OP-Sustainable World B

OP-Sustainable World offers a vehicle highlighting sustainable development, social wellbeing and ethical aspects and easy and simple investing. The fund applies both negative and positive screening. Negative screening means that certain sectors and functions are excluded from the fund's investment options as described below. We update our criteria for exclusion whenever required as a result of developments in the operating environment. Positive screening means analysing companies' operating policies from the perspective of responsibility and only the top companies can be admitted to the fund.

NEGATIVE SCREENING

Products and services hazardous to health or causing addiction

The fund does not invest in products or services that are hazardous to health or cause addiction. This category includes alcohol and tobacco producers and gambling companies. Neither do we invest in companies with a significant proportion of their turnover coming from the sale of tobacco and alcohol products. If the abovementioned products generate only a minor share of the sales, such as typically in the case of a department store, the fund may invest in such a firm if the firm otherwise meet the criteria set by the fund. The assessments are based on information available to the portfolio manager.

Social and societal topics

From the social and societal perspective too, harmful and doubtful practices, products and services count among those in which the fund does not invest. This category includes the manufacture of weapons other than sporting and hunting weapons, activities contrary to the UN Global Compact initiative, such as child labour and corruption, production of adult entertainment, animal tests for non-medical purposes and aggressive tax planning. The definition of aggressive tax planning will be specified thanks to international principles and improving reporting. We are currently paying attention, for example, to aggressive arrangements by country that have come to our notice.

Environment

For environmental reasons, the fund does not invest in companies in the oil or gas sector or in companies that otherwise have a significant impact on climate change. In respect of the impact on climate change, the fund uses fossil fuel reserves, carbon footprint and carbon intensity as criteria. The fund does not invest in nuclear power producers either.

POSITIVE SCREENING

Of the companies in industries remaining after positive screening, only those can be admitted to the fund that rank among the best ones in their sectors in responsibility assessment. The responsibility analysis comprises three components which relate to the environment, society and corporate governance. In selecting responsible companies, we make use of data collected by MSCI as one of our sources, where corporate responsibility is assessed by means of hundreds of various metrics. The metrics pertain, for example, to employee treatment, safety at work, supply chain responsibility, greenhouse gas emissions and pollutants, use of water, carbon footprint of products, biodiversity, composition of the board of directors and corruption.

In investment, risks and returns are linked. OP-Sustainable World takes the middle road in both. It is an easy and simple option for investors who are interested in earning returns but not in watching closely stock market developments. Strict compliance with ethical practices combined with thorough sustainability assessment gives investors peace of mind while portfolio management experts ensure that risks associated with equity markets remain in control.

OP-Sustainable World is a balanced fund which invests its assets in global equity and bond markets. In its investments, the fund applies unusual weightings and restrictions. It does not invest in certain products, services or functions that can be considered
hazardous to health or addictive. Investment in certain functions regarded as socially, societally or environmentally harmful has also been restricted. We update our criteria for exclusion whenever required as a result of developments in the operating environment.

We analyse companies' practices from the CSR perspective as well. Only companies which rank among the best ones in their sectors in terms of environmental, social and governance aspects on the whole can be admitted to the fund.

The Fund’s investments in fixed income instruments may account for 30–70% of the Fund’s value and those in equity-linked instruments for 30–70%.In its investment operations, the Fund may use derivative instruments in order to hedge against the risk of adverse market movements, to replace direct investments and to promote otherwise effective portfolio management. Derivatives are chiefly used to manage equity and interest rate risks.

The focus is on fixed income instruments issued by public institutions and companies with a good credit rating. Moody´s Baa3 or S&P BBB- represents the minimum rating for issuers. The Fund may also to a limited extent invest its assets in fixed income instruments issued by issuers with a lower credit rating or by non-rated issuers. The Fund makes its fixed income investments mainly in fixed income instruments issued by public sector entities and companies in the European and OECD bond markets.

The Fund’s benchmark index is a combination of several indexes. The composition of the benchmark index is described in the fund prospectus. With active investing, the Fund seeks to outperform its benchmark index in the long term. The Fund mainly takes notable active risk and it may differ significantly from the composition, weights and risk level of the benchmark index.

The Fund promotes environmental and social characteristics and, to ensure it, uses environmental, social and governance (ESG) analysis and excludes certain investments. 

Exclusion: The Fund excludes from its active direct investments controversial weapon manufacturers, mining companies producing thermal coal, power companies using thermal coal, tobacco companies, and companies that have breached international standards and where engagement has been unsuccessful.  The list of exclusions is public. In addition to general exclusion rules, the Fund does not invest in companies whose principal business is in unconventional oil and gas extraction, alcohol, gambling, weapons, adult entertainment or nuclear power.

Use of ESG data in the investment analysis: the Fund uses the best-in-class method based on an ESG rating by a third-party service provider. Only companies that are among the best in their sector in terms of ESG issues are selected for inclusion in the Fund. 

Violations of international standards: The Fund is screened regularly for non-compliances with international standards. In the event that a non-compliance is detected, an influencing process is begun with the company in question. The aim is to make non-compliant companies change their practices and begin to comply with international standards in their operations. If influencing proves fruitless, the company may be removed from the Fund portfolio and placed on the exclusion list.

Minimum share of sustainable investments: In accordance with the minimum amount stated below, the Fund allocates investments into companies whose business promotes one or more UN Sustainable Development Goals (SDG) without harming other sustainability factors or objectives. Sustainable investments are determined using OP Asset Management’s analysis model which is based on an external service provider’s SDG and sustainability data. 

Shareholders’ meetings: The Fund votes in shareholders’ meetings through a service provider in line with OP Fund Management Company Ltd’s shareholder engagement principles that take responsibility aspects into account.

Methods for assessing good governance practices: Analysing the target company’s governance is an important part of the investment process. To us, good governance is a key foundation for any company’s financial success, regardless of sector. When assessing governance, some of the areas considered include the appropriateness of the target company’s administrative organisation, the target company’s actions in relation to its personnel, and the target company’s rewarding and taxation practices. In assessing good governance, we use an external service provider’s analysis and our own qualitative analysis if no external data is available. We screen the funds regularly to check them against the criteria of good governance. Minimum limits apply for these criteria. 

As our owner-customer, saving and investing is especially worthwhile thanks to the excellent benefits you receive.

Your benefits when investing in funds:

• Buy and sell almost all OP mutual funds with no fees.*
• You earn 0.35% OP bonuses from mutual fund and insurance assets.** 

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• Begin saving through insurance free of charge. 
• You will earn 0.35% of OP bonuses from funds linked to insurance assets.***
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**OP bonuses are used to pay the bank’s service charges and insurance premiums.

***You earn OP bonuses from unit-linked insurance policies, excluding individual unit-linked insurance policies and Individual Capital Redemption Contracts. The principles of contribution towards OP bonuses from funds linked to insurance assets will be harmonised with direct investments. As of 1 January 2025, the following funds linked to insurance assets will no longer contribute towards OP bonuses: third-party funds such as JP Morgan funds, structured loans and institutional class funds such as OP-World III A.

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