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Focus ESG Derivatives: Q&A with Swedbank Robur

Release date: 31 Jan 2019 | Eurex Exchange, Eurex Clearing

Focus ESG Derivatives: Q&A with Swedbank Robur

Responsible investing has become a major theme for institutional investors worldwide. More than $23 trillion in AUM are now invested according to environmental, social and governance (ESG) principles. Following the introduction of the first three ESG Futures on leading European Benchmarks of responsible investment criteria, climate impact and low carbon focus, Eurex spoke with Magnus Linder, Head of Derivatives at Swedbank Robur, one of Scandinavia’s largest asset managers.

Magnus Linder, Head of Derivatives, Swedbank Robur

What does ESG mean for Swedbank Robur?

Swedbank Robur´s vision is to be a world leader in sustainable value creation. Therefore, ESG principles are naturally included in the way we work. We are continuously working to integrate, and have done so for many years, sustainability issues and the ESG perspective throughout our whole business. 

What role does ESG investing play in your portfolio management?  Seek more alpha or ‘just’ to manage unwanted sustainability risks?

ESG provides both. Portfolio management is very much about shouldering the responsibility and taking the opportunity to drive companies towards a positive and sustainable direction. In this context, ESG provides an extra tool for us to understand, mitigate and handle unwanted sustainability risks.  

Is this just a short-term hype or a lasting trend?

For us, ESG is not a short-term hype or trend. It is integrated in the way we work and do business. We have been working with ESG issues for nearly 25 years. In the early days, ESG were mostly focused on environmental issues. The scope though, has evolved over time. What we have noticed is that, over the last couple of years, retail customer interest has steadily increased and that institutional investors are helping to drive these issues and possibilities forward in many areas. The overall interest and engagement for ESG issues from all parties clearly contribute to a positive change in these matters.     

How do you foresee the evolution of ESG in the financial industry? Will there be further/more stringent regulations to impose stricter ESG mandates?

Regulations evolve continuously, as they should. In this case, it evolves in parallel to the broader scope of ESG. A lot more regulation is coming, and we only see it increase further over time. This is a good development. We believe that we have to work together, across companies and borders, to solve climate issues. In that sense, regulations can help push the sustainable development forward by driving investors and companies to implement more structure into the process for everyone. 

How important is the performance in ESG investing?

It is vital for us to understand and secure that the companies we invest in, maintain a positive direction aligned with responsible and sustainable principles. ESG provide us with a valuable tool to further identify and understand both the risks and possibilities that companies face. Moreover, for companies, it is increasingly a must-have to include the sustainability perspective into their business, products and services. If they don’t, their clients will choose another company or product. Hence, the focus on ESG-issues is now also customer-driven.

How do you decide which ESG product to invest in and why would futures fit?

It depends on which type of fund, and its mandate. We have over 85 funds, and they all have different mandates. We always try to find the cheapest way to get the exposure we seek. For the same index, the holding time can determine if it is a basket, future or ETF. 

How will you combine ESG futures with other investments, for example, combinations with specific stocks or long short with other indexes?

Our overall view on STOXX ESG products is that we hope that they will become the easiest and cheapest way to get a sustainable exposure. For us, a functioning EFP market is important.

How can you avoid that your ESG strategy is disturbed by unintended risks or cyclicality?

By continuously work to secure and maintain a high quality of Robur's own sustainability work. Together with other players in the market, we intend to participate and drive the market forward with liquid and market-accepted products using known and credible counterparties such as STOXX and EUREX. 

How important are exclusion criteria for you?

We have chosen to actively pursue responsible corporate governance - in line with "opting in" instead of "opting out." We actively work to contribute to a positive change by initiating and maintaining a dialogue and continuous collaboration with the companies in which we invest. As an example, we had on-going dialogues with 300+ companies, many of them concerning different sustainability issues. Today’s exclusion criteria are foremost driven by customers, and this is good – it gives us even more influence to have a sustainable impact as a responsible owner/investor. 

How important is the climate aspect for you?

From a scientific point of view, it is the most crucial issue. We can't live without a planet, but the planet will survive without us. It is also vital to meet the customers' increasing interest in climate change and all other sustainable aspects. Our customers increasingly like to see that their savings capital is used to speed up the transition process to a more sustainable society, while still getting good returns. Here we see transparency, engagement and clarity as extremely important, whether we are talking about climate or other sustainable issues - and definitely a concrete and competitive advantage. 

What role do Eurex ESG Futures play? (Compared to ESG ETFs?)

It gives us the opportunity to be fully invested in a cost-efficient manner, while at the same time be able to handle in and outflow in our sustainable funds. 

What convinces you about STOXX's ESG index concept? What would be the next logical steps for you?

We like the concept for the established companies it covers and for the analyzes and application of rules. This results in neutral and credible futures. We, of course, also like the benefits we get from netting the margin requirements against our other Eurex positions.

About Swedbank Robur

Swedbank Robur is one of Scandinavia’s largest asset managers and a strong investment partner. Since the foundation in 1967, Swedbank Robur has evolved from a small, equity-based mutual fund company into a highly diversified provider of savings products. Swedbank Robur offers savings products and discretionary investment management for private individuals, institutional clients, governments, universities, corporations and labor unions. The product range includes investment funds covering all major regions, sectors and asset classes. Many funds are also offered as part of tax-deferred retirement programs. 40 of 125 bn EUR are already placed in ESG related funds. The proportion is increasing rapidly. 


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