Sustainability risks refers to an environmental, social or governance-related event or circumstance which, if it were to occur, would have an actual or potentially significant adverse impact on the value of the investment.
Nyhavn therefore considers in the concept of sustainability risk those risks that are identified and related to the environment and climate, human rights and working conditions, diversity and gender equality, as well as transparency and governance.
Transparency and openness are a prerequisite for a sustainable process, which also includes consideration of sustainability risks when choosing investments, regions, or sectors.
The fund manager conducts an analysis of potential investments in the portfolios and fund, and, as part of this analysis, sustainability risks are identified. The risks are analysed based on whether they are judged to have an actual or potentially significant adverse impact on the value of the investment over time should the risk arise.
Adverse sustainability impacts
Adverse consequences for sustainability impacts refer to impacts that may have an adverse effect on sustainable development. Sustainability impacts are defined in the Disclosure Regulation as environmental, social or personnel-related issues, respect for human rights, and combatting corruption and bribery.
Nyhavn has identified the following potential adverse consequences regarding sustainability.
Adverse environmental consequences regarding sustainability impacts:
-High greenhouse gas emissions
-High energy consumption from non-renewable energy
-Damage to biodiversity
-High water consumption
-High levels of waste
Adverse social and personnel-related consequences regarding sustainability impacts:
-Lack of recognition of workers’ rights
-Gender-discriminatory wages and policies
Adverse consequences for human rights and combatting corruption and bribery
-Lack of human rights policy
-Lack of commitment to comply with UN human rights principles
-Lack of anti-corruption and anti-bribery policies
Three methods are used for integrating adverse consequences for sustainability in the investment process.
These consist of
2) opting out, and
Nyhavn has chosen never to invest in certain operations that are judged to have adverse consequences for sustainability impacts by their very nature. Such exclusions exist in the management of individual portfolios and funds.
Nyhavn has chosen to follow the ten principles of the UN Global Compact, the UN's guiding principles for business and human rights.
Remuneration Policies in relation to the integration of sustainability risks
Nyhavn ́s remuneration policy is in line with a sound and effective risk management regarding sustainability risks, making sure that the structure of remuneration does not encourage excessive risk-taking regarding sustainability risks and is based on risk-adjusted performance. Nyhavn takes into account the effect of potential conflicts of interest on remuneration in a way that is in line with the integration of sustainability risks. This includes activities that lead to greenwashing, mis-selling, or misrepresentation of investment strategies.