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.