News 31.3.2021

Nordic Engagement Cooperation (NEC) expanded its focus to sustainable water management – annual report 2020 published

Nordic Engagement Cooperation (NEC), a collaborative engagement network between large Nordic institutional investors (pension funds), expanded its focus to sustainable water management in invested companies in 2020. At the end of 2020, Ilmarinen had altogether 13 ongoing engagement processes, of which eight were part of the NEC collaboration.

Last year we as part of NEC started an engagement process related to sustainable water management in beverage and chemicals sectors as part of the service provider Sustainalytics’ Localized Water Management (LWM) engagement work. In addition, the engagement processes climate risks and related reporting in the food sector continuedThe new annual report sheds further light on the engagement processes.  

The focus of the new engagement initiative related to water is to improve the companies’ awareness of the importance, as well as the benefits of sustainable water management in relation to the local context. Furthermore, having a sustainable mindset in water management, decreases the companies’ risks, increases stability and ensures the access to clean water. Sustainable management of water resources and securing water supply is increasingly an important commercial issue for companies. Reputational risks are mounting related to local tensions over water access and rights. Furthermore, various authorities regulate water management. 

However, while water risks are global, water impacts vary by location. The LWM engagement has a geographic focus, targeting companies that are dependent on water from the Tiete river basin in Brazil and/or the Vaal river basin in South Africa. 

Four companies within the theme will be selected and targeted by NEC. Of these four companies twoAkzo Nobel and Anheuser-Busch InBev, were selected in 2020, while the remaining two will be selected during 2021. This engagement theme will run for three years. 

– We are delighted, that we have been able to continue these engagement processes with our Nordic colleagues despite the COVID pandemic. We at Ilmarinen believe that an active dialogue is the best way to impact the companies we invest in and thus to make real changes happen, says Niina Arkko, Specialist, Responsible Investment from Ilmarinen. 

Climate risks remain at the core of engagement 

In 2020, the engagement processes related to climate risks and related reporting in the food sector continued. The aim of this engagement initiative is to promote the usage of the TCFD framework (Taskforce on Climate-related Financial Disclosure) in the food sector. The international TCFD reporting framework has been created to enhance reporting on the various aspects, in which the climate change may affect the companies and their financial outcomes. The engagement work has focused on four companies: Danone, Glanbia, Kerry Foods and Tyson Foods. 

Nordic Engagement Cooperation (NEC) is a collaborative engagement network between three large Nordic institutional investors (pension funds). In addition to Ilmarinen, Swedish Folksam and Danish PFA Pension are part of the network. 

Previously, the co-operation focused on engagement processes initiated as a result of norm violations, but in recent years it has evolved towards more pro-active engagement.  

At the end of 2020, Ilmarinen had altogether 13 ongoing engagement processes, of which eight were part of the NEC collaboration. During the year two engagement processes reached a conclusion, as part of the NEC network’s engagement work. 

 

Additional information 

Niina Arkko, Specialist, Responsible Investment,  
tel. +358 407037 614, niina.arkko@ilmarinen.fi   

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