Norron excludes operations that we judge do not meet our basic sustainability requirements. This means that we do not invest in these businesses. We have chosen in some cases to allow a maximum of 5% of turnover to come from an excluded activity. This is partly to enable companies to adjust their operations, partly to be able to invest in companies whose main business is aimed at another purpose.
Our Exclusion Criteria
Pornography
Norron excludes companies that produce pornographic material. There are also companies that distribute pornographic material in their operations, such as hotels through their pay-per-view offer or media houses where pornography is included as part of the program offer. However, such distribution is excluded from the definition because it only corresponds to a very small part of the company’s total turnover.
Production: 0% of turnover
Distribution: Maximum 5% of turnover
Tobacco
Norron excludes companies that produce and distribute tobacco. Tobacco refers to snus, cigarettes (incl. E-cigarettes), pipe and chewing tobacco and other related addictive nicotine products. Components such as paper or plastic components and packaging are not covered by the definition. However, tobacco is often distributed in businesses with other purposes such as grocery stores or supermarket chains. Such activities are not covered by the definition.
Production: 0% of turnover
Distribution: Maximum 5% of turnover
Cannabis
Norron excludes companies that produce and / or distribute cannabis. Components such as paper or plastic components and packaging are not covered by the definition. Cannabis production and distribution for medical use (prescription drugs) are also not covered by the definition.
Production: 0% of turnover
Distribution: 0% of turnover
Alcohol Production
Alcohol production refers to the production of alcoholic beverages with an intoxicating effect. Thus, activities where alcohol is produced for other purposes, such as cleaning, skin care, etc. are not covered. We have chosen not to exclude and set a percentage on the distribution of alcohol as this would have affected the opportunity to invest in other industries with other purposes, such as the hotel industry. However, this presupposes that alcohol distribution is not a significant part of the total turnover, and a decision on this is made in each individual case.
Production: Maximum 5% of turnover
Controversial weapons
Controversial weapons include cluster munitions, landmines, biological and chemical weapons, and nuclear weapons. Norron excludes companies that produce and distribute these weapons as well as companies that produce essential components that are specifically designed for use in these products only.
Production: 0% of turnover
Distribution: 0% of turnover
Conventional Weapons
Norron excludes activities that produce or distribute conventional weapons, I e products used for military warfare, such as rifles, bombs, missiles and more. The definition also includes the production of essential components for such weapons, where the component is designed and produced solely for the purpose of producing weapons for warfare. In the event that there is doubt about the product’s main purpose and what the primary purpose of the product is, Norron makes an assessment in each individual case.
Production: Maximum 5% of turnover
Distribution: Maximum 5% of turnover
Gambling
Norron excludes companies whose core business is to conduct commercial gambling. Commercial gaming activities refer to games on betting, casinos, slot machines or online poker. Computer games (gaming) are not covered by the definition. The definition also includes the production of essential software programs for commercial gaming operations, where the software program is designed and produced only for the purpose of enabling commercial gaming operations. In the event that there is doubt about the main purpose of the software program and what the primary purpose of the program is, Norron makes an assessment in each individual case.
Production: Maximum 5% of turnover
Distribution: Maximum 5% of turnover
Oil, Gas and Coal (Fossil Fuels)
Norron excludes companies that extract oil, gas and coal as well as companies whose main activity aims to facilitate and provide conditions for the extraction of oil, gas and coal. In the individual case, Norron can invest in companies that use fossil fuels for energy production, provided that the company can clearly demonstrate goals and work to reduce emissions in line with the Paris Agreement.
Extraction: Maximum 5% of turnover
Companies that violate international standards
Norron excludes companies where it is generally known or where we become aware that international standards are not being followed. Regarding incidents in portfolio companies where it becomes known that the company has violated international standards, such as human rights, workers’ rights, children’s rights or environmental standards, we make an assessment in each individual case of how serious the incident is. Norron’s ESG & Ownership Council is involved in this work, whose primary task is then to assist the portfolio manager in assessing the incident and recommend appropriate action. In these cases, Norron usually contacts the company first, provided that the incident is not of such a serious nature that liquidation of the holding is justified.
Companies with elements of corruption
Norron excludes companies where it is generally know or where we become aware that there are significant risks of corruption or financial crime. With regard to incidents in portfolio companies where it becomes known that the company has violated international standards , in relation to the company’s operations and size, with regard to countering corruption, we make an assessment in each individual case of how serious the incident is. Norron’s ESG & Ownership Council is involved in this work, whose primary task is then to assist the portfolio manager in assessing the incident and recommend appropriate action. In these cases, Norron usually contacts the company first, provided that the incident is not of such a serious nature that liquidation of the holding is justified.
About the exclusion criteria and hedging strategies specifically
The exclusion criteria above include industries in different broad market indices. Part of a hedge fund’s strategy means that the fund takes short and long positions in such indices, with the possibility of so-called delta hedging where certain companies and industries are neutralized from the hedging. A part from this exception, the portfolio manager must always take into account the exclusion criteria above.
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