In pursuit of ESG investment excellence at Danske Bank Asset Management
As one of the largest asset managers in the Nordic region, Danske Bank Asset Management is today managing in excess of EUR 100 bn of assets for retail and institutional clients across a range of investment strategies, spanning equities, fixed income, balanced portfolios and alternative investments. By integrating sustainability into their investment activities, the company wants to take a leading position, helping their customers achieve their sustainability ambitions as well as supporting the broader society transitioning into more sustainable economies.
The strategic focus on sustainability has continued to grow in importance as has the breadth of responsible investment strategies deployed. Danske Bank Asset Management has various commitments and targets to advance responsible investments, such as volume targets for both Article 8 products, funds promoting ESG characteristics, and Article 9 products, funds with sustainability objectives. Furthermore, the company is a signatory to the Net Zero Asset Manager initiative with a goal of being Net Zero by 2050. To help realize its ambitions, Danske Bank Asset Management entered into a development partnership with SimCorp to co-create two new sustainability-related solutions.
- ESG Investing
Your entire ESG investment lifecycle covered, with SimCorp
Environmental, social and corporate governance (ESG) investment is a key element in institutional portfolios today and will continue to be so in the future
The business case: Overcoming the data challenge of ESG investing
The company-specific commitments to responsible investments coupled with the regulatory agenda in the form of EU’s Sustainable Finance Disclosure Regulation (SFDR) have had a profound impact on the daily operations of Danske Bank Asset Management.
In order to monitor their holdings and funds based on sustainability metrics, Danske Bank Asset Management faced a significant challenge of ensuring that high-quality sustainability data was accessible and scalable across the entire investment management value-chain. Danske Bank Asset Management is collecting thousands and thousands of sustainability data points from more than 10 different data vendors, which meant that the company was faced with an enormous amount of data and sometimes conflicting or missing data points that required a high degree of manual intervention. Furthermore, the data outputs such as tons of CO2 emissions, have very unique characteristics that are completely different from traditional financial data records.
With SimCorp Dimension already providing the system foundation for the company’s investment management operations, it was only natural that Danske Bank Asset Management entered into a development partnership with SimCorp to increase the usability and automation of sustainability-related data and analytics.
The solution: Development partnership as the path to sustainable solutions
The development partnership formally began in November 2020 with a number of deep-dive sessions involving multiple stakeholders from Danske Bank Asset Management and SimCorp with the aim to solve the core of the challenge - how to embed sustainability-related data into the daily workflow of investment management operations.
The involvement of many different stakeholders, including ESG analysts, equity portfolio managers, fixed income portfolio managers, compliance department, performance teams as well as SimCorp product experts, architects and developers was paramount for gathering insights about the daily ESG workflows at Danske Bank Asset Management and finding solutions for how these workflows could be automated. The opportunity to engage directly in technical dialogue with SimCorp developers and do hands-on testing was well-perceived by stakeholders across Danske Bank Asset Management during this phase. Solutions were built with a quick turnaround, taking into account regulatory developments.
Our partnership and collaborative co-creation approach with SimCorp is an important part of ensuring we have relevant tools and systems to consistently integrate sustainability-related perspectives in our investment management processes and products.
The business benefits: Scalable ESG and SFDR solutions embedded into existing workflows
The new solutions enable Danske Bank Asset Management to bring in any type of sustainability data into SimCorp Dimension, create tailor-made sustainability KPIs and integrate those into the entire investment management value-chain. By having automated sustainability data at their fingertips, analysts and portfolio managers always have an up-to-date view of how their portfolio, holdings and benchmarks are performing against certain ESG metrics.
This centralized and automated hub for sustainability data and internally-derived metrics also benefits other stakeholders along the investment value-chain. It helps risk managers more efficiently monitor and identify risky exposures, strategies and ultimately, price risk more adequately. Likewise, the solutions have also enabled Danske Bank Asset Management to introduce more sophisticated compliance rules based on sustainability criteria within the existing compliance module of SimCorp Dimension.
Onboarding such strategic solutions drives two sets of outcomes, enabling compliance with SFDR as well as supporting the operations underpinning the company’s sustainability-related investing strategies. By supporting and connecting all internal stakeholders from the portfolio managers and trade control, through to risk, compliance and performance teams, all within a single-platform architecture ensures that Danske Bank Asset Management can live up to customers’ increasing demands for strong sustainability-related investment practices, while also increasing efficiency and reducing costs.
Potential future extensions of the partnership are also being considered. This includes co-developing extensions to current sustainability functionalities in areas such as portfolio optimization and client communications.
Quick Facts (2021)
AUM: More than EUR 100 bn
Investment professionals: Approx. 200
About Danske Bank Asset Management
Danske Bank Asset Management is an international asset manager. It is part of the Large Corporates & Institutions division at Danske Bank, and has more than EUR 100bn in assets under management for institutional and retail clients, making it one of the largest asset managers in the Nordics. With approximately 200 dedicated investment professionals and additional resources in operations, compliance and legal, etc., Danske Bank Asset Management serves clients in the Nordics and around the world. The company is headquartered in Denmark, but also operates from offices in Sweden, Norway and Finland.