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No sustainable investment objective

This financial product promotes environmental or social characteristics, but does not have sustainable investment as its objective. However, the fund commits to investing at least 70% of its invested capital in sustainable investments.

Carnegie Fonder works with three overarching methods to manage and limit sustainability risks and principal adverse impacts on sustainable development: inclusion, exclusion and engagement. Specific objectives, tools and strategies are used when considering each indicator. Depending on the outcome of the analysis, company selection strategies, engagement dialogues, exclusions and voting at general meetings are applied in accordance with Carnegie Fonder’s Sustainability Policy.

The holdings of all funds managed by Carnegie Fonder are evaluated with consideration of the OECD Guidelines for Multinational Enterprises and the UN Guiding Principles on Business and Human Rights to ensure that an investee’s operations are not conducted in breach of these principles.

Environmental or social characteristics of the financial product

The fund promotes environmental and social characteristics from three different perspectives:

• The fund’s investments promote the fulfilment of global commitments and objectives such as the Paris Agreement and the UN 2030 Agenda.
• The fund also promotes higher standards and practices for general performance in relation to environmental and social matters among companies.
• The fund also promotes higher standards of good governance.

Investment strategy

The fund’s strategy for promoting environmental and social characteristics is based on the components of inclusion, exclusion and company engagement. All of the criteria below must be met for an investment to be classified as sustainable.

1. Contributes to one or more of the UN Sustainable Development Goals.
   This is implemented in the investment process through an internally developed tool used to identify companies whose revenue contributes to one or more of the UN Sustainable Development Goals and thereby contributes to the environmental objectives as formulated in the EU Taxonomy and set out in the previous table.
2. Does no significant harm to other social or environmental objectives.
   This is implemented by excluding activities considered to cause significant harm to environmental or social objectives from the fund’s investment universe in accordance with the fund company’s policy.
3. Follows good governance practices.
   This is implemented through Carnegie Fonder’s ownership policy. As active managers, we continuously monitor all holdings to draw the attention of investee companies to improvement opportunities we have identified, with the aim of increasing or preserving the value of the companies and thereby the value of the funds’ investments.

Proportion of investments

All investments in the fund, excluding cash, promote environmental or social characteristics (at least 90%). A minimum proportion of 70% of these investments also have environmental or social objectives. The remaining maximum proportion of 30% covers investments that are aligned with the environmental or social characteristics but do not qualify as sustainable investments. The fund maintains a certain proportion of its assets in cash to meet ongoing flows to and from the fund’s unit holders. This proportion is not used to attain environmental or social characteristics (maximum 10%).

Monitoring of environmental or social characteristics

The fund uses the following sustainability indicators to measure the environmental and social characteristics promoted:

1. The proportion of fund assets invested in companies where at least 25% of revenue contributes to the UN Sustainable Development Goals.
2. The proportion of fund assets invested in companies with revenue that is aligned with the environmental objectives of “climate change mitigation” and “climate change adaptation” in the EU Taxonomy.
3. The proportion of fund assets invested in companies rated Adequate, Strong or Very Strong in the fund company’s internally developed tool for sustainability analysis.
4. Excluded companies in accordance with the fund company’s exclusion policy, calculated as a number where the available index makes this possible.
5. The number of general meetings at which votes have been cast in accordance with the fund company’s voting policy.
6. The number of engagement dialogues with investee companies.
7. The proportion of fund assets invested in companies that have committed to, or had their climate targets approved by, the Science Based Targets initiative.

Methodologies

The fund continuously monitors all sustainability indicators to measure the extent to which the product promotes the environmental and social criteria.

Data sources and processing

We use both internally generated data and external data. Carnegie Fonder’s work on company engagement is also continuously mapped and documented in an engagement log, which generates internal data. Our main external data providers are Bloomberg, Sustainalytics, CDP and SBTi (Science Based Targets initiative). By using only established providers, we have secured data quality to the best of our judgement. Data is primarily used as input in our internal analysis tool, THOR, and in our internal controls to ensure compliance across all holdings in line with our policy, for example regarding exclusions.

Limitations to methodologies and data

There are different types of limitations regarding the methodologies and data sources we use. The main limitation is a lack of data. Disclosures on companies’ sustainability work are largely voluntary, and many companies therefore do not report on how they manage sustainability matters. Where reported data is unavailable, we use estimated data from established providers. We consider data from our providers to be reliable. If, despite this, we lack information, we contact the companies with our questions to ensure that they meet our requirements.

Due diligence

The due diligence process means that all investments are evaluated in Carnegie Fonder’s sustainability analysis tool, THOR, and covers a large number of issues. The analysis focuses on both risks and business opportunities. Carnegie Fonder applies a materiality assessment to determine which areas are most decisive for our view of the company as an investment. The questions are divided into Governance, Environmental and Social matters and comprise more than one hundred data points and 21 qualitative questions.

Engagement policies

The fund’s ownership engagement primarily takes place at three levels: through engagement dialogues with representatives of portfolio companies, through voting at general meetings and through our work on nomination committees. Carnegie Fonder maintains an ongoing dialogue with the companies in which we invest on both financial and sustainability-related matters. The objective of our dialogues is for the companies in which we invest, or are considering investing, to become “better”. We encourage companies to capture sustainability-related opportunities and to minimise and manage the sustainability-related risks that we have identified, as we believe this can increase the value of our investments and reduce downside risk.

Designated reference benchmark

The fund is actively managed and does not use an index as a reference benchmark to ensure that environmental and social characteristics are promoted. Instead, the previously mentioned sustainability indicators and binding elements of the investment strategy are used for this purpose.