Active investment management is often said to sit somewhere between art and science. It is also said that while scientists dream about doing great things it is engineers that actually do them. Having an engineer at the helm of its manager selection team Nordea Investment Management might be onto something.
By Pirkko Juntunen
Gilles Lafleuriel is the head of Real Assets and Alternatives within Nordea’s manager selection team. He started and worked as an engineer within the nuclear business of the French utility EDF. Having completed an MBA just ahead of the global financial crisis Lafleuriel continued working in the energy sector but held several business development roles and later developed direct investment projects within the sector. That ignited his appetite for investments and the road eventually led him to Nordea in Stockholm.
Lafleuriel leads a team of three in what he describes as a part of an investment boutique within Nordea Asset Management. “Our role is not to deliver asset allocation or take investment decision. We simply but thoroughly cater for new investment products for the various distribution channels of Nordea Wealth Management. The final decision on whether to invest or launch a product belongs to the bank, the life and pensions business or the institutional and wholesale distribution units” he said.
At the core of Lafleuriel and his team work is environmental, social and governance (ESG) criteria. A manager would not get a foot in the door without strong ESG credentials, he said. “We tend to have open criteria with regards to the managers’ styles but the one thing we do not compromise on is the ESG credentials and expertise of the managers we research,” Lafleuriel said, adding that it is a priority across Nordea’s businesses.
On top of the agenda is Nordea’s Star Funds where companies that are performing the best according to ESG analysis are proactively chosen as opposed to negatively screening out poor ESG industries. During the World Economic Forum in Davos earlier this year, Nordea Bank was ranked as one of the 100 most sustainable corporations in the world 2018 and was the only Nordic bank on the list.
Positioning itself as an ESG provider is key for future growth in Sweden and the Nordics in general, considering the pressure from regulatory changes brought on by the Swedish government, in addition to Europe-wide regulations. In its fund industry review the Swedish government put consumer protection at its core and new legislation requires further transparency and clear product specific information as well as proving their sustainability credentials.
A key part of the due diligence process is sending out an ESG questionnaire. Managers that are not able to show a level of excellence within the field will not be considered further, irrespective of excellence in other areas.
A starting point of the Nordea’s manager selection process is a research paper on the asset class and then an agreement on a mandate from the team’s clients, i.e. Nordea’s various distribution channels. The team then