Methodology
Over the last few years Stefnir has taken a number of important steps towards being a leader in responsible investment. We are a signatory to the UN Principles for Responsible Investment (UN PRI) and one of the founding members of Iceland SIF, an initiative designed to develop and add to the knowledge and debate on responsible investment.
It is important that the commitments we have undertaken are properly carried out, and by carefully planning how to invest capital it is possible to foster sustainable development, while at the same time making countries more competitive and safeguarding the future for the next generation.
About the methodology at Stefnir
When managing funds it is important to inform fund members how we are applying the methodology of responsible investment throughout the business.
The company’s policy on responsible investment sets out how we will consider environmental, social and governance factors when investing in companies and other issuers.
Below is a short description on the main factors relating to Stefnir’s methodology when it comes to choosing investments.
Integrating ESG into the investment process
Wherever possible Stefnir integrates ESG into the investment process at funds managed by the company. Companies are screened in order to identify those which do not meet the set ethical standards and a thematic methodology is applied where appropriate.
Ethical standards for Stefnir fund investments
Annex I to the policy on responsible investment approved by Stefnir’s ESG committee on 21.01.2025.
Relevant documents are currently being updated due to the revision of this annex.
| Activity | Definition | Negative screening | Positive screening | Best in class screening |
|---|---|---|---|---|
| Alcohol producers | Companies that derive revenue from alcoholic beverages. These include producers of these beverages as well as retails and distributors and suppliers of alcohol-related products/services to alcoholic beverage manufacturers. |
X | ||
| Cannabis | Companies that derive revenue from cannabis products that are not used for medical purposes. |
X | ||
| Fur production | Companies that derive revenue from fur or other exotic products made from animal skin. |
X | ||
| Animal experiments | Companies involved in conducting testing on animals, for non-pharmaceutical products. This includes for example food additives. |
X | ||
| Animal testing for medical purposes | Companies that are involved in conducting testing on animals, for pharmaceutical products or/and medical devices and/or biotechnology. |
X | ||
| Gambling | Companies that derive revenue from gambling. Those are companies that offer gambling services including operation of casinos and online gambling. |
X | ||
| Mining | Mines that are not operated in accordance with environmental impact assessment laws and violate human rights. |
X | ||
| Nuclear power production | Companies involved in the production of energy from nuclear sources. |
X | ||
| Coal and oil sands processing | Companies involved in coal production or oil sands extraction. |
X | ||
| Oil production | Companies that derive revenue from involvement in oil industries. |
X | ||
| Pornography production | Companies that derive revenue from production of adult entertainment. |
X | ||
| Loan sharking | Companies whose primary business model relies on exploitive lending practices. |
X | ||
| Activities which violate basic human rights, e.g. slavery | Stefnir on the United Nations Universal Declaration of Human Rights, see here. |
X | ||
| Tobacco producers | Companies that derive revenue from tobacco products including cigarettes, cigars, tobacco and snuff tobacco. |
X | ||
| Controversial weapons | Antipersonnel mines, cluster munitions, chemical weapons, biological weapons and weapons of mass destruction. |
X |
Negative screening: Not permitted to invest in business or sector. .
Positive screening: Look to companies who are driving positive development in the sector and outperform peers according to ratings agencies and internal assessment at Stefnir.
Best in class screening: The company or issuer which performs best among its peers in opinion of ratings agencies and internal assessment at Stefnir.
Active ownership and impact investing
Stefnir complies with rules on proxy voting and Stefnir exercises its shareholder rights according to the best interests of the funds. Through active ownership we aim to advocate positive change which benefits ESG issues in the short and long term.
Alternative investments
Due diligence is performed on alternative investment options to identify and highlight the key aspects of a company’s operations and finances. There is a particular emphasis on ESG factors in this respect, and the extent of the ESG check performed depends on the nature of the investment option being considered at any given time.
Stefnir’s ESG committee
The ESG committee works in accordance with rules of procedure, provides support on asset allocation and assurance that Stefnir works in accordance with the established criteria on responsible investment. Stefnir employees who serve on the ESG committee are the torchbearers for implementing the responsible investment methodology throughout Stefnir.
The board and employees of Stefnir have an option to undertake courses at PRI Academy in the methodology of responsible investment. PRI Academy is the global leader for people who want to gain an insight into how environmental, social and governance issues affect companies’ performance and increase value of all stakeholders.