Handelsbanken Amerika Tema (B1 EUR)

Summary

No sustainable investment objective

This fund promotes environmental and social characteristics but does not have sustainable investments as its objective. In promoting environmental and social characteristics, the fund takes into account the environment and climate, as well as human rights, employee rights and equal opportunity.

In the promotion of environmental and social characteristics, the fund may also invest in sustainable investments, in accordance with the assessment method applied by the Management Company.

What are the objectives of the sustainable investments that the financial product partially intends to make and how does the sustainable investment contribute to such objectives? The fund's sustainable investments are made in companies whose economic activities are considered as having a positive impact on the attainment of one or several environmental or social objectives, alternatively, the company is involved in activities aligned with the EU Taxonomy. The environmental and social objectives are defined based on the Sustainable Development Goals in Agenda 2030.

Sustainable investments contribute primarily through investments in companies that support the Sustainable Development Goals or activities aligned with the EU Taxonomy by exceeding a minimum level of revenue in the company in line with the Sustainable Development Goals or the EU Taxonomy or a combination thereof. In addition to company revenue, the companies' capital expenditures or operational expenditures (CAPEX/OPEX) can be used to assess a company's contributions to the objectives.

For a company to be defined as a sustainable investment, an investment must not only contribute to the attainment of an environmental or social objective, but the investment must also not cause significant harm to any of the environmental or social objectives and the company must follow good governance practices. The control to ensure that the company does not cause significant harm to any of the environmental or social objectives is based on two components: taking into account the principal adverse impacts on sustainability factors (PAI), as well as ensuring that the company does not significantly obstructs any environmental or social objective through its other products and services. The fund applies the following principles to ensure adherence to the do no significant harm" principle:

1. Exclusion criteria for companies with activities linked to controversial sectors as well as specific PAI indicators (Principal Adverse Impact, see explanation above), such as fossil fuels and controversial weapons. 2. Exclusion criteria for companies with verified violations of international norms and conventions.

3. Assessment that the investments are not considered to cause significant adverse impacts on sustainability factors (PAI). This is conducted through the Management Company's internal PAI tool.

4. Assessment of what products and services in which the company is otherwise involved in, as well as if these can be considered as significantly obstructing a sustainable development.

In the context of taking into account the PAI indicators, the Management Company conducts engagement work through dialogue and active corporate governance so that the companies manage their sustainable risks and any principal adverse impacts on sustainability factors.

With respect to the Management Company's assessment methodology for sustainable investments, including the assessment of the "do no significant harm" principle, read more in the Statement on Principal Adverse Impacts on Sustainability Factors, which is published on our website at www.handelsbankenfonder.se. A description of the Management Company's PAI tool is also available on the website.

Environmental or social characteristics of the financial product

The fund promotes environmental characteristics through:

Investments in companies whose economic activities are considered to be contributing to an environmental objective under the Sustainable Development Goals in Agenda 2030 and/or activities aligned with the EU Taxonomy.
Exclusion criteria for companies with activities linked to fossil fuels and companies with verified violations of international norms and conventions related to environmental issues.
Considering the principal adverse impacts on sustainability factors (see explanation above) linked to the environment and climate.

The fund promotes social characteristics through:

Investments in companies whose economic activities are considered to be contributing to a social objective under the Sustainable Development Goals in Agenda 2030.
Exclusion criteria for companies with activities linked to controversial weapons, nuclear weapons, weapons and military equipment, alcohol, tobacco, cannabis, pornography and commercial gambling, as well as by excluding companies with verified violations of international norms and conventions related to human rights, employee rights or anti-corruption and anti-bribery.
Considering PAI indicators linked to human rights, employee rights or anti-corruption and anti-bribery.

Refer to handelsbankenfonder.se for more detailed information about the Management Company's strategies regarding exclusion.

Investment strategy

The fund is an actively-managed equity fund. The fund applies the following investment strategy to attain the environmental and social characteristics promoted by the fund:

Sustainability analysis: Sustainability analysis is an integral part of the portfolio management's investment analysis in which each portfolio company is carefully analyzed based on relevant issues related to how the company conducts its business, as well as what products and services the company offers. Analyses are also conducted of the company's strategy, financial and non-financial results and risks, capital structure, social and environmental impact as well as corporate governance. The analyses are based on information provided by the company, external sources and through in-house analyses.

Asset Stewardship: Active engagement is an essential strategy to influence companies in a more sustainable direction. The Management Company and the fund manager manage this through company dialogues, voting, nomination committees and work within investor networks. Company dialogues are conducted directly between the fund manager and the company, together with other investors or within the scope of investor networks and other collaborations. The dialogues include a broad spectrum of sustainability issues. The Management Company conducts an active and responsible corporate governance through representation in nomination committees and voting at shareholders' meetings. The starting point for our efforts is based on our Policy for shareholder engagement and responsible investment, as well as our guidelines for nomination committee work.

Exclusion strategy: The fund applies sustainability criteria in the form of an exclusion strategy. The strategy includes companies with production and distribution of controversial weapons, nuclear weapons, weapons and military equipment, alcohol, tobacco, cannabis, pornography, commercial gambling, fossil fuels, as well as companies with verified violations of international norms and conventions related to human rights, the environment, employee rights or anti-corruption and anti-bribery. The limits applied by the Management Company with regard to revenues from production and services are stated in the table for exclusion that is shown in the Appendix for sustainability-related disclosures in the fund's prospectus. The fund has the option of including so-called transition companies involved in power generation, transmission and distribution of electricity and with some exposure to fossil fuels. Transition companies refer to companies that have been considered by the Management Company's sustainability committee as those that are in the process of transitioning business operations in a manner that is expected to contribute to, rather than counteract, the attainment of one or several of the Sustainable Development Goals. The company's rate of transition is assessed based on the following dimensions: that the companies' activities do not consist primarily of fossil power generation, that the company's current investment rate supports the transition from fossil fuels to renewable energy, as well as that the company's forecasted business development of the activities is in line with a global warming of a maximum of 2?C. Read more about our requirements for transition companies in Inclusion of companies in transition, which is published on our website at handelsbankenfonder.se. The limits in the table referenced in the previous paragraph do not apply to so-called transition companies.

Pursuant to regulations, the fund may only invest in a company that meets practices for goodgovernance. The Management Company ensures this through the application of the Exclusion and Inclusion strategies. By excluding companies with confirmed violations of international norms and conventions linked to, for example, taxes, employee rights, as well as anti-corruption and anti-bribery, the Management Company ensures that the fund's investee companies comply with current practices related to good governance. A company analysis is conducted for each investment decision in which sustainability dimensions as well as financial dimensions are factored into the decision. This analysis includes issues related to the companies' governance, such as relationships with employees, remuneration, management and management structures, as well as compliance with tax regulations. Examples of relevant principles and guidelines include the Global Compact principles 1,3,6 and 10, OECD's Guidelines for Multinational Enterprises as well as conventions such as the UN's Convention against Corruption and ILO's Convention 111, Discrimination in Respect of Employment and Occupation. Read more about the Management Company's definition of principles for good governance in the document, SFDR - Definitions and description of methodology within sustainability, which is available at handelsbankenfonder.se.

The fund's stated minimum proportion of sustainable investments and application of an exclusion strategy is a binding element for the Management Company in the management of the fund.

Proportion of investments

Monitoring of environmental or social characteristics

The Management Company's risk control function monitors the environmental/social characteristics promoted by the fund on a daily basis to ensure compliance. This occurs through the control of the minimum proportion stated in the Appendix for sustainability-related disclosures in the fund's prospectus, for example, regarding the share aligned to environmental or social characteristics as well as the minimum proportion of sustainable investments. The Management Company's risk control function also follows up to ensure that the fund abides by its provisions for the exclusion of companies. The control relates to sectors we exclude and those we consider risk counteracting a sustainable development. The Management Company's risk control function also follows up to ensure that the investee companies are not in violation of international norms and conventions. For additional information, refer to the Methodologies" section below.

The following sustainability indicators are used to assess the environmental/social characteristics of the fund:

Sustainable investments: Share of the fund's investments that are invested in companies considered to be contributing to an environmental or social objective pursuant to the Sustainable Development Goals in Agenda 2030 and/or the EU Taxonomy, at the same time as they do not significantly harm any other environmental or social objective and that the companies follow good governance practices. Follow up is conducted by the Management Company's risk control function.
Carbon footprint: Carbon footprint measured in the investee companies' greenhouse gas emissions Scope 1, 2 and 3 relative to the investee companies' enterprise value including cash (EVIC). Follow up is conducted by the Management Company's risk control function.
Greenhouse gas intensity: The greenhouse gas intensity measured in the investee companies' greenhouse gas emissions Scope 1, 2 and 3 relative to the investee companies' revenue. Follow up is conducted by the Management Company's risk control function.
UN Global Compact (UNGC) principles and Organization for Economic Cooperation and Development (OECD) Guidelines for Multinational Enterprises: Share of investments in companies that have been involved in violations of the UNGC principles or OECD Guidelines for Multinational Enterprises.
Share of investments in companies that are active within the fossil fuels sector. Follow up is conducted by the Management Company's risk control function.

Methodologies

Data sources and processing

Information on the companies' exposure to excluded activities and incidents that lead to violations of international norms and conventions are obtained from external data providers. The external data providers gather information about the companies' exposure to excluded activities from public presentations made by the companies and/or through direct contact with the companies. Information about violations of international norms and conventions are obtained from ISS ESG. The contributions to the EU Taxonomy are obtained from Sustainalytics and SDG contributions are obtained from ISS ESG. In addition, the Management Company conducts its own analysis with regard to contributions to environmental or social objectives, with the assessment based primarily on data obtained from the companies' annual reports. The classification of sustainable bonds is obtained primarily through direct analysis of the companies' framework for sustainable bonds that companies have published inhouse, in consultation with other data gathered inhouse at the companies, as well as data obtained from Bloomberg. Information about violations of international norms and conventions is obtained from ISS ESG. The Management Company's risk control function receives the data and carries out the ongoing control of the fund.

The sustainability data for various areas can be estimated if this can be carried out in a reliable manner and when reported data is unavailable. In this case, the purpose of the estimation is to give a conservative estimate. Examples of areas that can be estimated are shown below. Where possible, the share of the reported data will also be provided. The share of the estimated data at the fund level is continually changing since estimates are made per investment and the fund’s exposure for each investment changes. The information provided below is based on data as of 31 December 2022.

Greenhouse gas emissions:
Estimated data for Scope 1 + 2 was 23.4% and reported data was 76.6%. Estimated data for Scope 3 was 53.4% and reported data was 46.6%.
Contributions to the EU Taxonomy:
Estimated data was 100% and reported data was 0%.
Exposure to the fossil fuels sector:
No information available for the share of estimated or reported data.
Company’s sales from products and services considered to be contributing to a social or environmental objective: No information available for the share of estimated or reported data.

The Management Company conducts ongoing discussions with the external data providers to ensure high-quality data. Specific analyses are completed when there is contradictory information. In questionable situations, the company concerned is contacted to have the opportunity to provide their view on the situation. The Management Company analyzes and controls the data to capture any deficiencies and/or inaccurate information. Data received from external sources is used primarily in its raw form provided that the data is reliable. For example, the management of data conducted for aggregations and transformations, such as the calculation of the carbon footprint based on the separate data points for emissions and company value, respectively.

Limitations to methodologies and data

Information about the companies' exposure to excluded activities is limited to the information made available from companies themselves. Consequently, it is not always possible to ensure the exact exposure to these activities. The limitations are most prominent for companies with a smaller portion of the business involved in the excluded activities, such as a grocery store that also sells alcohol. This is an acceptable limitation since the principal impact of the fund's strategy is attained by the exclusion of companies with significant exposure to the excluded activities.

There are also limitations linked to the use of estimated data to enable the assessment of positive and adverse impacts since an estimate may not necessarily be consistent with reality. The use of estimated data can still be beneficial, provided that it is calculated conservatively and only when it can be conducted reliably. It may then be possible to identify a company with unwanted exposure to fossil fuels, even though the company may not have reported the exposure themselves. There are also limitations due to the fact that a significant amount of data is reported with a lag in the annual reports of companies. This is managed by making use of the most recently available information. Some limitations linked to data accessibility and data quality are inevitable but are reduced to the greatest extent possible through conservative assessment processes and continuous further development to enhance the information for screening and ensure the data quality.

Due diligence

The Management Company regularly takes into account the principal adverse impacts for sustainable development in the management of all of its investment decisions. The Management Company's website, handelsbankenfonder.se, provides a description of the Management Company's due diligence routines for identifying and prioritizing principal adverse impacts and general information about the indicators used for sustainable development. The website also provides a description of the principal adverse impacts for sustainable development within the Management Company's business activities and a report of the actions taken in relation to these. The description also includes information about how the Management Company engages companies on behalf of the funds through dialogue and active corporate governance.

Upon investment and on an ongoing basis, the Management Company monitors all of the fund's investments against the Management Company's exclusion criteria to ensure that there are no companies involved in activities deemed by the Management Company to be inconsistent with a sustainable development. This applies to activities regarding the production and distribution of controversialweapons, nuclear weapons, weapons and military equipment, alcohol, tobacco, cannabis, pornography, commercial gambling, fossil fuels, as well as companies that violate international norms and conventions related to human rights, the environment, employee rights or anti-corruption and anti-bribery. Any deviations are managed through exclusion.

In addition to the exclusion strategy, indicators are used within the areas of greenhouse gas emissions, energy efficiency, biodiversity, water, waste, social and employee rights issues, human rights, the environment, anti-corruption and anti-bribery to identify and prioritize the principal adverse impacts. The Management Company addresses adverse impacts through engagement dialogues and active corporate governance and uses both internally-developed analyses as well as external analyses as the basis for decisions on how the Management Company should vote at shareholders' meetings. For the fund company's funds, the risk department also conducts daily assessments of the funds' underlying assets to monitor whether these are in line with the sustainability requirements set for each fund. For more information, see "Due diligence routines" at handelsbankenfonder.se.

Engagement policies

As a significant investor, the Management Company has a responsibility and an opportunity to engage with companies to act responsibly and conduct their business activities in a sustainable manner, in addition to promoting the development of the sustainability efforts in the asset management industry. The Management Company engages through company dialogues, corporate governance work and investor networks. Our engagement efforts are based on Handelsbanken's core values, our commitments, as well as the international norms and conventions supported by the Management Company. The company dialogues include overall strategic sustainability issues, as well as specific dimensions of a company's risks, opportunities and impact linked to sustainable development.

Through our corporate governance work, we influence companies by participating in nomination committees and voting at shareholders' meetings. Networks and collaborations with other shareholders and stakeholders contribute to collective learning, development and making an impact in the engagement work. The engagement work on behalf of active equity funds is carried out through company dialogues, as well as corporate governance work and investor networks.

Additional information about the principles and methodologies applied by the Management Company in its engagement work and in its corporate governance, as well as how the work is structured within the Management Company is available in the Management Company's Policy for shareholder engagement and responsible investment at handelsbankenfonder.se.