Engagement Policy

1. Introduction

Saxo Bank is an international firm for investors and traders who are serious about investing towards their own financial goals and towards generating impact in the things they value. For over 30 years, we have perfected our industry-leading platforms to give our clients regulated and reliable access to over 70,000 financial instruments.

Saxo Bank provides discretionary portfolio management solutions across various asset classes to clients around the world to be invested both towards their own financial goals, but also in the things that they value.

2. Scope and Objective

Saxo Bank aims to deliver long-term value to clients’ investments through engagement activities through third party model portfolio service providers selection. This policy describes Saxo Bank’s engagement approach when partnering with third party model portfolio service providers.

The Policy applies to Saxo Bank A/S including all fully or partly owned subsidiaries. Where differences in local regulatory requirements exist, the local regulation takes precedence and local policies, and procedures will be drafted to reflect deviation from this document. This policy is approved by the Saxo Bank Group Asset Management Committee, which consists of senior management stakeholders, and is subject to regular reviews, minimum annually.

The Policy does not apply to the financial products offered on the Saxo Platforms for self-investing clients. The Policy does not cover trading strategies implemented using derivatives.

This Policy is reviewed and updated as required and at least annually.

3. Definitions

SFDR is the EU Regulation 2019/2088 on sustainability‐related disclosures in the financial services sector. This is applicable to Saxo Bank for the discretionary portfolio management services.

Active Ownership (engagement) means the use of rights and position of ownership to influence the activities or behaviour of investee companies based on financial and/or impact materiality considerations.

Stewardship refers to preserving and enhancing the value of assets with which one entity has been entrusted on behalf of others. It reflects the fact that any investment intermediary looking after assets on behalf of a beneficiary or client has obligations of a fiduciary nature.

Third party model portfolio service provider is a third party with which Saxo Bank A/S or any of its subsidiary engages with the purpose to procure model portfolios for Saxo Bank’s discretionary portfolio management services.

Financial materiality is the likely impact of various sources of risk on the return of the investment service.

Principal Adverse Impacts (PAI) are negative impacts that investments might have on sustainability factors as measured through indicators defined in SFDR.

Sustainability factors are environmental, social and employee-related matters, respect for human rights, anti-corruption and anti-bribery matters.

4. Discretionary portfolio managements

Saxo Bank offers discretionary portfolio management services in partnership with third party model portfolio service providers. Therefore, any active engagement is done through these third party model portfolio service providers. The impact Saxo Bank has starts with their selection. Saxo Bank has developed associated procedures and a scorecard template that measures all the relevant aspects of a potential third party model portfolio service provider, including stewardship efforts.

Therefore, during the due diligence phase, Saxo Bank will assess if the third party model portfolio service providers have engagement and voting policies to meet the goals or targets established for specific strategies. Saxo Bank continues to check stewardship efforts throughout the partnership. The due diligence is used for selecting as well as for ongoing monitoring and review of the third party model portfolio service providers. Saxo Bank engages on a quarterly basis with its third party model portfolio service providers about how they influence the impact that investee companies’ have on sustainability-related matters in accordance with specific strategies’ mandates. This dialogue provides Saxo Bank with greater insight into individual companies or funds. However, since Saxo Bank does not currently have positions on minimising PAI impacts on sustainability factors, the dialogue is centred on obtaining information on how a particular strategy is performing against established goals and targets. Currently, the dialogue is not directed towards any specific effort to reduce PAI impact, unless the specific investment strategy has PAI consideration at the product level.

If there are PAI considerations at product level, Saxo Bank will monitor the reduction of those specific PAIs. The expectations for engagement by third party model portfolio service providers when there are PAI considerations at product level are as follows:

• Engagement is a dialogue with an investee company, with the intent to instigate change on environmental, social or governance issues in line with goals or targets established for specific strategies. Third party model portfolio service providers must demonstrate that they have a policy for engagement and voting and explain how it applies to a specific strategy and how they add value through their influence.
• Third party model portfolio service providers must demonstrate their processes and set objectives as well as track progress on engagement in terms of impact and outcomes against goals and targets.
• Saxo Bank expects that third party model portfolio service providers report on successes achieved as results of engagement efforts and is working with these third parties to make this reporting more systematic. If a third party model portfolio service provider does not achieve sufficient improvements on reduction of PAI over more than one period reported on, it will be assessed and graded in the ongoing due diligence review of the third party model portfolio service provider that Saxo Bank conducts on all its partners.

5. Roles and Responsibilities

Saxo Bank conducts due diligence on all potential third party model portfolio service providers for Saxo Bank and any of its subsidiaries. All relevant due diligence documentation is analysed and graded into a scorecard in relation to potential candidates.

The Group Investment Committee reviews all materials as well as the scorecard and provides inputs before sending for approval to Group Asset Management Committee where senior management within the Group meets on a recurring basis. Group Asset Management Committee reports to Management Risk Committee where the Board of Management attends as well as representatives from second line and third line.