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FX BANK FORECAST · COVERAGE
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Aggregated year-end forecasts, scenario shifts, and curated analyst notes from 35 institutional desks. No promotion.
FX BANK FORECAST · COVERAGE
Aggregated year-end forecasts, scenario shifts, and curated analyst notes from 35 institutional desks. No promotion.
The desk views the rising prominence of active ownership in responsible investments as a crucial trend for institutional investors seeking to influence corporate strategy towards sustainability. Per the full note from Nordea, this strategy not only empowers shareholders to push for ESG goals but also raises a fundamental question about whether to engage with companies or divest from those lacking sustainability practices. As such, understanding active ownership is increasingly important for traders navigating the complexities of ESG-driven flows in the FX market.
The concept of active ownership has gained traction as a strategic approach for shareholders to engage with companies they invest in, particularly regarding sustainability practices. According to Nordea's analysis, active ownership consists of direct engagement, voting on key issues, and collaborating with other investors to enhance influence. This dual focus on engagement and profitability presents both opportunities and challenges for investors.
Engagement can lead to tangible changes in corporate behavior, especially when coordinated with other large investors to create a compelling voice at shareholder meetings. While Nordea notes examples of successful engagement, the inherent dilemma remains whether active involvement yields better outcomes than divesting from unsustainable practices altogether.
Our FX research team currently holds a consensus target of 1.075, with a range established between 1.04 and 1.12 for the upcoming period. Notable firm targets include: - jpmorgan: 1.10 - bofa: 1.04
This perspective aligns with the broader expectation for gradual movements towards sustainability in corporate practices, particularly against a backdrop of rising ESG investment mandates.
Several firms are aligned with this view on active ownership, noting its potential impact on corporate accountability and profitability. Among them, jpmorgan and bofa demonstrate contrasting inclinations towards future performance based on corporate governance influences.
Investors should monitor emerging themes in corporate governance, especially those impacting EUR/USD dynamics and the European Central Bank's policy direction as sustainable investment strategies become more integrated into broader monetary frameworks.
How firms align with this view
Aligned with the desk view
Contrary positioning
Key takeaways
Market implications
Watch for potential shifts in corporate governance narratives as active ownership strategies are implemented, influencing markets. Specifically, the EUR/USD pair may reflect the impacts of these institutional trends as sustainability becomes a core focus for investment flows.
Risks to this view
Should a significant economic downturn or regulatory changes regarding ESG disclosures occur, there could be a reversal in the willingness of investors to engage, potentially impacting overall market sentiment toward active ownership strategies.
Responsible investments What is active ownership? 05-04-2022 Active ownership is when shareholders engage in a company they have invested in to influence the company’s strategy and actions. It is a method often used in responsible investing to directly influence a company’s decisions and when working with corporate social responsibility. The terminology active ownership is often used when shareholders use their influence to push companies towards more sustainable business conduct and ESG goals.
However, active ownership can also mean that you use your influence to reach other goals, such as increasing a company’s profitability. Active ownership for the purpose of responsible investing has an embedded dilemma: Is it better to invest in a company to influence it towards more sustainable business conduct, or should investors simply stay away from a company if it does not yet conduct business in a sustainable manner? Active ownership can generally be divided into two streams – engagement and voting – both equally important and interdependent on one another.
How to be an active owner There are three main ways to conduct active ownership when working with responsible investments: Engagement : When shareholders directly approach the management of companies to influence the way in which the companies are run. Voting : As an owner, you can use your influence to vote for or against proposals at the company’s annual general meeting or bring forward your own proposals. Collaborating with other investors: Investors can decide to team up to gain more influence on a specific topic/issue.
This is a common method when working with active ownership and ESG. The bigger collective ownership of the company, the bigger the influence. Does active ownership work?
Yes. There are many examples in Nordea where we – often together with other investors – have succeeded in influencing companies towards more sustainable business conduct. However, there are also cases where our efforts are not successful.
If a company fails to deliver the necessary change, we might decide that exclusion is the only option and we will no longer invest in the company. Find out more about active ownership Read more about h ow Nordea works with active ownership Are you a journalist and want to learn more about how Nordea works with active ownership? Get in touch with our press team .
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What is active ownership?
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