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Third quarter engagement report

Engagement activity was lower than usual in the third quarter. This was in part due to the absence of ESG risks and events that required our immediate attention as well as a focus on directing resources towards implementation of the Sustainable Finance Disclosure Regulation (SFDR).

During the quarter, we initiated four new engagement cases and continued our dialogue on an existing case with a Nordic company. Year-to-date, we have 22 ongoing cases with 19 different companies.

A focus on governance

The new engagement cases in the quarter focused largely on governance topics. In one of the cases, SKAGEN's ESG team joined SKAGEN Global on a call with Danish transport and logistics company DSV to discuss an agenda item at their upcoming AGM. DSV was seeking to raise capital by up to 20% without pre-emptive rights, which is an action that SKAGEN typically votes against.

However, the DSV case is a good example of how we take an independent and contextual view of different AGMs rather than blindly relying on third-party recommendations. In this case, we made an exception to the rule and SKAGEN aligned with management on the item in question. We agreed that the action is of strategic importance to the firm's merger and acquisition (M&A) activities, which have fuelled share price growth over recent years. Moreover, DSV will use the share capital directly to pay for M&As, meaning that SKAGEN avoids the risk of the equity landing in the hands of larger shareholders in return for cash. The agenda item was approved by a majority of the votes.

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Historical returns are no guarantee for future returns. Future returns will depend, inter alia, on market developments, the fund manager's skill, the fund's risk profile and management fees. The return may become negative as a result of negative price developments.

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