Since 2010, the Bank of Åland has adhered to the UN Principles for Responsible Investment (UNPRI). This means that a review of environmental, social and governance (ESG factors) is an integral element of all our company analyses.
Principal Adverse Impact (PAI)
We note that even responsible investment activities may include elements that have negative consequences for sustainable development. We endeavour to consider the main negative consequences for sustainable development in all investment decisions to the extent this is possible, based on currently available information and data. The main negative consequences are taken into account in the Bank of Åland's investment strategy
Statement on principal adverse impacts of investment decisions on sustainability factors (PAI statement)
This statement is the consolidated statement on principal adverse impacts on sustainability factors by Ålandsbanken, including both Ålandsbanken Abp (7437006WYM821IJ3MN73) and Ålandsbankens Fondbolag Ab (743700YOXKOQ7F6FS364). As a rule, Ålandsbanken takes principal adverse impacts (PAI, Principal Adverse Impacts) of its investment decisions on sustainability factors into account as part of its investment process in all its investment management. For sustainable investments, this means ensuring that the investments do not harm any environmental or social objective.
Similarly, Ålandsbanken Abp takes principal adverse impacts on sustainability factors into consideration in its advisory processes. As a financial advisor, Ålandsbanken Abp must also report on how information on PAI from the asset managers is used in the advice. Since complete data will only be available later in 2023, Ålandsbanken is waiting to see how the information may affect the advisory process.
The publication of this statement on principal adverse impacts on sustainability factors coincides with the first reference period from 1 January 2022 to 31 December 2022. Reporting of the indicators of adverse impacts for the reference period is presented in table 1 and any relevant indicators in tables 2 and 3 in annex I to the delegated regulation. This reporting will take place in 2023 after the measurement of the first reference periods (Q1 2022 – Q4 2022).
A summary of the PAI indicators considered by Ålandsbanken is presented in table 1.
Implementation of the investment strategy
The Bank of Åland's responsible investment efforts can be divided into different phases. Initially, we aim to exclude companies involved in the production of controversial weapons, pornography, gambling, tobacco and thermal coal. In addition, we are selective about holdings in companies involved in the production of alcoholic beverages.
The process of analysing individual potential investments not only identifies and takes into account financial risks and opportunities, but also relevant sustainability factors that may have an impact on the company in question. To achieve a systematic approach and a deeper analysis, we collaborate with external system suppliers MSCI and Morningstar concerning the analysis of sustainability factors for companies globally. This collaboration also gives us access to tools to evaluate our handling of sustainability issues in managed funds and portfolios.
Of the negative sustainability impacts defined in the new EU Sustainable Finance Disclosure Regulation (SFDR), we currently consider the following factors:
Carbon dioxide intensity
Carbon dioxide emissions
Violations of the UN Global Compact
We offer solutions to our customers aimed at contributing to global climate transition through the continuous development of a sustainable investment product range. For more information and reported values regarding the carbon intensity of mutual funds, see the Bank of Åland's Sustainability Report. Information on carbon dioxide emissions can be found in the consolidated financial statements. The data cover all of the Bank’s mutual funds and model portfolios, but external funds are excluded due to missing or sub-standard coverage in third-party data. The list of factors taken into account is constantly evolving and being updated.
In managed portfolios and in investment advisory services that include exchange-traded funds (ETFs), our ambition is to select ETFs that consider sustainability factors to the extent possible. However, ETFs that consider sustainability factors may not currently be available in all individual sectors.
We report our responsible investment work through the UNPRI's annual self-assessment, which is published externally, and in the Sustainability Report of the Bank’s mutual funds. Climate-related issues are increasingly emphasised.
Sustainability in investment advisory services
In investment or insurance advisory services, our responsible investment process – including the principal adverse impacts on sustainability factors − is reflected in the whole broad range of financial products on which we provide advice.
We are an active owner
We want to actively contribute to creating a better, more sustainable society. We thus behave actively in the companies in which our funds have a significant ownership stake.
Since 2010, we have been one of the founding members of Finland's Sustainable Investment Forum (Finsif). In addition, since 2016 we have been members of Sweden's Sustainable Investment Forum (Swedif), in order to help provide information, stimulate discussion in the community and influence attitudes about responsible long-term investments in Finland and Sweden.
On ownership issues, Ålandsbanken Funds Ltd (Ålandsbanken Fondbolag Ab) acts in keeping with the principles set out in its Ownership Policy document. As a rule, the Bank of Åland Plc does not exercise shareholder involvement in the companies invested in on behalf of customers, in accordance with the Bank's principles regarding capital management and corporate governance. We provide information about both Ålandsbanken Funds Ltd’s Ownership Policy and the Bank of Åland's principles regarding capital management and corporate governance on our website.
Sustainability risks are included in the Bank of Åland's remuneration policy
We believe that the remuneration of employees should be designed in such a way that it does not counteract the long-term interests of the Bank of Åland. Our remuneration system shall be designed so that it does not promote interests that conflict with the interests of customers or encourage excessive risk-taking regarding sustainability risks.
We continuously train our staff in the field of responsible investments.