prioritise any single theme or sustainability factor, but takes sustainability factors broadly into account by focusing on environmental and social risks, opportunities and impacts relevant for each sector and investee company.
The Fund promotes environmental and social characteristics and, to ensure it, uses environmental, social and governance (ESG) analysis and excludes certain investments.
Exclusion: The Fund excludes from its active direct investments controversial weapon manufacturers, mining companies producing thermal coal, power companies using thermal coal, tobacco companies, and companies that have breached international standards and where engagement has been unsuccessful. The list of exclusions is public. In addition to general exclusion rules, the Fund does not invest in companies whose principal business is in unconventional oil and gas extraction.
Use of ESG data in the investment analysis: ESG factors are considered in the investment process with the help of data by an external ESG service provider and the ESG tool developed internally by OP Asset Management. Considering ESG factors in the investment process means, for example, that the risks and opportunities related to the environment, society and governance are made transparent using selected indicators from each area.
Violations of international standards: The Fund is screened regularly for non-compliances with international standards. In the event that a non-compliance is detected, an influencing process is begun with the company in question. The aim is to make non-compliant companies change their practices and begin to comply with international standards in their operations. If influencing proves fruitless, the company may be removed from the Fund portfolio and placed on the exclusion list.
Minimum share of sustainable investments: In accordance with the minimum amount stated below, the Fund allocates investments into companies whose business promotes one or more UN Sustainable Development Goals (SDG) without harming other sustainability factors or objectives. Sustainable investments are determined using OP Asset Management’s analysis model which is based on an external service provider’s SDG and sustainability data.
Shareholders’ meetings: The Fund votes in shareholders’ meetings through a service provider in line with OP Fund Management Company Ltd’s shareholder engagement principles that take responsibility aspects into account.
Assessing good governance practices: Analysing the target company’s governance is an important part of the investment process. To us, good governance is a key foundation for any company’s financial success, regardless of sector. When assessing governance, some of the areas considered include the appropriateness of the target company’s administrative organisation, the target company’s actions in relation to its personnel, and the target company’s rewarding and taxation practices. In assessing good governance, we use an external service provider’s analysis and our own qualitative analysis if no external data is available. We screen the funds regularly to check them against the criteria of good governance. Minimum limits apply for these criteria.
Investments that promote ESG characteristics: 90%, of which 20% are sustainable investments. Others: the Fund may also invest its assets in exchange traded derivatives and OTC derivative contracts in order to hedge against the risk of adverse market movements, to replace direct investments and to otherwise promote effective portfolio management. Sustainability data might not be available for possible derivatives.
The Fund might include investment options which are in line with the EU Taxonomy, but the Fund does not commit to a certain minimum number of investments in line with the EU Taxonomy. Currently, only few investment options in line with the EU Taxonomy are available, and there is a limited amount of reported information on compliance with the EU Taxonomy.
Portfolio managers have access to the Fund’s ESG analysis, which indicates, among other things, the weighted ESG rating, carbon intensity and share of green business of the portfolio.
Investments are regularly screened by ESG specialists for principal adverse impacts (PAI), exclusion criteria and international standard violations.
Fund-specific ESG indicators on environmental and social characteristics are reported on a monthly basis.
Sectors with adverse impacts to the environment and society defined by OP Asset Management are excluded from the Fund. The enforcement of exclusions is monitored regularly by calculating the Fund’s exposure to controversial and harmful operations and by screening the Fund using the criteria in the exclusion list.
The Fund’s investments are also screened regularly for violations of international standards using an external service provider’s analysis. If a standard violation is detected, the preferred option is to influence the company’s behaviour. If that is impossible or unsuccessful, the company may be removed from the Fund portfolio and placed on the list of exclusions. Identified standard violations and their related engagement processes are reported twice a year in connection with shareholder engagement reporting.
ESG factors are considered in the investment process where possible with the help of data by an external ESG service provider, the ESG tool developed internally by OP Asset Management, and the internal analysis model for assessing sustainable investments. Considering ESG factors in the investment process means, for example, that the risks and opportunities related to the environment, society and governance are made transparent using selected indicators from each area.
The internal ESG tool can be used to assess a company’s current state in relation to its peers in the sector in terms of ESG factors material for the companies as well as the company’s performance in these factors.
External ESG data can be used to examine the investee company’s targets for GHG emission reductions or current state in terms of the green transition.
The internal model developed by OP Asset Management for defining sustainable investments also provides relevant company-specific ESG data and gives an estimate of the company’s sustainability. Those investment options whose business promotes one or more UN Sustainable Development Goals (SDG) without harming other sustainable factors or goals are considered sustainable investments. The Fund’s proportion of sustainable investments is reported annually in periodic reports, in addition to which portfolio management has access to data updated on a monthly basis on the share of sustainable investments of the Fund’s portfolio.
In addition to ESG tools applied to the investee companies, portfolio managers have access to fund-specific reports on ESG issues at the portfolio level. The reports allow portfolio managers to view the Fund’s weighted ESG rating, carbon intensity and share of green business, among other data. These values are also presented in comparison to benchmark indexes.
The Fund votes in shareholders’ meetings in line with OP Fund Management Company Ltd’s shareholder engagement principles that take responsibility aspects into account. Attendance at meetings is based on the company’s share of the Fund’s investments. Attendance at shareholders’ meetings and the Fund’s votes are reported twice a year in connection with shareholder engagement reporting.
OP Asset Management uses several data sources from different service providers. Primary data sources are MSCI ESG Research and S&P Trucost, which provide information on topics such as the sustainability risks of investee companies, share of business operations with adverse impacts, climate risks and opportunities, and how the operations of investee companies align with UN Sustainable Development Goals. The service providers use both data reported by companies and estimates based on an assessment model developed by each service provider.
We also use materiality analyses by SSAB and Bloomberg data on investee companies, based on which we have developed our own analysis model for investigating investee companies’ current level of sustainability and likely future performance.
In shareholder meeting votes, we use data and company research by ISS ESG.
The service providers we use have detailed and appropriate processes in place for ensuring data quality and correcting inaccuracies in the data.
When selecting new data packages and service providers, we carefully compare and analyse the data quality, coverage, methodology and reliability of each service provider. We regularly monitor trends in ESG data and service providers on the market to ensure the best possible data to support our investment decisions and client reporting.
Data sources are utilised either directly based on metrics or analysis by the service provider as well as by combining different metrics and using them for internal analyses and assessments by OP Asset Management. A part of the data is imported directly to OP Asset Management’s database, from which it can be used in internal analysis models and reports. Data is also used directly from interfaces offered by the service providers.
The share of data that is assessed depends on sustainability indicators and the sustainability factor under scrutiny, and it is not possible to give a universal definition of the share of assessed data of all ESG data. It is difficult to determine what portion of ESG data are based on reported information and estimates, respectively. In cases where reported data is available, it is used as the primary source. Third-party service providers must specify for each metric whether the data is reported by companies themselves or estimated using the provider’s internal model.
At the moment, ESG data is not fully standardised, and investee companies do not report on the data widely. This makes it challenging to compare investee companies. Service providers may use different methods for compiling, evaluating and analysing data. For these reasons, we carefully review the methodologies of service providers to ensure their suitability for our purposes.
We use several different service providers to enable us to assess certain metrics from multiple sources and fill any gaps in data.
The Fund is subject to exclusion criteria and is screened for international standard violations as described above in part (d) Investment strategy. A party independent of portfolio management oversees that the Fund complies with the criteria. The Fund’s material exclusion criteria are implemented in the trading system.
OP is an active shareholder through its funds by voting in Finnish and international shareholders’ meetings, engaging in direct dialogue with companies and supporting joint initiatives by investors. OP's funds comply with the principles of shareholder engagement that take into account OP Fund Management Company Ltd’s ESG perspectives. These principles and the latest report on the implementation of shareholder engagement principles are available at op.fi/responsible-investing. Participation in general meetings of foreign companies takes place in markets where participation is cost-effective, taking into account their proportion of the Fund’s investments.
This Fund participates in the shareholder meetings of listed companies in accordance with OP Fund Management Company’s principles of shareholder engagement. A detailed list of attended meetings and actions taken and decisions adopted at the meetings can be found at op.fi/responsible-investing. By 2025, OP Asset Management’s climate-related shareholder engagement will cover 70% of financed emissions, as measured by direct equity and bond investments by OP funds in high climate risk sectors (NACE categories A-H and J-L). In practice, shareholder engagement in these companies involves either voting at shareholders’ meetings, direct dialogue or joint initiatives by investors. In addition, the Fund is involved in shareholder engagement more broadly where necessary, such as in relation to good governance, responsible tax practice or business ethics.
The Fund’s benchmark index is not applied to the performance of environmental or social characteristics promoted by the Fund.
Data published on 1 January 2023
ISIN: FI0008800206
Summary
No sustainable investment objective
Environmental or social characteristics of the finance product
Investment strategy
Share of investments
Monitoring of environmental or social characteristics
Methods
Data sources and data processing
Limitations of the methodology and data
Due diligence
Shareholder engagement policy
Designated reference benchmark
The Fund promotes environmental and social characteristics and, to ensure it, uses environmental, social and governance (ESG) analysis and excludes certain investments. The Fund does not place emphasis on or prioritise any single theme or sustainability factor, but takes sustainability factors broadly into account by focusing on environmental and social risks, opportunities and impacts relevant for each sector and investee company.
Principal adverse impacts (PAI) on sustainability are regularly analysed by screening all investments for their PAI indicators. If screening reveals investee companies with significant principal adverse impacts on sustainability in comparison to its peers and if the said PAI indicator is deemed essential for the investee company, the investee company will be monitored more closely and excluded, if necessary. Also, a process to influence the company’s behaviour can be started.
More information about how we take adverse sustainability impacts into account can be found in the document “Consideration of Principal Adverse Sustainability Impacts in Investing and Insurance Operations (in Finnish)”, which is available online at op.fi.
This financial product promotes environmental or social characteristics, but sustainable investment is not its primary objective. To the extent that the Fund engages in sustainable investment, in other words investing in financial activities that promote either environmental or social objectives, steps are taken to ensure that these sustainable investments do not cause significant harm to any sustainable investment objective.
Principal adverse impacts (PAI) on sustainability are regularly analysed by screening all investments for their PAI indicators. If screening reveals investee companies with significant principal adverse impacts on sustainability in comparison to its peers and if the said PAI indicator is deemed essential for the investee company, the investee company will be monitored more closely and excluded, if necessary. Also, a process to influence the company’s behaviour can be started.
More information about how we take adverse sustainability impacts into account can be found in the document “Consideration of Principal Adverse Sustainability Impacts in Investing and Insurance Operations (in Finnish)”, which is available online at op.fi.
The OP Asset Management’s sustainable investment analysis model is used to check whether a company has violated international standards (UN Global Compact and OECD guidelines for multinationals). If a violation is identified, the company cannot be determined as a sustainable investment. The definition of international standard violations and company-specific analysis is based on the methodology of a third-party service provider.
The Fund does not place emphasis on or prioritise any single theme or sustainability factor, but takes sustainability factors broadly into account by focusing on environmental and social risks, opportunities and impacts relevant for each sector and investee company.
The Fund promotes environmental and social characteristics and, to ensure it, uses environmental, social and governance (ESG) analysis and excludes certain investments.
Exclusion: The Fund excludes from its active direct investments controversial weapon manufacturers, mining companies producing thermal coal, power companies using thermal coal, tobacco companies, and companies that have breached international standards and where engagement has been unsuccessful. The list of exclusions is public. In addition to general exclusion rules, the Fund does not invest in companies whose principal business is in unconventional oil and gas extraction, alcohol, gambling, weapons, adult entertainment or nuclear power.
Use of ESG data in the analysis of investments: the Fund uses the best-in-class method based on an ESG rating by a third-party service provider. Only companies that are among the best in their sector in terms of ESG issues are selected for inclusion in the Fund.
Violations of international standards: The Fund is screened regularly for non-compliances with international standards. In the event that a non-compliance is detected, an influencing process is begun with the company in question. The aim is to make non-compliant companies change their practices and begin to comply with international standards in their operations. If influencing proves fruitless, the company may be removed from the Fund portfolio and placed on the exclusion list.
Minimum share of sustainable investments: In accordance with the minimum amount stated below, the Fund allocates investments into companies whose business promotes one or more UN Sustainable Development Goals (SDG) without harming other sustainability factors or objectives. Sustainable investments are determined using OP Asset Management’s analysis model which is based on an external service provider’s SDG and sustainability data.
Shareholders’ meetings: The Fund votes in shareholders’ meetings through a service provider in line with OP Fund Management Company Ltd’s shareholder engagement principles that take responsibility aspects into account.
Assessing good governance practices: Analysing the target company’s governance is an important part of the investment process. To us, good governance is a key foundation for any company’s financial success, regardless of sector. When assessing governance, some of the areas considered include the appropriateness of the target company’s administrative organisation, the target company’s actions in relation to its personnel, and the target company’s rewarding and taxation practices. In assessing good governance, we use an external service provider’s analysis and our own qualitative analysis if no external data is available. We screen the funds regularly to check them against the criteria of good governance. Minimum limits apply for these criteria.
Investments that promote ESG characteristics: 90%, of which 3% are sustainable investments
Currently, only few investment options in line with the EU Taxonomy are available, and there is a limited amount of reported information on compliance with the EU Taxonomy. Until reported data is available, we will use information based on estimates by a third-party service provider on alignment with EU taxonomy.
Others: the Fund may also invest its assets in exchange traded derivatives and OTC derivative contracts in order to hedge against the risk of adverse market movements, to replace direct investments and to otherwise promote effective portfolio management. Sustainability data might not be available for possible derivatives.
Portfolio managers have access to the Fund’s ESG analysis, which indicates, among other things, the weighted ESG rating, carbon intensity and share of green business of the portfolio.
Investments are regularly screened by ESG specialists for principal adverse impacts (PAI), exclusion criteria and international standard violations.
Fund-specific ESG indicators on environmental and social characteristics are reported on a monthly basis.
Negative screening is used to limit and exclude certain sectors and operations from the Fund’s investments.
Products and services hazardous to health or causing addition: The Fund does not invest in products or services that are hazardous to health or cause addiction. This category includes alcohol and tobacco production, and gambling companies.
Other social and societal topics: the Fund does not invest in the manufacture of weapons, adult entertainment production and activities that violate UN Global Compact, such as child labour and corruption.
Environment: the Fund excludes producers and users of fossil energy and nuclear power producers.
The Fund’s investments are also screened regularly for violations of international standards using an external service provider’s analysis. If a standard violation is detected, the preferred option is to influence the company’s behaviour. If that is impossible or unsuccessful, the company may be removed from the Fund portfolio and placed on the list of exclusions. Identified standard violations and their related engagement processes are reported twice a year in connection with shareholder engagement reporting.
The Fund applies the best-in-class method using data by a third-party ESG service provider.
The internal model developed by OP Asset Management for defining sustainable investments also provides relevant company-specific ESG data and gives an estimate of the company’s sustainability. Those investment options whose business promotes one or more UN Sustainable Development Goals (SDG) without harming other sustainable factors or goals are considered sustainable investments. The Fund’s proportion of sustainable investments is reported annually in periodic reports, in addition to which portfolio management has access to data updated on a monthly basis on the share of sustainable investments of the Fund’s portfolio.
In addition to ESG tools applied to the investee companies, portfolio managers have access to fund-specific reports on ESG issues at the portfolio level. The reports allow portfolio managers to view the Fund’s weighted ESG rating, carbon intensity and share of green business, among other data. These values are also presented in comparison to benchmark indexes.
The Fund votes in shareholders’ meetings in line with OP Fund Management Company Ltd’s shareholder engagement principles that take responsibility aspects into account. Attendance at meetings is based on the company’s share of the Fund’s investments. Attendance at shareholders’ meetings and the Fund’s votes are reported twice a year in connection with shareholder engagement reporting.
OP Asset Management uses several data sources from different service providers. Primary data sources are MSCI ESG Research and S&P Trucost, which provide information on topics such as the sustainability risks of investee companies, share of business operations with adverse impacts, climate risks and opportunities, and how the operations of investee companies align with UN Sustainable Development Goals. The service providers use both data reported by companies and estimates based on an assessment model developed by each service provider. In shareholder meeting votes, we use data and company research by ISS ESG. The service providers we use have detailed and appropriate processes in place for ensuring data quality and correcting inaccuracies in the data.
When selecting new data packages and service providers, we carefully compare and analyse the data quality, coverage, methodology and reliability of each service provider. We regularly monitor trends in ESG data and service providers on the market to ensure the best possible data to support our investment decisions and client reporting.
Data sources are utilised either directly based on metrics or analysis by the service provider as well as by combining different metrics and using them for internal analyses and assessments by OP Asset Management. A part of the data is imported directly to OP Asset Management’s database, from which it can be used in internal analysis models and reports. Data is also used directly from interfaces offered by the service providers.
The share of data that is assessed depends on sustainability indicators and the sustainability factor under scrutiny, and it is not possible to give a universal definition of the share of assessed data of all ESG data. It is difficult to determine what portion of ESG data are based on reported information and estimates, respectively. In cases where reported data is available, it is used as the primary source. Third-party service providers must specify for each metric whether the data is reported by companies themselves or estimated using the provider’s internal model.
At the moment, ESG data is not fully standardised, and investee companies do not report on the data widely. This makes it challenging to compare investee companies. Service providers may use different methods for compiling, evaluating and analysing data. For these reasons, we carefully review the methodologies of service providers to ensure their suitability for our purposes.
We use several different service providers to enable us to assess certain metrics from multiple sources and fill any gaps in data.
The Fund is subject to exclusion criteria and is screened for international standard violations as described above in part (d) Investment strategy. A party independent of portfolio management oversees that the Fund complies with the criteria. The Fund’s material exclusion criteria are implemented in the trading system.
OP is an active shareholder through its funds by voting in Finnish and international shareholders’ meetings, engaging in direct dialogue with companies and supporting joint initiatives by investors. OP's funds comply with the principles of shareholder engagement that take into account OP Fund Management Company Ltd’s ESG perspectives. These principles and the latest report on the implementation of shareholder engagement principles are available at op.fi/responsible-investing. Participation in general meetings of foreign companies takes place in markets where participation is cost-effective, taking into account their proportion of the Fund’s investments.
This Fund participates in the shareholder meetings of listed companies in accordance with OP Fund Management Company’s principles of shareholder engagement. A detailed list of attended meetings and actions taken and decisions adopted at the meetings can be found at op.fi/responsible-investing. By 2025, OP Asset Management’s climate-related shareholder engagement will cover 70% of financed emissions, as measured by direct equity and bond investments by OP funds in high climate risk sectors (NACE categories A-H and J-L). In practice, shareholder engagement in these companies involves either voting at shareholders’ meetings, direct dialogue or joint initiatives by investors. In addition, the Fund is involved in shareholder engagement more broadly where necessary, such as in relation to good governance, responsible tax practice or business ethics.
The Fund’s benchmark index is not applied to the performance of environmental or social characteristics promoted by the Fund.
Data published on 1 January 2023
ISIN: FI4000410931
Summary
No sustainable investment objective
Environmental or social characteristics of the finance product
Investment strategy
Share of investments
Monitoring of environmental or social characteristics
Methods
Data sources and data processing
Limitations of the methodology and data
Due diligence
Shareholder engagement policy
Designated reference benchmark
The Fund promotes environmental and social characteristics and, to ensure it, uses environmental, social and governance (ESG) analysis and excludes certain investments. The Fund does not place emphasis on or prioritise any single theme or sustainability factor, but takes sustainability factors broadly into account by focusing on environmental and social risks, opportunities and impacts relevant for each sector and investee company.
Principal adverse impacts (PAI) on sustainability are regularly analysed by screening all investments for their PAI indicators. If screening reveals investee companies with significant principal adverse impacts on sustainability in comparison to its peers and if the said PAI indicator is deemed essential for the investee company, the investee company will be monitored more closely and excluded, if necessary. Also, a process to influence the company’s behaviour can be started.
More information about how we take adverse sustainability impacts into account can be found in the document “Consideration of Principal Adverse Sustainability Impacts in Investing and Insurance Operations (in Finnish)”, which is available online at op.fi.
This financial product promotes environmental or social characteristics, but sustainable investment is not its primary objective. To the extent that the Fund engages in sustainable investment, in other words investing in financial activities that promote either environmental or social objectives, steps are taken to ensure that these sustainable investments do not cause significant harm to any sustainable investment objective.
Principal adverse impacts (PAI) on sustainability are regularly analysed by screening all investments for their PAI indicators. If screening reveals investee companies with significant principal adverse impacts on sustainability in comparison to its peers and if the said PAI indicator is deemed essential for the investee company, the investee company will be monitored more closely and excluded, if necessary. Also, a process to influence the company’s behaviour can be started.
More information about how we take adverse sustainability impacts into account can be found in the document “Consideration of Principal Adverse Sustainability Impacts in Investing and Insurance Operations (in Finnish)”, which is available online at op.fi.
The OP Asset Management’s sustainable investment analysis model is used to check whether a company has violated international standards (UN Global Compact and OECD guidelines for multinationals). If a violation is identified, the company cannot be determined as a sustainable investment. The definition of international standard violations and company-specific analysis is based on the methodology of a third-party service provider.
The Fund does not place emphasis on or prioritise any single theme or sustainability factor, but takes sustainability factors broadly into account by focusing on environmental and social risks, opportunities and impacts relevant for each sector and investee company.
The Fund promotes environmental and social characteristics and, to ensure it, uses environmental, social and governance (ESG) analysis and excludes certain investments.
Exclusion: The Fund excludes from its active direct investments controversial weapon manufacturers, mining companies producing thermal coal, power companies using thermal coal, tobacco companies, and companies that have breached international standards and where engagement has been unsuccessful. The list of exclusions is public. In addition to general exclusion rules, the Fund does not invest in companies whose principal business is in unconventional oil and gas extraction, alcohol, gambling, weapons, adult entertainment or nuclear power.
Use of ESG data in the analysis of investments: the Fund uses the best-in-class method based on an ESG rating by a third-party service provider. Only companies that are among the best in their sector in terms of ESG issues are selected for inclusion in the Fund.
Violations of international standards: The Fund is screened regularly for non-compliances with international standards. In the event that a non-compliance is detected, an influencing process is begun with the company in question. The aim is to make non-compliant companies change their practices and begin to comply with international standards in their operations. If influencing proves fruitless, the company may be removed from the Fund portfolio and placed on the exclusion list.
Minimum share of sustainable investments: In accordance with the minimum amount stated below, the Fund allocates investments into companies whose business promotes one or more UN Sustainable Development Goals (SDG) without harming other sustainability factors or objectives. Sustainable investments are determined using OP Asset Management’s analysis model which is based on an external service provider’s SDG and sustainability data.
Shareholders’ meetings: The Fund votes in shareholders’ meetings through a service provider in line with OP Fund Management Company Ltd’s shareholder engagement principles that take responsibility aspects into account.
Assessing good governance practices: Analysing the target company’s governance is an important part of the investment process. To us, good governance is a key foundation for any company’s financial success, regardless of sector. When assessing governance, some of the areas considered include the appropriateness of the target company’s administrative organisation, the target company’s actions in relation to its personnel, and the target company’s rewarding and taxation practices. In assessing good governance, we use an external service provider’s analysis and our own qualitative analysis if no external data is available. We screen the funds regularly to check them against the criteria of good governance. Minimum limits apply for these criteria.
Investments that promote ESG characteristics: 90%, of which 3% are sustainable investments
Currently, only few investment options in line with the EU Taxonomy are available, and there is a limited amount of reported information on compliance with the EU Taxonomy. Until reported data is available, we will use information based on estimates by a third-party service provider on alignment with EU taxonomy.
Others: the Fund may also invest its assets in exchange traded derivatives and OTC derivative contracts in order to hedge against the risk of adverse market movements, to replace direct investments and to otherwise promote effective portfolio management. Sustainability data might not be available for possible derivatives.
Portfolio managers have access to the Fund’s ESG analysis, which indicates, among other things, the weighted ESG rating, carbon intensity and share of green business of the portfolio.
Investments are regularly screened by ESG specialists for principal adverse impacts (PAI), exclusion criteria and international standard violations.
Fund-specific ESG indicators on environmental and social characteristics are reported on a monthly basis.
Negative screening is used to limit and exclude certain sectors and operations from the Fund’s investments.
Products and services hazardous to health or causing addition: The Fund does not invest in products or services that are hazardous to health or cause addiction. This category includes alcohol and tobacco production, and gambling companies.
Other social and societal topics: the Fund does not invest in the manufacture of weapons, adult entertainment production and activities that violate UN Global Compact, such as child labour and corruption.
Environment: the Fund excludes producers and users of fossil energy and nuclear power producers.
The Fund’s investments are also screened regularly for violations of international standards using an external service provider’s analysis. If a standard violation is detected, the preferred option is to influence the company’s behaviour. If that is impossible or unsuccessful, the company may be removed from the Fund portfolio and placed on the list of exclusions. Identified standard violations and their related engagement processes are reported twice a year in connection with shareholder engagement reporting.
The Fund applies the best-in-class method using data by a third-party ESG service provider.
The internal model developed by OP Asset Management for defining sustainable investments also provides relevant company-specific ESG data and gives an estimate of the company’s sustainability. Those investment options whose business promotes one or more UN Sustainable Development Goals (SDG) without harming other sustainable factors or goals are considered sustainable investments. The Fund’s proportion of sustainable investments is reported annually in periodic reports, in addition to which portfolio management has access to data updated on a monthly basis on the share of sustainable investments of the Fund’s portfolio.
In addition to ESG tools applied to the investee companies, portfolio managers have access to fund-specific reports on ESG issues at the portfolio level. The reports allow portfolio managers to view the Fund’s weighted ESG rating, carbon intensity and share of green business, among other data. These values are also presented in comparison to benchmark indexes.
The Fund votes in shareholders’ meetings in line with OP Fund Management Company Ltd’s shareholder engagement principles that take responsibility aspects into account. Attendance at meetings is based on the company’s share of the Fund’s investments. Attendance at shareholders’ meetings and the Fund’s votes are reported twice a year in connection with shareholder engagement reporting.
OP Asset Management uses several data sources from different service providers. Primary data sources are MSCI ESG Research and S&P Trucost, which provide information on topics such as the sustainability risks of investee companies, share of business operations with adverse impacts, climate risks and opportunities, and how the operations of investee companies align with UN Sustainable Development Goals. The service providers use both data reported by companies and estimates based on an assessment model developed by each service provider. In shareholder meeting votes, we use data and company research by ISS ESG. The service providers we use have detailed and appropriate processes in place for ensuring data quality and correcting inaccuracies in the data.
When selecting new data packages and service providers, we carefully compare and analyse the data quality, coverage, methodology and reliability of each service provider. We regularly monitor trends in ESG data and service providers on the market to ensure the best possible data to support our investment decisions and client reporting.
Data sources are utilised either directly based on metrics or analysis by the service provider as well as by combining different metrics and using them for internal analyses and assessments by OP Asset Management. A part of the data is imported directly to OP Asset Management’s database, from which it can be used in internal analysis models and reports. Data is also used directly from interfaces offered by the service providers.
The share of data that is assessed depends on sustainability indicators and the sustainability factor under scrutiny, and it is not possible to give a universal definition of the share of assessed data of all ESG data. It is difficult to determine what portion of ESG data are based on reported information and estimates, respectively. In cases where reported data is available, it is used as the primary source. Third-party service providers must specify for each metric whether the data is reported by companies themselves or estimated using the provider’s internal model.
At the moment, ESG data is not fully standardised, and investee companies do not report on the data widely. This makes it challenging to compare investee companies. Service providers may use different methods for compiling, evaluating and analysing data. For these reasons, we carefully review the methodologies of service providers to ensure their suitability for our purposes.
We use several different service providers to enable us to assess certain metrics from multiple sources and fill any gaps in data.
The Fund is subject to exclusion criteria and is screened for international standard violations as described above in part (d) Investment strategy. A party independent of portfolio management oversees that the Fund complies with the criteria. The Fund’s material exclusion criteria are implemented in the trading system.
OP is an active shareholder through its funds by voting in Finnish and international shareholders’ meetings, engaging in direct dialogue with companies and supporting joint initiatives by investors. OP's funds comply with the principles of shareholder engagement that take into account OP Fund Management Company Ltd’s ESG perspectives. These principles and the latest report on the implementation of shareholder engagement principles are available at op.fi/responsible-investing. Participation in general meetings of foreign companies takes place in markets where participation is cost-effective, taking into account their proportion of the Fund’s investments.
This Fund participates in the shareholder meetings of listed companies in accordance with OP Fund Management Company’s principles of shareholder engagement. A detailed list of attended meetings and actions taken and decisions adopted at the meetings can be found at op.fi/responsible-investing. By 2025, OP Asset Management’s climate-related shareholder engagement will cover 70% of financed emissions, as measured by direct equity and bond investments by OP funds in high climate risk sectors (NACE categories A-H and J-L). In practice, shareholder engagement in these companies involves either voting at shareholders’ meetings, direct dialogue or joint initiatives by investors. In addition, the Fund is involved in shareholder engagement more broadly where necessary, such as in relation to good governance, responsible tax practice or business ethics.
The Fund’s benchmark index is not applied to the performance of environmental or social characteristics promoted by the Fund.
Data published on 1 January 2023
ISIN: FI4000410949
Summary
No sustainable investment objective
Environmental or social characteristics of the finance product
Investment strategy
Share of investments
Monitoring of environmental or social characteristics
Methods
Data sources and data processing
Limitations of the methodology and data
Due diligence
Shareholder engagement policy
Designated reference benchmark
The Fund promotes environmental and social characteristics and, to ensure it, uses environmental, social and governance (ESG) analysis and excludes certain investments. The Fund does not place emphasis on or prioritise any single theme or sustainability factor, but takes sustainability factors broadly into account by focusing on environmental and social risks, opportunities and impacts relevant for each sector and investee company.
Principal adverse impacts (PAI) on sustainability are regularly analysed by screening all investments for their PAI indicators. If screening reveals investee companies with significant principal adverse impacts on sustainability in comparison to its peers and if the said PAI indicator is deemed essential for the investee company, the investee company will be monitored more closely and excluded, if necessary. Also, a process to influence the company’s behaviour can be started.
More information about how we take adverse sustainability impacts into account can be found in the document “Consideration of Principal Adverse Sustainability Impacts in Investing and Insurance Operations (in Finnish)”, which is available online at op.fi.
This financial product promotes environmental or social characteristics, but sustainable investment is not its primary objective. To the extent that the Fund engages in sustainable investment, in other words investing in financial activities that promote either environmental or social objectives, steps are taken to ensure that these sustainable investments do not cause significant harm to any sustainable investment objective.
Principal adverse impacts (PAI) on sustainability are regularly analysed by screening all investments for their PAI indicators. If screening reveals investee companies with significant principal adverse impacts on sustainability in comparison to its peers and if the said PAI indicator is deemed essential for the investee company, the investee company will be monitored more closely and excluded, if necessary. Also, a process to influence the company’s behaviour can be started.
More information about how we take adverse sustainability impacts into account can be found in the document “Consideration of Principal Adverse Sustainability Impacts in Investing and Insurance Operations (in Finnish)”, which is available online at op.fi.
The OP Asset Management’s sustainable investment analysis model is used to check whether a company has violated international standards (UN Global Compact and OECD guidelines for multinationals). If a violation is identified, the company cannot be determined as a sustainable investment. The definition of international standard violations and company-specific analysis is based on the methodology of a third-party service provider.
The Fund does not place emphasis on or prioritise any single theme or sustainability factor, but takes sustainability factors broadly into account by focusing on environmental and social risks, opportunities and impacts relevant for each sector and investee company.
The Fund promotes environmental and social characteristics and, to ensure it, uses environmental, social and governance (ESG) analysis and excludes certain investments.
Exclusion: The Fund excludes from its active direct investments controversial weapon manufacturers, mining companies producing thermal coal, power companies using thermal coal, tobacco companies, and companies that have breached international standards and where engagement has been unsuccessful. The list of exclusions is public. In addition to general exclusion rules, the Fund does not invest in companies whose principal business is in unconventional oil and gas extraction, alcohol, gambling, weapons, adult entertainment or nuclear power.
Use of ESG data in the analysis of investments: the Fund uses the best-in-class method based on an ESG rating by a third-party service provider. Only companies that are among the best in their sector in terms of ESG issues are selected for inclusion in the Fund.
Violations of international standards: The Fund is screened regularly for non-compliances with international standards. In the event that a non-compliance is detected, an influencing process is begun with the company in question. The aim is to make non-compliant companies change their practices and begin to comply with international standards in their operations. If influencing proves fruitless, the company may be removed from the Fund portfolio and placed on the exclusion list.
Minimum share of sustainable investments: In accordance with the minimum amount stated below, the Fund allocates investments into companies whose business promotes one or more UN Sustainable Development Goals (SDG) without harming other sustainability factors or objectives. Sustainable investments are determined using OP Asset Management’s analysis model which is based on an external service provider’s SDG and sustainability data.
Shareholders’ meetings: The Fund votes in shareholders’ meetings through a service provider in line with OP Fund Management Company Ltd’s shareholder engagement principles that take responsibility aspects into account.
Assessing good governance practices: Analysing the target company’s governance is an important part of the investment process. To us, good governance is a key foundation for any company’s financial success, regardless of sector. When assessing governance, some of the areas considered include the appropriateness of the target company’s administrative organisation, the target company’s actions in relation to its personnel, and the target company’s rewarding and taxation practices. In assessing good governance, we use an external service provider’s analysis and our own qualitative analysis if no external data is available. We screen the funds regularly to check them against the criteria of good governance. Minimum limits apply for these criteria.
Investments that promote ESG characteristics: 90%, of which 3% are sustainable investments
Currently, only few investment options in line with the EU Taxonomy are available, and there is a limited amount of reported information on compliance with the EU Taxonomy. Until reported data is available, we will use information based on estimates by a third-party service provider on alignment with EU taxonomy.
Others: the Fund may also invest its assets in exchange traded derivatives and OTC derivative contracts in order to hedge against the risk of adverse market movements, to replace direct investments and to otherwise promote effective portfolio management. Sustainability data might not be available for possible derivatives.
Portfolio managers have access to the Fund’s ESG analysis, which indicates, among other things, the weighted ESG rating, carbon intensity and share of green business of the portfolio.
Investments are regularly screened by ESG specialists for principal adverse impacts (PAI), exclusion criteria and international standard violations.
Fund-specific ESG indicators on environmental and social characteristics are reported on a monthly basis.
Negative screening is used to limit and exclude certain sectors and operations from the Fund’s investments.
Products and services hazardous to health or causing addition: The Fund does not invest in products or services that are hazardous to health or cause addiction. This category includes alcohol and tobacco production, and gambling companies.
Other social and societal topics: the Fund does not invest in the manufacture of weapons, adult entertainment production and activities that violate UN Global Compact, such as child labour and corruption.
Environment: the Fund excludes producers and users of fossil energy and nuclear power producers.
The Fund’s investments are also screened regularly for violations of international standards using an external service provider’s analysis. If a standard violation is detected, the preferred option is to influence the company’s behaviour. If that is impossible or unsuccessful, the company may be removed from the Fund portfolio and placed on the list of exclusions. Identified standard violations and their related engagement processes are reported twice a year in connection with shareholder engagement reporting.
The Fund applies the best-in-class method using data by a third-party ESG service provider.
The internal model developed by OP Asset Management for defining sustainable investments also provides relevant company-specific ESG data and gives an estimate of the company’s sustainability. Those investment options whose business promotes one or more UN Sustainable Development Goals (SDG) without harming other sustainable factors or goals are considered sustainable investments. The Fund’s proportion of sustainable investments is reported annually in periodic reports, in addition to which portfolio management has access to data updated on a monthly basis on the share of sustainable investments of the Fund’s portfolio.
In addition to ESG tools applied to the investee companies, portfolio managers have access to fund-specific reports on ESG issues at the portfolio level. The reports allow portfolio managers to view the Fund’s weighted ESG rating, carbon intensity and share of green business, among other data. These values are also presented in comparison to benchmark indexes.
The Fund votes in shareholders’ meetings in line with OP Fund Management Company Ltd’s shareholder engagement principles that take responsibility aspects into account. Attendance at meetings is based on the company’s share of the Fund’s investments. Attendance at shareholders’ meetings and the Fund’s votes are reported twice a year in connection with shareholder engagement reporting.
OP Asset Management uses several data sources from different service providers. Primary data sources are MSCI ESG Research and S&P Trucost, which provide information on topics such as the sustainability risks of investee companies, share of business operations with adverse impacts, climate risks and opportunities, and how the operations of investee companies align with UN Sustainable Development Goals. The service providers use both data reported by companies and estimates based on an assessment model developed by each service provider. In shareholder meeting votes, we use data and company research by ISS ESG. The service providers we use have detailed and appropriate processes in place for ensuring data quality and correcting inaccuracies in the data.
When selecting new data packages and service providers, we carefully compare and analyse the data quality, coverage, methodology and reliability of each service provider. We regularly monitor trends in ESG data and service providers on the market to ensure the best possible data to support our investment decisions and client reporting.
Data sources are utilised either directly based on metrics or analysis by the service provider as well as by combining different metrics and using them for internal analyses and assessments by OP Asset Management. A part of the data is imported directly to OP Asset Management’s database, from which it can be used in internal analysis models and reports. Data is also used directly from interfaces offered by the service providers.
The share of data that is assessed depends on sustainability indicators and the sustainability factor under scrutiny, and it is not possible to give a universal definition of the share of assessed data of all ESG data. It is difficult to determine what portion of ESG data are based on reported information and estimates, respectively. In cases where reported data is available, it is used as the primary source. Third-party service providers must specify for each metric whether the data is reported by companies themselves or estimated using the provider’s internal model.
At the moment, ESG data is not fully standardised, and investee companies do not report on the data widely. This makes it challenging to compare investee companies. Service providers may use different methods for compiling, evaluating and analysing data. For these reasons, we carefully review the methodologies of service providers to ensure their suitability for our purposes.
We use several different service providers to enable us to assess certain metrics from multiple sources and fill any gaps in data.
The Fund is subject to exclusion criteria and is screened for international standard violations as described above in part (d) Investment strategy. A party independent of portfolio management oversees that the Fund complies with the criteria. The Fund’s material exclusion criteria are implemented in the trading system.
OP is an active shareholder through its funds by voting in Finnish and international shareholders’ meetings, engaging in direct dialogue with companies and supporting joint initiatives by investors. OP's funds comply with the principles of shareholder engagement that take into account OP Fund Management Company Ltd’s ESG perspectives. These principles and the latest report on the implementation of shareholder engagement principles are available at op.fi/responsible-investing. Participation in general meetings of foreign companies takes place in markets where participation is cost-effective, taking into account their proportion of the Fund’s investments.
This Fund participates in the shareholder meetings of listed companies in accordance with OP Fund Management Company’s principles of shareholder engagement. A detailed list of attended meetings and actions taken and decisions adopted at the meetings can be found at op.fi/responsible-investing. By 2025, OP Asset Management’s climate-related shareholder engagement will cover 70% of financed emissions, as measured by direct equity and bond investments by OP funds in high climate risk sectors (NACE categories A-H and J-L). In practice, shareholder engagement in these companies involves either voting at shareholders’ meetings, direct dialogue or joint initiatives by investors. In addition, the Fund is involved in shareholder engagement more broadly where necessary, such as in relation to good governance, responsible tax practice or business ethics.
The Fund’s benchmark index is not applied to the performance of environmental or social characteristics promoted by the Fund.
Data published on 1 January 2023
ISIN: FI4000410956
Summary
No principal adverse impact on a sustainable investment objective
Sustainable investment objective of the financial product
Investment strategy
Share of investments
Monitoring of sustainable investment objectives
Methods
Data sources and data processing
Limitations of the methodology and data
Due diligence
Shareholder engagement policy
Achieving a sustainable investment objective
The Fund promotes environmental and social characteristics by integrating fund level as well as fund-look-through analysis and monitoring of sustainability factors into the investment process. The Fund does not emphasise or prioritise any single theme or sustainability factor, but addresses sustainability factors widely, avoiding investments in controversial activities and business with adverse environmental or social impacts and by emphasising funds that promote environmental and/or social characteristics or aim to invest sustainably.
To the extent that the Fund engages in sustainable investment, in other words investing in financial activities that promote either environmental or social objectives, steps are taken to ensure that these sustainable investments do not cause significant harm to any sustainable investment objective. OP Asset Management uses several data sources from different service providers.
The primary data sources are Bloomberg, Morningstar, MSCI ESG Research and S&P Trucost. Data from Bloomberg and Morningstar are mainly used for fund level analyses. MSCI ESG Research and S&P Trucost provide information on topics such as the sustainability risks of investee companies, share of business operations with adverse impacts, climate risks and opportunities, and how the operations of investee companies align with the UN Sustainable Development Goals. Data from these service providers are used to the extent that the Fund invests in mutual funds managed by OP. The service providers use both data reported by the companies and estimates based on an assessment model developed by each service provider.
Regarding mutual funds managed by OP, the principal adverse impacts (PAI) on sustainability are regularly analysed by screening all investments for their PAI indicators. If the screening reveals investee companies with significant principal adverse impacts on sustainability in comparison to peers, and if the said PAI indicator is deemed essential for the investee company, the investee company will be monitored more closely and excluded, if deemed necessary. Also, a process to engage with the company can be started. For investments in funds other than OP funds, the extent to which PAI factors can be addressed depends on the availability of data, and our processes can develop as the availability and quality of data improve.
This finance product promotes environmental or social characteristics, but sustainable investment is not its primary objective.
To the extent that the Fund engages in sustainable investment, in other words investing in financial activities that promote either environmental or social objectives, steps are taken to ensure that these sustainable investments do not cause significant harm to any sustainable investment objective.
For funds managed by OP Fund Management Company, the principal adverse impacts (PAI) on sustainability are regularly analysed by screening all investments for their PAI indicators. If the screening reveals investee companies with significant principal adverse impacts on sustainability in comparison to peers, and if the said PAI indicator is deemed essential for the investee company, the investee company will be monitored more closely and excluded, if deemed necessary. Also, a process to engage with the company can be started. For investments in funds other than OP funds, the extent to which PAI factors can be addressed depends on the availability of data, and our processes can develop as the availability and quality of data improve.
More information about how we take adverse sustainability impacts into account can be found in the document ""Consideration of Principal Adverse Sustainability Impacts in Investing and Insurance Operations (in Finnish)"", which is available online at op.fi.
The OP Asset Management’s sustainable investment analysis model is used to check whether a company has violated international standards (UN Global Compact and OECD guidelines for multinationals). If a violation is identified, the company cannot be defined as a sustainable investment. The definition of international standard violations and company-specific analysis is based on the methodology of a third-party service provider.
The Fund does not emphasise or prioritise any single theme but addresses sustainability factors by integrating fund level as well as fund-look-through analysis and monitoring of sustainability factors into the investment process. The analysis and monitoring consist of exclusions aimed at limiting exposure to certain industries, as well as the consideration of climate factors and active ownership as part of asset managers' investment processes.
The Fund promotes environmental and social characteristics by integrating fund level as well as fund-look-through analysis and monitoring of sustainability factors into the investment process.
Exclusion: The following criteria apply to investments in OP-managed funds. The Fund excludes from its active direct investments any controversial weapon manufacturers, mining companies producing thermal coal, power companies using thermal coal, tobacco companies, and companies that have breached international standards and where engagement has been unsuccessful. The list of exclusions is public.
Use of ESG data in the analysis of investments: ESG factors are considered part of the investment process by using an external service provider’s data and an ESG tool, developed internally by OP Asset Management. Considering ESG factors in the investment process means, for example, that the risks and opportunities related to the environment, society and governance are made transparent using selected indicators from each area. A sustainable investment percentage is calculated for each internally and externally managed fund and ETF. OP monitors that each ETF provider has an ESG policy or that they are committed to responsible investment principles.
Global norms breaches: Investments in OP Funds are screened regularly for non-compliance with global norms. If a non-compliance is detected, an engagement process is begun with the company in question. The aim is to make non-compliant companies change their practices and begin to comply with global norms in their operations. If engagement proves unsuccessful, the company may be removed from the fund portfolio and placed on the exclusion list.
Minimum allocation for sustainable investments: The following description applies to investments in OP-managed funds. Regarding OP-managed funds, the funds allocate a minimum share of investments, as stated below, in companies whose business promotes one or more of the UN Sustainable Development Goals (SDG) without harming other sustainability factors or objectives. Sustainable investments are determined using OP Asset Management’s analysis model which is based on an external service provider’s SDG and sustainability data.
Methods for assessing good governance practices: Analysing the target company’s governance is an important part of the investment process. For us, good governance is a fundamental pillar for any company’s financial success, regardless of the sector. Regarding OP-managed funds, when assessing governance, some of the areas considered include the appropriateness of the target company’s administrative organisation, the target company’s actions in relation to its personnel, and the target company’s rewarding and taxation practices. To assess good governance, we use the analysis of third-party service providers and our own qualitative analysis if no external data are available. We screen the funds regularly against the criteria of good governance, with minimum thresholds in place. We also expect good governance from our external asset managers, and its examination is an essential part of the due diligence process conducted before investment decisions and of the annual survey.
The Fund makes investments that promote environmental and social characteristics, and sustainable investments account for at least 5% of these.
Others: The Fund may also invest its assets in exchange traded derivatives and OTC derivative contracts in order to hedge against the risk of adverse market movements, to replace direct investments and to otherwise promote effective portfolio management. Sustainability data might not be available for possible derivatives.
The Fund might include investment options which are in line with the EU Taxonomy, but the Fund does not commit to a certain minimum number of investments in line with the EU Taxonomy. Currently, only few investment options in line with the EU Taxonomy are available, and there is a limited amount of reported information on compliance with the EU Taxonomy.
Using data from a third-party service provider, portfolio managers follow whether a specific fund invested in promotes environmental or social characteristics and/or whether the fund aims to make sustainable investments. Portfolio managers also use an internally developed ESG tool for fund level analysis of the degree to which the fund product emphasises investments in funds that promote environmental and social characteristics and aim to invest sustainably. This ESG tool can also be used to ensure that exposure to OP Asset Management's exclusion list is minimised. Portfolio managers can also use the tool to monitor that the fund's minimum allocation to sustainable investment is reached and that any adverse sustainability impacts related to sustainable investments are addressed either through OP Asset Management's principal adverse impact (PAI) analysis or the PAI monitoring of third-party funds.
Investments are regularly screened by ESG specialists for the metrics listed above. Fund-specific ESG indicators on top-level environmental and social characteristics related to the Fund are reported on a monthly basis.
The Fund avoids investing in sectors that OP Asset Management has indicated as having adverse impacts on the environment and society. The enforcement of exclusions is monitored regularly by calculating the Fund’s exposure to controversial and harmful operations and by screening the Fund using the criteria in the exclusion list.
ESG factors are addressed in investment decisions by emphasising funds that promote environmental and/or social characteristics or that aim to invest sustainably. Portfolio managers have access to fund level data provided by both a third-party ESG service provider and an ESG tool internally developed by OP Asset Management. Data from a third-party service provider enables portfolio managers to follow whether a specific fund invested in promotes environmental or social characteristics and/or whether the fund aims to make sustainable investments. The internally developed ESG tool makes it possible to assess the degree to which a financial instrument emphasises investments in funds that promote environmental and social characteristics and aim to invest sustainably, as well as to ensure that any exposure to sectors that OP Asset Management has defined as adverse in terms of sustainability is minimised. Portfolio managers can also use the tool to monitor that the fund's minimum allocation to sustainable investment is reached and that any adverse sustainability impacts related to sustainable investments are addressed either through OP Asset Management's principal adverse impact (PAI) analysis or the PAI monitoring of third-party funds.
External asset managers' ESG operations are comprehensively audited by reviewing their ESG policy, resources and reporting, exclusion principles and consideration of sustainability factors in investment activities. The audit results are scored by OP Asset Management, and the external managers' sustainability work and its development are monitored using an annual survey. The Fund does not invest in external managers' funds that do not have an ESG policy or are not committed to responsible investment principles.
OP Asset Management uses several data sources from different service providers. The primary data sources are Bloomberg, Morningstar, MSCI ESG Research and S&P Trucost. Data from Bloomberg and Morningstar are mainly used for fund level analysis, while data from MSCI ESG Research and S&P Trucost are used for company level analysis regarding investments in OP-managed funds. These service providers provide data on topics including the sustainability risks of investee companies, share of business operations with adverse impacts, climate risks and opportunities, and how the operations of investee companies align with the UN Sustainable Development Goals. The service providers use both data reported by the companies and estimates based on an assessment model developed by each service provider.
Our service providers use detailed and standardised processes for ensuring data quality and correcting inaccuracies in the data.
When selecting new data packages and service providers, we carefully compare and analyse the data quality, coverage, methodology and reliability of each service provider. We regularly monitor trends in ESG data and service providers on the market to ensure we have the best possible data to support our investment decisions and client reporting.
Data sources are used either directly based on the service provider's metrics or analysis or by combining different metrics and using them for OP Asset Management's internal analyses and assessments. Some of the data are imported directly to OP Asset Management’s database, from which it can be used in internal analysis models and reports. Data are also used directly through interfaces offered by the service providers.
The share of data assessed depends on sustainability indicators and the sustainability factor under scrutiny, and it is impossible to give a universal definition of the share of assessed data of all ESG data. It is difficult to determine what portion of ESG data is based on reported information and estimates respectively. In cases where reported data are available, they are used as the primary source. Third-party service providers must specify for each metric whether the data are reported by companies themselves or estimated using the provider's internal model.
At the moment, ESG data are not fully standardised, and they are not necessarily widely reported by fund and asset management companies. This can make comparability challenging. Service providers may use different methods for compiling, evaluating and analysing data. For these reasons, we carefully review the methodologies of service providers to ensure their suitability for our purposes.
We use several different service providers to enable us to assess certain metrics from multiple sources and fill any gaps in data.
The Fund is subject to exclusion criteria as described above in part (d) Investment strategy. A party independent of portfolio management oversees that the Fund complies with the criteria. The Fund’s material exclusion criteria are implemented in the trading system.
To the extent that the Fund invests in OP-managed funds, the funds work as an active owner by participating in shareholder meetings and engaging in direct dialogue with the companies.
The Fund's benchmark index is not applied to the performance of environmental or social characteristics promoted by the Fund.
Summary
No sustainable investment objective
Environmental or social characteristics of the finance product
Investment strategy
Share of investments
Monitoring of environmental or social characteristics
Methods
Data sources and data processing
Limitations of the methodology and data
Due diligence
Shareholder engagement policy
Designated reference benchmark
OP-Rental Yield is a non-UCITS fund which mainly invests its assets in homes, commercial premises and residential construction contracting in Finland. The Fund promotes environmental and social characteristics and, to ensure it, uses environmental, social and governance (ESG) analysis and excludes certain investments. The Fund’s investments are mainly made directly in rental apartments which account for at least half of the Fund’s portfolio. In addition, the Fund invests a maximum of a fifth of its gross assets in residential construction contracting.
The Fund promotes environmental and social characteristics by supporting sustainable urbanisation in the form of infill development and by favouring energy efficient solutions. In selecting investments, we place emphasis on locations that enable access to services on foot or by bicycle or public transport. The Fund enables the construction of new, healthy homes and a high-quality alternative to home ownership.
This financial product promotes environmental or social characteristics, but sustainable investment is not its objective. For any sustainable investments made in the Fund, those investments in line with the EU Taxonomy which have set climate change mitigation as their environmental goals are considered sustainable investments. Climate change mitigation is promoted by investing in the options that meet the requirements of the EU Taxonomy. Insofar as the Fund makes sustainable investments with climate change mitigation as the environmental goal, it is assessed in line with the EU Taxonomy that the investment does not cause significant harm to other goals following the EU Taxonomy.
The sustainability indicators monitored include the average energy class of properties, the production of renewable energy in properties, the number of homes built and the number of certified properties.
This financial product promotes environmental or social characteristics, but sustainable investment is not its objective.
To the extent that the Fund makes sustainable investments, those investments aligned with the EU Taxonomy which have set climate change mitigation as their environmental goals are considered sustainable investments. Climate change mitigation is promoted by investing in the options that meet the requirements of the EU Taxonomy.
Insofar as the Fund makes sustainable investments with climate change mitigation as the environmental goal, it is assessed in line with the EU Taxonomy that the investment does not cause significant harm to other goals following the EU Taxonomy. The “do no significant harm” assessment related to property acquisition and possession comprises the assessment of physical climate risks concerning taxonomy-aligned investments. As part of the assessment, climate risk analysis is thus carried out for sustainable investments. This assessment progresses in phases and involves (i) review of activities in order to define which physical climate risks may affect the properties during their expected lifetime; (ii) if the activities are assumed to be in danger due to one or more physical climate risks, assessment of significance of the climate risk based on the vulnerability of the property; and (iii) review of adjustment solutions that decrease the identified physical climate risks related to properties.
Principal adverse impacts (PAI) on sustainability are regularly assessed by considering the PAI indicators applicable to investments in real estate assets. These indicators apply to risks related to fossil fuels and energy inefficiency, as well as greenhouse gas emissions.
The Fund invests mainly in housing or real estate companies owned by the Fund for 100% of their shares. As part of OP Financial Group, we support the UN Global Compact initiative and comply with the OECD’s operating instructions for multinational companies and the UN Guiding Principles on Business and Human Rights. Insofar as the Fund may have investments in companies, these companies are reviewed in terms of quality in accordance with the OECD’s instructions and the UN principles.
Environmental or social characteristics of the finance product
The Fund promotes environmental and social characteristics by supporting sustainable urbanisation in the form of infill development and by favouring energy efficient solutions. In selecting investments, we place emphasis on locations that enable access to services on foot or by bicycle or public transport. The Fund enables the construction of new, healthy homes and a high-quality alternative to home ownership. To the extent that the Fund invests in properties in alignment with the EU Taxonomy, its aim is to promote climate change mitigation.
Investment strategy
OP-Rental Yield is a non-UCITS fund which mainly invests its assets in homes, commercial premises and residential construction contracting in Finland. The Fund promotes environmental and social characteristics and, to ensure it, uses environmental, social and governance (ESG) analysis and excludes certain investments. The Fund’s investments are mainly made directly in rental apartments, which account for at least half of the Fund’s portfolio. In addition, the Fund invests a maximum of a fifth of its gross assets in residential construction contracting. These investments are made either directly in OP-Rental Yield’s own construction contracting or indirectly in shares in limited partnerships engaged in building and renting homes. The Fund also invests in commercial premises such as business and office premises. The Fund’s yield and value are greatly affected by the general trend in the values and rental yields in the Finnish real estate market. The Fund’s investments typically focus on growth poles and other regions considered most attractive by the portfolio management.
Insofar as the Fund can invest in companies, a qualitative analysis is made for these based on which the implementation of good governance is assessed. When assessing a company’s governance, some of the areas considered include the appropriateness of the company’s administrative organisation, the company’s actions in relation to its personnel, and the company’s rewarding and taxation practices. In addition, the company’s operations should be transparent.
At least 60% of the assets are invested in real properties in Finland and related real estate securities. These investments promote environmental and social characteristics.
At least 20% of the investments promoting environmental and social characteristics align with EU taxonomy and are thus also sustainable investments.
Other environmental and social characteristics cover investments promoting environmental or social characteristics that are not considered sustainable investments and not aligned with EU Taxonomy.
The Fund’s other assets (up to 40%) cover other investments in the financing product that do not promote environmental or social characteristics, and that are not considered sustainable investments. Other assets may comprise short-term net assets such as cash investments and derivatives used for interest rate hedging. The Fund may invest its assets in derivative contracts and OTC derivatives to hedge against the risk of adverse market movements, to replace direct investments and to otherwise promote effective portfolio management. Sustainability factors cannot be determined for possible derivatives.
The Fund does not have a minimum share of sustainable investments not in line with the EU Taxonomy. Additionally, the Fund has no minimum share of sustainable investments with social targets.
The sustainability indicators monitored include the average energy class of properties, the production of renewable energy in properties, the number of homes built and the number of certified properties. In addition to ESG indicators, the Fund tracks, among other things, the accessibility of investments by public transport. Accessibility is assessed with a scoring system based on distance to the nearest public transport stop (up to 1 kilometre or up to 500 metres) and the frequency of service during peak hours (up to 15 minutes) and the area’s accessibility on foot using a walk score tool. We select properties in central locations to promote sustainable mobility. Properties developed by the Fund have capacity for electric vehicle charging stations, and charging stations are installed based on customer demand. Shared cars and bicycle maintenance facilities can also be implemented for the properties. In addition, the Fund gives preference to in-fill development in existing urban structures or in its immediate vicinity. The Fund uses a third-party service provider in the certification of properties and drafting of energy performance certificates.
The average energy class of invested properties is tracked annually by calculating the average energy class according to energy performance certificates, with a weighting based on building volume. This indicator does not consider properties for which no energy performance certificate will be drawn up. The production of renewable energy and certifications are tracked based on the number of properties. The number of homes is reported for each investment. Sustainability indicators are identified for each investment and reported annually in summary reports.
Data sources and data processing
Data used to assess the materialisation of environmental or social characteristics is received from building permits and contract documents or from the contractor or seller of the property. In addition, data is obtained from official registers and other public sources. Data quality is ensured with a careful DD process. The ESG officer ensures in the investment decision proposal that ESG criteria are met. In addition, third-party service providers are used for monitoring and storing data related to the defined indicators. The assessment is made in the investment decision phase, when data on new developments is based on designs that precede the construction phase.
To the extent that the Fund may invest in other funds or companies, this data is collected in connection with the ESG DD of the investment to determine that the proposed investment takes sustainability risks sufficiently into consideration.
In construction projects, ESG assessment is carried out during the building permit phase, at which point details such as the building’s energy class are still subject to changes. Possible changes to the building’s construction method are always negotiated with the contractor, and the contractor may not unilaterally make changes to the building’s sustainability factors. The changes may not materially worsen the property.
ESG analysis of potential investments in already finished properties may contain inaccuracies because the seller does not always have access to comprehensive, up-to-date data on the property’s sustainability factors. The data is supplemented by DD audits by third-party experts and information obtained from public sources.
As part of the acquisition of new investments, an appropriate due diligence is carried out. The audit investigates, among other matters, predefined questions related to the investment’s sustainability. The investment decision is based on reports made in the DD audit phase and responses received from the seller or developer. The audit may also involve external technical specialists. Possible changes in construction projects are always discussed with the contractor. As part of the assessment during the investment decision phase, the investment is also screened for predefined exclusion criteria.
The Fund’s portfolio manager, OP Real Estate Asset Management Ltd, does not draw up or publish its shareholder engagement principles. This is because the funds under its management do not invest in the shares of companies traded in a regulated market.
To the extent that the Fund may invest in other funds or companies, the Fund is an active shareholder by appointing a representative in the Fund’s or company’s bodies or by attending meetings of the relevant bodies, such as shareholder’s meetings, and by engaging in direct dialogue with the Fund or company.
No benchmark value has been set to achieve the environmental and social characteristics that the Fund promotes.
Data published on 1 January 2023
ISIN: FI4000060934
Summary
No sustainable investment objective
Environmental or social characteristics of the finance product
Investment strategy
Share of investments
Monitoring of environmental or social characteristics
Methods
Data sources and data processing
Limitations of the methodology and data
Due diligence
Shareholder engagement policy
Designated reference benchmark
The Fund promotes environmental and social characteristics using environmental, social and governance (ESG) analysis while excluding certain investments. The Fund aims to achieve carbon intensity which is at less than half that of the general world index’s carbon intensity. This means that the Fund’s investments place a greater emphasis on companies whose carbon intensity is lower in comparison to the rest of their sector.
To the extent that the Fund invests in financial activities that promote either environmental or social objectives, steps are taken to ensure that these sustainable investments do not cause significant harm to any sustainable investment objective.
Principal adverse impacts (PAI) on sustainability are regularly analysed by screening all investments for their PAI indicators. If screening reveals investee companies with significant principal adverse impacts on sustainability in comparison to its peers and if the said PAI indicator is deemed essential for the investee company, the investee company will be monitored more closely and excluded, if necessary. Also, a process to influence the company’s behaviour can be started.
OP Asset Management uses several data sources from different service providers. Primary data sources are MSCI ESG Research and S&P Trucost, which provide information on topics such as the sustainability risks of investee companies, share of business operations with adverse impacts, climate risks and opportunities, and how the operations of investee companies align with UN Sustainable Development Goals. The service providers use both data reported by companies and estimates based on an assessment model developed by each service provider.
This financial product promotes environmental or social characteristics, but sustainable investment is not its primary objective. To the extent that the Fund invests in financial activities that promote either environmental or social objectives, steps are taken to ensure that these sustainable investments do not cause significant harm to any sustainable investment objective.
Principal adverse impacts (PAI) on sustainability are regularly analysed by screening all investments for their PAI indicators. If screening reveals investee companies with significant principal adverse impacts on sustainability in comparison to its peers and if the said PAI indicator is deemed essential for the investee company, the investee company will be monitored more closely and excluded, if necessary. Also, a process to influence the company’s behaviour can be started.
More information about how we take adverse sustainability impacts into account can be found in the document “Consideration of Principal Adverse Sustainability Impacts in Investing and Insurance Operations (in Finnish)”, which is available online at op.fi.
The OP Asset Management’s sustainable investment analysis model is used to check whether a company has violated international standards (UN Global Compact and OECD guidelines for multinationals). If a violation is identified, the company cannot be determined as a sustainable investment. The definition of international standard violations and company-specific analysis is based on the methodology of a third-party service provider.
The Fund promotes environmental characteristics. The Fund aims to achieve carbon intensity which is at less than half that of the general world index’s carbon intensity. This means that the Fund’s investments place a greater emphasis on companies whose carbon intensity is lower in comparison to the rest of their sector.
The Fund promotes environmental and social characteristics and, to ensure it, uses environmental, social and governance (ESG) analysis and excludes certain investments.
Exclusion: The Fund excludes from its active direct investments controversial weapon manufacturers, mining companies producing thermal coal, power companies using thermal coal, tobacco companies, and companies that have breached international standards and where engagement has been unsuccessful. The list of exclusions is public. In addition to general negative screening rules, the Fund does not invest in fossil energy production or use.
Use of ESG data in the investment analysis: the Fund uses the best-in-class method based on the carbon intensity of investee companies. The Fund invests in companies with a lower carbon intensity than peer companies in the same sector.
Violations of international standards: The Fund is screened regularly for non-compliances with international standards. In the event that a non-compliance is detected, an influencing process is begun with the company in question. The aim is to make non-compliant companies change their practices and begin to comply with international standards in their operations. If influencing proves fruitless, the company may be removed from the Fund portfolio and placed on the exclusion list.
Minimum share of sustainable investments: In accordance with the minimum amount stated below, the Fund allocates investments into companies whose business promotes one or more UN Sustainable Development Goals (SDG) without harming other sustainability factors or objectives. Sustainable investments are determined using OP Asset Management’s analysis model which is based on an external service provider’s SDG and sustainability data.
Shareholders’ meetings: The Fund votes in shareholders’ meetings through a service provider in line with OP Fund Management Company Ltd’s shareholder engagement principles that take responsibility aspects into account.
Methods for assessing good governance practices: Analysing the target company’s governance is an important part of the investment process. To us, good governance is a key foundation for any company’s financial success, regardless of sector. When assessing governance, some of the areas considered include the appropriateness of the target company’s administrative organisation, the target company’s actions in relation to its personnel, and the target company’s rewarding and taxation practices. In assessing good governance, we use an external service provider’s analysis and our own qualitative analysis if no external data is available. We screen the funds regularly to check them against the criteria of good governance. Minimum limits apply for these criteria.
Investments that promote ESG characteristics: 90%, of which 10% are sustainable investments
Others: the Fund may also invest its assets in exchange traded derivatives and OTC derivative contracts in order to hedge against the risk of adverse market movements, to replace direct investments and to otherwise promote effective portfolio management.
Portfolio managers have access to the Fund’s ESG analysis, which indicates, among other things, the weighted ESG rating, carbon intensity and share of green business of the portfolio.
Investments are regularly screened by ESG specialists for principal adverse impacts (PAI), exclusion criteria and international standard violations.
Fund-specific ESG indicators on top-level environmental and social characteristics related to the Fund are reported on a monthly basis.
Negative screening is used to limit and exclude certain sectors and operations from the Fund’s investments. The Fund excludes from its active direct investments controversial weapon manufacturers, tobacco companies and companies that have violated international standards and where engagement has been unsuccessful. In addition, the Fund does not invest in fossil energy producers or users.
The Fund’s investments are also screened regularly for violations of international standards using an external service provider’s analysis. If a standard violation is detected, the preferred option is to influence the company’s behaviour. If that is impossible or unsuccessful, the company may be removed from the Fund portfolio and placed on the list of exclusions. Identified standard violations and their related engagement processes are reported twice a year in connection with shareholder engagement reporting.
The Fund applies the best-in-class method using carbon intensity data by a third-party ESG service provider.
The internal model developed by OP Asset Management for defining sustainable investments also provides relevant company-specific ESG data and gives an estimate of the company’s sustainability. Those investment options whose business promotes one or more UN Sustainable Development Goals (SDG) without harming other sustainable factors or goals are considered sustainable investments. The Fund’s proportion of sustainable investments is reported annually in periodic reports, in addition to which portfolio management has access to data updated on a monthly basis on the share of sustainable investments of the Fund’s portfolio.
In addition to ESG tools applied to the investee companies, portfolio managers have access to fund-specific reports on ESG issues at the portfolio level. The reports allow portfolio managers to view the Fund’s weighted ESG rating, carbon intensity and share of green business, among other data. These values are also presented in comparison to benchmark indexes.
The Fund votes in shareholders’ meetings in line with OP Fund Management Company Ltd’s shareholder engagement principles that take responsibility aspects into account. Attendance at meetings is based on the company’s share of the Fund’s investments. Attendance at shareholders’ meetings and the Fund’s votes are reported twice a year in connection with shareholder engagement reporting.
OP Asset Management uses several data sources from different service providers. Primary data sources are MSCI ESG Research and S&P Trucost, which provide information on topics such as the sustainability risks of investee companies, share of business operations with adverse impacts, climate risks and opportunities, and how the operations of investee companies align with UN Sustainable Development Goals. The service providers use both data reported by companies and estimates based on an assessment model developed by each service provider. In shareholder meeting votes, we use data and company research by ISS ESG. The service providers we use have detailed and appropriate processes in place for ensuring data quality and correcting inaccuracies in the data. When selecting new data packages and service providers, we carefully compare and analyse the data quality, coverage, methodology and reliability of each service provider. We regularly monitor trends in ESG data and service providers on the market to ensure the best possible data to support our investment decisions and client reporting.
Data sources are utilised either directly based on metrics or analysis by the service provider as well as by combining different metrics and using them for internal analyses and assessments by OP Asset Management. A part of the data is imported directly to OP Asset Management’s database, from which it can be used in internal analysis models and reports. Data is also used directly from interfaces offered by the service providers. The share of data that is assessed depends on sustainability indicators and the sustainability factor under scrutiny, and it is not possible to give a universal definition of the share of assessed data of all ESG data. It is difficult to determine what portion of ESG data are based on reported information and estimates, respectively. In cases where reported data is available, it is used as the primary source. Third-party service providers must specify for each metric whether the data is reported by companies themselves or estimated using the provider’s internal model.
At the moment, ESG data is not fully standardised, and investee companies do not report on the data widely. This makes it challenging to compare investee companies. Service providers may use different methods for compiling, evaluating and analysing data. For these reasons, we carefully review the methodologies of service providers to ensure their suitability for our purposes. We use several different service providers to enable us to assess certain metrics from multiple sources and fill any gaps in data.
The Fund is subject to exclusion criteria and is screened for international standard violations as described above in part (d) Investment strategy. A party independent of portfolio management oversees that the Fund complies with the criteria. The Fund’s material exclusion criteria are implemented in the trading system.
OP is an active shareholder through its funds by voting in Finnish and international shareholders’ meetings, engaging in direct dialogue with companies and supporting joint initiatives by investors. OP's funds comply with the principles of shareholder engagement that take into account OP Fund Management Company Ltd’s ESG perspectives. These principles and the latest report on the implementation of shareholder engagement principles are available at op.fi/responsible-investing. Participation in general meetings of foreign companies takes place in markets where participation is cost-effective, taking into account their proportion of the Fund’s investments.
This Fund participates in the shareholder meetings of listed companies in accordance with OP Fund Management Company’s principles of shareholder engagement. A detailed list of attended meetings and actions taken and decisions adopted at the meetings can be found at op.fi/responsible-investing. By 2025, OP Asset Management’s climate-related shareholder engagement will cover 70% of financed emissions, as measured by direct equity and bond investments by OP funds in high climate risk sectors (NACE categories A-H and J-L). In practice, shareholder engagement in these companies involves either voting at shareholders’ meetings, direct dialogue or joint initiatives by investors.
The Fund’s benchmark index is the MSCI ACWI Low Carbon Leaders Net USD. The benchmark index considers low-carbon in two ways: by considering carbon intensity and fossil reserves. The benchmark index excludes companies with high carbon intensity and companies that own the greatest fossil reserves. It aims to reduce carbon intensity by 50% in relation to corresponding general market index.
Data published on 1 January 2023
ISIN: FI4000148226
Summary
No sustainable investment objective
Environmental or social characteristics of the finance product
Investment strategy
Share of investments
Monitoring of environmental or social characteristics
Methods
Data sources and data processing
Limitations of the methodology and data
Due diligence
Shareholder engagement policy
Designated reference benchmark
The Fund promotes environmental and social characteristics using environmental, social and governance (ESG) analysis while excluding certain investments. The Fund does not emphasise or prioritise any single theme or sustainability factor, but takes sustainability factors broadly into account by focusing on environmental and social risks, opportunities and impacts relevant for each sector and investee company. To the extent that the Fund investis in financial activities that promote either environmental or social objectives, steps are taken to ensure that these sustainable investments do not cause significant harm to any sustainable investment objective. OP Asset Management uses several data sources from different service providers. Primary data sources are MSCI ESG Research and S&P Trucost, which provide information on topics such as the sustainability risks of investee companies, share of business operations with adverse impacts, climate risks and opportunities, and how the operations of investee companies align with UN Sustainable Development Goals. The service providers use both data reported by companies and estimates based on an assessment model developed by each service provider. Principal adverse impacts (PAI) on sustainability are regularly analysed by screening all investments for their PAI indicators. If screening reveals investee companies with significant principal adverse impacts on sustainability in comparison to its peers and if the said PAI indicator is deemed essential for the investee company, the investee company will be monitored more closely and excluded, if necessary. Also, a process to influence the company’s behaviour can be started.
This finance product promotes environmental or social characteristics, but sustainable investment is not its primary objective.
To the extent that the Fund invests in financial activities that promote either environmental or social objectives, steps are taken to ensure that these sustainable investments do not cause significant harm to any sustainable investment objective.
Principal adverse impacts (PAI) on sustainability are regularly analysed by screening all investments for their PAI indicators. If screening reveals investee companies with significant principal adverse impacts on sustainability in comparison to its peers and if the said PAI indicator is deemed essential for the investee company, the investee company will be monitored more closely and excluded, if necessary. Also, a process to influence the company’s behaviour can be started.
More information about how we take adverse sustainability impacts into account can be found in the document “Consideration of Principal Adverse Sustainability Impacts in Investing and Insurance Operations (in Finnish)”, which is available online at op.fi.
The OP Asset Management’s sustainable investment analysis model is used to check whether a company has violated international standards (UN Global Compact and OECD guidelines for multinationals). If a violation is identified, the company cannot be determined as a sustainable investment. The definition of international standard violations and company-specific analysis is based on the methodology of a third-party service provider.
The Fund does not emphasise or prioritise any single theme or sustainability factor, but takes sustainability factors broadly into account by focusing on environmental and social risks, opportunities and impacts relevant for each sector and investee company
The Fund promotes environmental and social characteristics and, to ensure it, uses environmental, social and governance (ESG) analysis and excludes certain investments.
Exclusion: The Fund excludes from its active direct investments controversial weapon manufacturers, mining companies producing thermal coal, power companies using thermal coal, tobacco companies, and companies that have breached international standards and where engagement has been unsuccessful. The list of exclusions is public. In addition to general exclusion rules, the Fund does not invest in companies whose principal business is in unconventional oil and gas extraction.
Use of ESG data in the investment analysis: ESG factors are considered in the investment process with the help of data by an external ESG service provider and the ESG tool developed internally by OP Asset Management. Considering ESG factors in the investment process means, for example, that the risks and opportunities related to the environment, society and governance are made transparent using selected indicators from each area.
Violations of international standards: The Fund is screened regularly for non-compliances with international standards. In the event that a non-compliance is detected, an influencing process is begun with the company in question. The aim is to make non-compliant companies change their practices and begin to comply with international standards in their operations. If influencing proves fruitless, the company may be removed from the Fund portfolio and placed on the exclusion list.
Minimum share of sustainable investments: In accordance with the minimum amount stated below, the Fund allocates investments into companies whose business promotes one or more UN Sustainable Development Goals (SDG) without harming other sustainability factors or objectives. Sustainable investments are determined using OP Asset Management’s analysis model which is based on an external service provider’s SDG and sustainability data.
Assessing good governance practices: Analysing the target company’s governance is an important part of the investment process. To us, good governance is a key foundation for any company’s financial success, regardless of sector. When assessing governance, some of the areas considered include the appropriateness of the target company’s administrative organisation, the target company’s actions in relation to its personnel, and the target company’s rewarding and taxation practices. In assessing good governance, we use the analysis of third-party service providers and our own qualitative analysis if no external data is available. We screen the funds regularly to check them against the criteria of good governance. Minimum limits apply for these criteria.
Investments that promote ESG characteristics: 90%, of which 10% are sustainable investments
Others: the Fund may also invest its assets in exchange traded derivatives and OTC derivative contracts and ETFs in order to hedge against the risk of adverse market movements, to replace direct investments and to otherwise promote effective portfolio management. ESG data may not be available for derivatives and ETFs.
The Fund might include investment options which are in line with the EU Taxonomy, but the Fund does not commit to a certain minimum number of investments in line with the EU Taxonomy. Currently, only few investment options in line with the EU Taxonomy are available, and there is a limited amount of reported information on compliance with the EU Taxonomy.
Portfolio managers have access to the Fund’s ESG analysis, which indicates, among other things, the weighted ESG rating, carbon intensity and share of green business of the portfolio. Portfolio managers also have access to comprehensive company-specific ESG data with which they can monitor the level of sustainability of investee companies.
Investments are regularly screened by ESG specialists for principal adverse impacts (PAI), exclusion criteria and international standard violations.
Fund-specific ESG indicators on environmental and social characteristics are reported on a monthly basis.
Sectors with adverse impacts to the environment and society defined by OP Asset Management are excluded from the Fund. The enforcement of exclusions is monitored regularly by calculating the Fund’s exposure to controversial and harmful operations and by screening the Fund using the criteria in the exclusion list.
The Fund’s investments are also screened regularly for violations of international standards using an external service provider’s analysis. If a standard violation is detected, the preferred option is to influence the company’s behaviour. If that is impossible or unsuccessful, the company may be removed from the Fund portfolio and placed on the list of exclusions. Identified standard violations and their related engagement processes are reported twice a year in connection with shareholder engagement reporting.
ESG factors are considered in the investment process where possible with the help of data by an external ESG service provider, the ESG tool developed internally by OP Asset Management, and the internal analysis model for assessing sustainable investments. Considering ESG factors in the investment process means, for example, that the risks and opportunities related to the environment, society and governance are made transparent using selected indicators from each area.
The internal ESG tool can be used to assess a company’s current state in relation to its peers in the sector in terms of ESG factors material for the companies as well as the company’s performance in these factors.
External ESG data can be used to examine the investee company’s targets for GHG emission reductions or current state in terms of the green transition.
The internal model developed by OP Asset Management for defining sustainable investments also provides relevant company-specific ESG data and gives an estimate of the company’s sustainability. Those investment options whose business promotes one or more UN Sustainable Development Goals (SDG) without harming other sustainable factors or goals are considered sustainable investments. The Fund’s proportion of sustainable investments is reported annually in periodic reports, in addition to which portfolio management has access to data updated on a monthly basis on the share of sustainable investments of the Fund’s portfolio.
In addition to ESG tools applied to the investee companies, portfolio managers have access to fund-specific reports on ESG issues at the portfolio level. The reports allow portfolio managers to view the Fund’s weighted ESG rating, carbon intensity and share of green business, among other data. These values are also presented in comparison to benchmark indexes.
OP Asset Management uses several data sources from different service providers. Primary data sources are MSCI ESG Research and S&P Trucost, which provide information on topics such as the sustainability risks of investee companies, share of business operations with adverse impacts, climate risks and opportunities, and how the operations of investee companies align with UN Sustainable Development Goals. The service providers use both data reported by companies and estimates based on an assessment model developed by each service provider.
We also use materiality analyses by SASB and Bloomberg data on investee companies, based on which we have developed our own analysis model for investigating investee companies’ current level of sustainability and likely future performance.
In addition, the Fund has access to Moody’s analyses on the ESG factors of investee companies and their impact on the company’s credit risk.
The service providers we use have detailed and appropriate processes in place for ensuring data quality and correcting inaccuracies in the data.
When selecting new data packages and service providers, we carefully compare and analyse the data quality, coverage, methodology and reliability of each service provider. We regularly monitor trends in ESG data and service providers on the market to ensure the best possible data to support our investment decisions and client reporting.
Data sources are utilised either directly based on metrics or analysis by the service provider as well as by combining different metrics and using them for internal analyses and assessments by OP Asset Management. A part of the data is imported directly to OP Asset Management’s database, from which it can be used in internal analysis models and reports. Data is also used directly from interfaces offered by the service providers.
The share of data that is assessed depends on sustainability indicators and the sustainability factor under scrutiny, and it is not possible to give a universal definition of the share of assessed data of all ESG data. It is difficult to determine what portion of ESG data are based on reported information and estimates, respectively. In cases where reported data is available, it is used as the primary source. Third-party service providers must specify for each metric whether the data is reported by companies themselves or estimated using the provider’s internal model.
At the moment, ESG data is not fully standardised, and investee companies do not report on the data widely. This makes it challenging to compare investee companies. Service providers may use different methods for compiling, evaluating and analysing data. For these reasons, we carefully review the methodologies of service providers to ensure their suitability for our purposes.
We use several different service providers to enable us to assess certain metrics from multiple sources and fill any gaps in data.
The Fund is subject to exclusion criteria and is screened for international standard violations as described above in part (d) Investment strategy. A party independent of portfolio management oversees that the Fund complies with the criteria. The Fund’s material exclusion criteria are implemented in the trading system.
OP is an active shareholder through its funds by voting in Finnish and international shareholders’ meetings, engaging in direct dialogue with companies and supporting joint initiatives by investors. OP's funds comply with the principles of shareholder engagement that take into account OP Fund Management Company Ltd’s ESG perspectives. These principles and the latest report on the implementation of shareholder engagement principles are available at op.fi/responsible-investing. Participation in general meetings of foreign companies takes place in markets where participation is cost-effective, taking into account their proportion of the Fund’s investments.
By 2025, OP Asset Management’s climate-related shareholder engagement will cover 70% of financed emissions, as measured by direct equity and bond investments by OP funds in high climate risk sectors (NACE categories A-H and J-L). In practice, shareholder engagement in these companies involves either voting at shareholders’ meetings, direct dialogue or joint initiatives by investors. In addition, the Fund is involved in shareholder engagement more broadly where necessary, such as in relation to good governance, responsible tax practice or business ethics.
The Fund’s benchmark index is not applied to the performance of environmental or social characteristics promoted by the Fund.
Summary
No sustainable investment objective
Environmental or social characteristics of the finance product
Investment strategy
Share of investments
Monitoring of environmental or social characteristics
Methods
Data sources and data processing
Limitations of the methodology and data
Due diligence
Shareholder engagement policy
Designated reference benchmark
The Fund promotes environmental and social characteristics using environmental, social and governance (ESG) analysis while excluding certain investments. The Fund does not emphasise or prioritise any single theme or sustainability factor, but takes sustainability factors broadly into account by focusing on environmental and social risks, opportunities and impacts relevant for each sector and investee company. To the extent that the Fund investis in financial activities that promote either environmental or social objectives, steps are taken to ensure that these sustainable investments do not cause significant harm to any sustainable investment objective. OP Asset Management uses several data sources from different service providers. Primary data sources are MSCI ESG Research and S&P Trucost, which provide information on topics such as the sustainability risks of investee companies, share of business operations with adverse impacts, climate risks and opportunities, and how the operations of investee companies align with UN Sustainable Development Goals. The service providers use both data reported by companies and estimates based on an assessment model developed by each service provider. Principal adverse impacts (PAI) on sustainability are regularly analysed by screening all investments for their PAI indicators. If screening reveals investee companies with significant principal adverse impacts on sustainability in comparison to its peers and if the said PAI indicator is deemed essential for the investee company, the investee company will be monitored more closely and excluded, if necessary. Also, a process to influence the company’s behaviour can be started.
This finance product promotes environmental or social characteristics, but sustainable investment is not its primary objective.
To the extent that the Fund invests in financial activities that promote either environmental or social objectives, steps are taken to ensure that these sustainable investments do not cause significant harm to any sustainable investment objective.
Principal adverse impacts (PAI) on sustainability are regularly analysed by screening all investments for their PAI indicators. If screening reveals investee companies with significant principal adverse impacts on sustainability in comparison to its peers and if the said PAI indicator is deemed essential for the investee company, the investee company will be monitored more closely and excluded, if necessary. Also, a process to influence the company’s behaviour can be started.
More information about how we take adverse sustainability impacts into account can be found in the document “Consideration of Principal Adverse Sustainability Impacts in Investing and Insurance Operations (in Finnish)”, which is available online at op.fi.
The OP Asset Management’s sustainable investment analysis model is used to check whether a company has violated international standards (UN Global Compact and OECD guidelines for multinationals). If a violation is identified, the company cannot be determined as a sustainable investment. The definition of international standard violations and company-specific analysis is based on the methodology of a third-party service provider.
The Fund does not emphasise or prioritise any single theme or sustainability factor, but takes sustainability factors broadly into account by focusing on environmental and social risks, opportunities and impacts relevant for each sector and investee company
The Fund promotes environmental and social characteristics and, to ensure it, uses environmental, social and governance (ESG) analysis and excludes certain investments.
Exclusion: The Fund excludes from its active direct investments controversial weapon manufacturers, mining companies producing thermal coal, power companies using thermal coal, tobacco companies, and companies that have breached international standards and where engagement has been unsuccessful. The list of exclusions is public. In addition to general exclusion rules, the Fund does not invest in companies whose principal business is in unconventional oil and gas extraction.
Use of ESG data in the investment analysis: ESG factors are considered in the investment process with the help of data by an external ESG service provider and the ESG tool developed internally by OP Asset Management. Considering ESG factors in the investment process means, for example, that the risks and opportunities related to the environment, society and governance are made transparent using selected indicators from each area.
Violations of international standards: The Fund is screened regularly for non-compliances with international standards. In the event that a non-compliance is detected, an influencing process is begun with the company in question. The aim is to make non-compliant companies change their practices and begin to comply with international standards in their operations. If influencing proves fruitless, the company may be removed from the Fund portfolio and placed on the exclusion list.
Minimum share of sustainable investments: In accordance with the minimum amount stated below, the Fund allocates investments into companies whose business promotes one or more UN Sustainable Development Goals (SDG) without harming other sustainability factors or objectives. Sustainable investments are determined using OP Asset Management’s analysis model which is based on an external service provider’s SDG and sustainability data.
Assessing good governance practices: Analysing the target company’s governance is an important part of the investment process. To us, good governance is a key foundation for any company’s financial success, regardless of sector. When assessing governance, some of the areas considered include the appropriateness of the target company’s administrative organisation, the target company’s actions in relation to its personnel, and the target company’s rewarding and taxation practices. In assessing good governance, we use the analysis of third-party service providers and our own qualitative analysis if no external data is available. We screen the funds regularly to check them against the criteria of good governance. Minimum limits apply for these criteria.
Investments that promote ESG characteristics: 90%, of which 10% are sustainable investments
Others: the Fund may also invest its assets in exchange traded derivatives and OTC derivative contracts and ETFs in order to hedge against the risk of adverse market movements, to replace direct investments and to otherwise promote effective portfolio management. ESG data may not be available for derivatives and ETFs.
The Fund might include investment options which are in line with the EU Taxonomy, but the Fund does not commit to a certain minimum number of investments in line with the EU Taxonomy. Currently, only few investment options in line with the EU Taxonomy are available, and there is a limited amount of reported information on compliance with the EU Taxonomy.
Portfolio managers have access to the Fund’s ESG analysis, which indicates, among other things, the weighted ESG rating, carbon intensity and share of green business of the portfolio. Portfolio managers also have access to comprehensive company-specific ESG data with which they can monitor the level of sustainability of investee companies.
Investments are regularly screened by ESG specialists for principal adverse impacts (PAI), exclusion criteria and international standard violations.
Fund-specific ESG indicators on environmental and social characteristics are reported on a monthly basis.
Sectors with adverse impacts to the environment and society defined by OP Asset Management are excluded from the Fund. The enforcement of exclusions is monitored regularly by calculating the Fund’s exposure to controversial and harmful operations and by screening the Fund using the criteria in the exclusion list.
The Fund’s investments are also screened regularly for violations of international standards using an external service provider’s analysis. If a standard violation is detected, the preferred option is to influence the company’s behaviour. If that is impossible or unsuccessful, the company may be removed from the Fund portfolio and placed on the list of exclusions. Identified standard violations and their related engagement processes are reported twice a year in connection with shareholder engagement reporting.
ESG factors are considered in the investment process where possible with the help of data by an external ESG service provider, the ESG tool developed internally by OP Asset Management, and the internal analysis model for assessing sustainable investments. Considering ESG factors in the investment process means, for example, that the risks and opportunities related to the environment, society and governance are made transparent using selected indicators from each area.
The internal ESG tool can be used to assess a company’s current state in relation to its peers in the sector in terms of ESG factors material for the companies as well as the company’s performance in these factors.
External ESG data can be used to examine the investee company’s targets for GHG emission reductions or current state in terms of the green transition.
The internal model developed by OP Asset Management for defining sustainable investments also provides relevant company-specific ESG data and gives an estimate of the company’s sustainability. Those investment options whose business promotes one or more UN Sustainable Development Goals (SDG) without harming other sustainable factors or goals are considered sustainable investments. The Fund’s proportion of sustainable investments is reported annually in periodic reports, in addition to which portfolio management has access to data updated on a monthly basis on the share of sustainable investments of the Fund’s portfolio.
In addition to ESG tools applied to the investee companies, portfolio managers have access to fund-specific reports on ESG issues at the portfolio level. The reports allow portfolio managers to view the Fund’s weighted ESG rating, carbon intensity and share of green business, among other data. These values are also presented in comparison to benchmark indexes.
OP Asset Management uses several data sources from different service providers. Primary data sources are MSCI ESG Research and S&P Trucost, which provide information on topics such as the sustainability risks of investee companies, share of business operations with adverse impacts, climate risks and opportunities, and how the operations of investee companies align with UN Sustainable Development Goals. The service providers use both data reported by companies and estimates based on an assessment model developed by each service provider.
We also use materiality analyses by SSAB and Bloomberg data on investee companies, based on which we have developed our own analysis model for investigating investee companies’ current level of sustainability and likely future performance.
In addition, the Fund has access to Moody’s analyses on the ESG factors of investee companies and their impact on the company’s credit risk.
The service providers we use have detailed and appropriate processes in place for ensuring data quality and correcting inaccuracies in the data.
When selecting new data packages and service providers, we carefully compare and analyse the data quality, coverage, methodology and reliability of each service provider. We regularly monitor trends in ESG data and service providers on the market to ensure the best possible data to support our investment decisions and client reporting.
Data sources are utilised either directly based on metrics or analysis by the service provider as well as by combining different metrics and using them for internal analyses and assessments by OP Asset Management. A part of the data is imported directly to OP Asset Management’s database, from which it can be used in internal analysis models and reports. Data is also used directly from interfaces offered by the service providers.
The share of data that is assessed depends on sustainability indicators and the sustainability factor under scrutiny, and it is not possible to give a universal definition of the share of assessed data of all ESG data. It is difficult to determine what portion of ESG data are based on reported information and estimates, respectively. In cases where reported data is available, it is used as the primary source. Third-party service providers must specify for each metric whether the data is reported by companies themselves or estimated using the provider’s internal model.
At the moment, ESG data is not fully standardised, and investee companies do not report on the data widely. This makes it challenging to compare investee companies. Service providers may use different methods for compiling, evaluating and analysing data. For these reasons, we carefully review the methodologies of service providers to ensure their suitability for our purposes.
We use several different service providers to enable us to assess certain metrics from multiple sources and fill any gaps in data.
The Fund is subject to exclusion criteria and is screened for international standard violations as described above in part (d) Investment strategy. A party independent of portfolio management oversees that the Fund complies with the criteria. The Fund’s material exclusion criteria are implemented in the trading system.
OP is an active shareholder through its funds by voting in Finnish and international shareholders’ meetings, engaging in direct dialogue with companies and supporting joint initiatives by investors. OP's funds comply with the principles of shareholder engagement that take into account OP Fund Management Company Ltd’s ESG perspectives. These principles and the latest report on the implementation of shareholder engagement principles are available at op.fi/responsible-investing. Participation in general meetings of foreign companies takes place in markets where participation is cost-effective, taking into account their proportion of the Fund’s investments.
By 2025, OP Asset Management’s climate-related shareholder engagement will cover 70% of financed emissions, as measured by direct equity and bond investments by OP funds in high climate risk sectors (NACE categories A-H and J-L). In practice, shareholder engagement in these companies involves either voting at shareholders’ meetings, direct dialogue or joint initiatives by investors. In addition, the Fund is involved in shareholder engagement more broadly where necessary, such as in relation to good governance, responsible tax practice or business ethics.
The Fund’s benchmark index is not applied to the performance of environmental or social characteristics promoted by the Fund.
Data published on 1 January 2023
ISIN: FI0008805304