Aktia's net impact-driven approach to Article 9 classification

Starting point: Addressing market demand with new sustainable investment products

Recognizing the growing market demand and regulatory developments, Aktia, the Finnish asset manager, bank, and life insurer, wanted to further focus efforts towards sustainable investment products.

Aligning with SFDR regulation, Aktia initiated the development of a fund called UI – Aktia Sustainable Corporate Bond, focusing on sustainable corporate bonds and catering to institutional investors. The fund was created in cooperation with Universal Investment.

Aktia aimed to classify the fund as an Article 9 fund, or so-called dark green fund. As only a small portion of European funds currently hold Art 9 classification, Aktia perceived this as an opportunity to differentiate itself.

We saw this as a way to create interest. It is increasingly important for investors to understand the impact of their investment and the specific targets of the funding.

Markus LindqvistSustainability Director, Aktia

Solution: Article 9 fund classification with Upright’s net impact data

Aktia was already well-versed in Upright's net impact data and methodology, as they have been using it for quantifying and reporting the externalities of their funds for years. Appreciating the holistic assessment of companies and their core business that Upright’s approach provides, Aktia found net impact well-suited also for the classification of their new fund.

Article 9 funds are designed to invest in economic activities with a sustainability objective, measured by a sustainability indicator, without significantly harming other sustainability goals. They also ensure that investee companies follow good governance.

In fund classification, net impact enables investors to create customized thresholds and set granular impact targets looking at both positive and negative impacts on the environment, society, health, and knowledge creation across 19 impact categories. In the case of their new fund, Aktia decided to exclusively invest in bonds that have a positive net impact ratio, meaning the instrument creates more positive than negative impact.

Benefits: Comprehensive compliance and detailed impact insights combined

While a fund classification process always involves multiple stakeholders – in Aktia’s case, most notably their international partner Universal Investment (UI) – Markus Lindqvist describes the classification journey as smooth and clear. “Throughout the process, Upright’s team actively supported the classification in a credible and reliable manner, ensuring compliance with regulatory demands,” he shares.

One significant advantage in Upright’s data model for Aktia was the way it extends to the level of investment instruments, all the way down to products and services – unlike many other analyses that are issuer-specific. This allows for a detailed evaluation of each target of the bond, considering its specific characteristics.

Eeva Toivonen, ESG Manager at Aktia, was closely involved in the development of the new product solution. “We want to invest also in transition companies and therefore it is important for us to not just evaluate the issuer as a whole but also the specific target for the funding,” explains Toivonen.

Moreover, using net impact data as a classification criterion has provided Aktia with insight into the most important impacts of companies. Aktia has found net impact especially robust for fulfilling the classification criteria of no significant harm to other sustainability objectives, as it showcases negative impacts on a detailed level.

In late 2023, Aktia’s SFDR Art 9 UI-Aktia Sustainable Corporate Bond was also recognized for the robustness of its SRI management methodology, as it was awarded the FNG label – a high-quality standard for socially responsible funds sold in German-speaking countries.

Today, the net impact approach supports Aktia’s need to holistically define sustainable investments beyond the initial use case.

“At the beginning, the priority for the cooperation was to gain transparency and improve the quality of our reporting. Today, we utilize Upright’s different data sets for a variety of use cases, such as net impact ratio, EU Taxonomy, and PAI indicators,” Lindqvist concludes.