Handelsbanken Global Momentum

This document provides an review of the fund's sustainability-related disclosures. More information can be found in the fund's prospectus and also under the respective sections below.

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, labor 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.

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, or alternatively, that 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 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, 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 fund applies the following principles to ensure adherence to the do no significant harm principle:

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 document "SDFR - Definitions and description of methodology within sustainability, which is published on our website at: www.handelsbankenfonder.se.

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 for sustainable development (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, labor rights or anti-corruption and anti-bribery.
• Considering PAI indicators linked to human rights, labor rights or anti-corruption and anti-bribery.

The fund is a rules-based quantitatively-managed fund and its objective is to offer exposure to companies in the global equity markets that demonstrate a positive risk-adjusted momentum. In rules-based management, the fund manager follows a clearly-defined quantitative model for the selection and weighting of companies in the fund. Within the quantitative model followed by the fund, sustainability factors and sustainability criteria are integrated through, for example, the exclusion strategy applied for the fund.

The fund applies the following investment strategy to attain the environmental and social characteristics promoted by the fund:

Dialogue and 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 committee 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 range 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 and its index apply 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, labor rights or anti-corruption and anti-bribery. The limits applied by the Management Company with regard to revenue 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.

Pursuant to regulations, the fund may only invest in a company that meets practices for good governance. The Management Company ensures this through the application of the Exclusion and Inclusion strategies. By excluding companies with verified violations of international norms and conventions linked to, for example, taxes, labor 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 methodologies and principles for good governance in the document "Policy for Shareholder Engagement and Responsible Investment", which is published on our website at www.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.

The fund is managed based on a rule-based quantitative management methodology and normally invests directly in equities. However, indirect investments in the form of index-based financial instruments (such as futures) may be used in the fund’s management of liquidity. The fund’s asset allocation describes the proportion of investments in specific assets. The schematic description of the asset allocation shown below reflects the minimum proportion of the fund’s investments that are planned to fulfil the environmental or social characteristics promoted by the fund, as well as the total of the minimum proportion of sustainable investments in the fund. However, the asset allocation is expected to exceed the stated minimum proportions. The result of the actual allocation is reported in the fund’s annual report. The fund’s remaining investments, which neither promote the environmental or social characteristics, nor are considered as sustainable investments can consist of liquid assets, for example.

Read more about the Management Company’s definition of sustainable investments in the document titled "SFDR - Definitions and description of methodologies within sustainability" which is available at www.handelsbankenfonder.se.

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 regarding the share aligned to environmental or social characteristics as well as the minimum proportion of sustainable investments, for example. The Management Company's risk control function also follows up to ensure that the fund abides by its rules 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 fund regularly applies follow up at the holdings level to ensure that companies with activities in the sectors excluded by the fund and/or companies that violate international norms and conventions are not included in the fund. This means that information about each individual fund is obtained from external data providers, such as ISS ESG (issgovernance.com/esg) and Sustainalytics (sustainalytics.com). The fund applies the following monitoring safeguards:

Information about exposure to excluded operations and incidents that lead to violations of international norms and conventions is obtained from external data providers. The external data providers obtain information about the companies’ exposure to excluded operations from public presentations provided by the companies and/or through direct contact with the companies. Information about violations of international norms and conventions is obtained from ISS ESG. The EU taxonomy contributions are obtained from Sustainalytics and the SDG contributions are obtained from ISS ESG. In addition to this, the fund company conducts its own analysis regarding contributions to environmental or social objectives. The assessment is based primarily on data from the companies’ annual reports.

Sustainability data for various areas can be estimated when this can be reliably measured, and the estimate in this case is made in order to give a conservative estimate. For example, a company’s exposure to fossil-based operations or a company’s greenhouse gas emissions are estimated if the concerned company does not report this information in a reliable manner.

  

As of 31 December 2023 the distribution of reported and estimated data for greenhouse gas emissions was:

The proportion of the estimated data at the fund level changes continuously since the estimation is made for each investment and the fund’s exposure to each individual investment also changes.

The fund company conducts ongoing discussions with the external data providers to ensure high-quality data. Specific analyses are conducted when there is conflicting information. When questionable situations arise, the concerned company will be contacted and given the opportunity to provide its views.

The fund company analyzes and controls data in order to capture potential deficiencies or inaccurate  information. Data retrieved from external sources is primarily used in its raw format, provided that it is reliable data. Examples of data processing that are performed include aggregation and transformation, such as calculating the carbon footprint based on the separate data points for emissions as well as company value.  

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 tobacco. 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.

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 is conducted on behalf of the funds 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 www.handelsbankenfonder.se.

The fund is rules-based, quantitatively-managed and the index is not used to determine whether the fund meets the environmental and social characteristics promoted by the fund.

Updated text pursuant to EU Regulation 2022/1288.

Updated text regarding the fund's alignment with the EU taxonomy.

Implementation of EU Regulation 2020/852 on the establishment of a framework to facilitate sustainable investment and changes to the EU Regulation 2019/2088, the EU Taxonomy.

Implementation of Regulation (EU) 2019/2088 of the European Parliament and of the Council on sustainability-related disclosures in the financial services sector, SFDR.