Atlant Fonder is a Swedish Asset Manager with only 10 employees, but you would not have been able to guess it just by looking at their financial products: a total of nine funds, all of them Article 8, and some with a very strong sustainability drive.
You would also not have guessed that all of their sustainability screening and reporting have been crafted in the past years by only one of Atlant Fonder's team members: Peter Beckman, Deputy Managing Director, who has been championing sustainable investment as one of his tasks since 1996.
Datia interviewed the team at Atlant Fonder to dissect how this army of half a person can successfully manage sustainability reporting with the help of Datia and establish a market position as a provider of sustainability-conscious products in the Nordics.
The challenge: Data limitations and sustainable finance workload
All of the nine funds managed by Atlant Fonder invest in a relatively small group of companies (between 150 and 180). The funds share the assets but offer different risk profiles. One could argue it is relatively easy to keep a tab on the sustainability KPIs of these companies over time. But there is one issue: the majority of the companies within Atlant Fonder’s portfolios are small Nordic institutions that have not yet published ESG reports following the latest European standards.
Atlant Fonder’s second biggest problem was that, because of SFDR requirements, the workload was becoming increasingly larger for the lean team. "Many of my peers in the industry say that the past few years have been all about reporting. And, ironically, there was not enough time left to actually care about sustainability", says Beckman to explain the conundrum.
At the same time, sustainable finance disclosure is "a must-have, not a nice to have", as he describes. "Your products have to be at least Article 8 to qualify for big platforms and big fund distribution in Sweden", says Beckman who also estimates that about 80% of the meetings with clients and distributors touch upon topics related to sustainability.
In 2021, Atlant Fonder’s team started acting to ensure that their sustainability reporting practices could live up to the new and expanded requirements.
“SFDR was prompting us to find a solution for the new reporting requirements which were going to be massive. We had to find a more systematic approach” - Peter Beckman, Deputy Managing Director
The solution: Proactive reporting that exceeds clients’ expectations
In 2022, Atlant Fonder decided to partner with Datia to solve both challenges: workload and data limitations.
First, Datia has been enabling Atlant Fonder’s team to work more effectively. “We now have more time to actually make an impact on our holdings and to work actively with sustainability”, explains Beckman. Second, Datia has been supporting Atlant Fonder in filling the data gap through data research and questionnaires sent to investee companies. “We trust Datia to continuously increase our coverage as it has happened since we started working together”, says Beckman.
In 2022, Atlant Fonder’s team started to present to stakeholders fund-level Principal Adverse Impact (PAI) statements and the entity sustainability reports which include the percentage of AUM contributing to the different SDGs.
“When we present our reports, we always stress that our coverage is not large, given our focus on small and micro-cap companies”, adds Beckman. Yet, Atlant Fonder’s clients and distributors receive the reporting with great praise.
“The standardized and easily understandable sustainability reports we export from Datia are highly appreciated by our clients” - Peter Beckman, Deputy Managing Director
“If you say you want to promote a climate goal, for example, you need a KPI such as a PAI indicator to measure and to show some progress. And the PAI statement per fund helps us prove that our funds are really delivering on certain sustainability strategies”, explains Beckman.
Moving forward: Tackling strategic decisions, such as upgrading to Article 9
With a sustainability reporting process in place, the team at Atlant Fonder is ready to discuss challenges of higher order. An example of such is the tradeoffs that must, potentially, be made in a fund’s sustainability strategy in order to meet the guidelines for SFDR’s Article 9.
This is a topic on Mattias Gromark’s agenda. He is the Fund Manager of Green Tech Metals, one of Atlant Fonder’s nine funds. It was launched in 2016, pioneering the investment thesis of enabling the green transition through the supply chain of raw materials.
The fund strives to only invest in companies in line with both EU Taxonomy’s and the UN's Global Compact criteria. In other words: the investees are responsible companies supplying materials for products such as car batteries and solar panels - certainly, investments contributing to combat climate change.
But, according to SFDR’s delegated act, funds focused on mining companies cannot easily qualify for Article 9, as they might find it difficult to meet the “do no significant harm” criteria. “Mining can be seen as a dirty business but it is crucial for the green transition, and we are picking those companies which are doing it in a new and clean way", explains Mattias Gromark who is proud of Atlant Green Tech Metals' sustainability thesis and not willing to change it, despite the growing demand for Article 9 financial products.
Atlant Fonder and Datia will continue following the progress of SFDR and EU Taxonomy and, when the opportunity comes, will certainly be ready to rise to the challenge of disclosing sustainability KPIs under Article 9 as well.
ABOUT ATLANT FONDER
Atlant Fonder AB is an independent Swedish fund company founded in 2006, running exclusively active management of alternative funds.
Atlant Fonder in numbers:
- Asset Under Management: approx. €700 Million
- Employees: 10
- Article 8 funds: 9 of 9
For more information, visit Atlant Fonder's website.