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As environment, social and governance ( ESG ) frameworks face mounting global pushback marked by high-profile exits from alliances like the Net Zero Asset Managers initiative and Net Zero Banking Alliance, investors are asking who remains truly committed for the long haul. At a time when many are retreating from climate targets, Nordea Asset Management is doubling down, not on divestment, but on high-impact, direct engagement.
At the core of this approach is Nordea’s Climate Transition Engagement Fund, which takes a conviction-led stance on working with high-emitting companies to unlock value through strategic decarbonization.
Alexandra Christiansen ( AC ), the fund’s portfolio manager, leads this effort with a sharp focus on alpha generation and real-world impact. In a conversation with The Asset ( TA ), London-based Christiansen outlines why active ownership, grounded in sector-specific targets, forward-looking emissions modelling and bottom-up feasibility analysis, remains Nordea’s most powerful tool for driving both environmental and financial performance.
TA: What’s been the biggest challenge in sticking to your engagement-first strategy while others pull back from climate commitments?
AC: Our strategy is about generating alpha by investing in businesses with a strategic and economic rationale to improve their environmental footprints. Engagement is an important way for us to deepen our edge in understanding these sustainability trends better than the rest. It is also a central part of our process in holding management teams accountable to delivering value-creative decarbonization.
And it is a valuable tool in forming constructive dialogues with companies on how the market will recognize and reward these decarbonization efforts. We see no reason to deviate from this approach which has delivered alpha and real economy decarbonization since we launched this strategy three years ago.
TA: Can you walk me through what real engagement looks like, beyond voting and ESG checklists?
AC: We see engagement with the management teams of the companies we invest in as a valuable part of our process in generating alpha. We believe we have deeper expertise than most in understanding long-term sustainability trends and a better understanding of what investors will reward in the market.
This is what we bring to the table when we engage with the companies in our universe, and we seek alignment with management in delivering decarbonization that makes economic sense.
Our engagement process starts before we become shareholders in a company, where we test the feasibility of our engagement objectives. This means not just testing whether we have good access to management, but also whether they share our vision of the most likely decarbonization pathway for their business.
We must also ensure that what we are asking the company to do is within management’s control, and that environmental improvement aligns with value creation for the business.
Once we buy the shares in a company, we agree on specific objectives that are specific to their business models. We keep a detailed scorecard of objectives for each company we are invested in. And we track the progress of these objectives over our investment horizon.
A lack of progress for us means the investment thesis not playing out, so we are focussed on holding management teams on track.
TA: You’ve worked with companies like ArcelorMittal, how do you decide when a company is serious enough about transition to stay invested?
AC: There must be a strategic and economic rationale for decarbonization in the businesses we invest in, and this underlines our confidence in the decarbonization pathways of the companies in our portfolio.
This may not always align with achieving net zero. The pace and degree of decarbonization may not be on track to deliver the most ambitious climate scenarios. Instead, it is our job to assess what the most likely pathway is for the business, and what this means for the fundamentals and justified worth of the company. This forms the basis of our analysis of the risk-reward and differential market view.
Our in-house climate experts have developed proprietary tools to help us in this fundamental analysis. For example, our forward decarbonization tool predicts emissions trajectories based on historical emissions, company targets and a credibility score that assesses the likelihood a company will meet its targets. This provides a forward-looking view rather than just relying on past performance or company targets.
TA: Is there any misconception about investing in high-emitting sectors that you often have to push back on?
AC: For us the biggest misconception remains around the value proposition and decarbonization impact of engaging with high-emitting sectors rather than excluding them from the investment universe.
We strongly believe in the alpha opportunity of investing in companies with an economic rationale for environmental improvement. The track record of our strategy is the best demonstration of this.
As for decarbonizing portfolios through divestment, we believe this is divorced from what happens in the real economy. Many heavy-emitting sectors will continue to exist in a sustainable economy of the future; in fact, they may even be critical in achieving sustainability goals.
Simply divesting out of these sectors may look better on paper, but will not have an impact in the real world. Our strategy is focused on holding heavy-emitting businesses accountable to reducing their emissions and participating in a significant delta of decarbonization in the real economy.
TA: What kind of data or milestones do you share with retail investors to show progress and impact?
AC: Nordea shares several types of metrics with investors to demonstrate progress and impact in the annual engagement report.
For engagement activities, we report the percentage of portfolio companies engaged ( 100% ), and progress on specific company milestones using a four-stage visual progress indicator.
On emissions performance, we share real-world emissions reductions and compare this to benchmark performance to show that portfolio companies are reducing emissions more effectively than the broader market.
For net-zero alignment progress, we report the number of companies in each alignment category and track progress on specific net-zero key performance indicators, showing movement from “not aligned” towards “aligned” status.
We also provide detailed case studies showing concrete outcomes, which helps investors understand the tangible impacts of engagement.
TA: Have you seen growing interest from Asian regulators or asset owners in this kind of engagement-led climate strategy?
AC: Yes, there has been notable growth in interest from both Asian regulators and asset owners in engagement-led climate strategies over the past few years. This trend reflects the broader global shift towards sustainable finance and climate risk management, with some distinct regional characteristics.
From a regulatory perspective, several Asian jurisdictions, particularly Japan, Singapore, Hong Kong and China, have introduced or strengthened sustainable finance taxonomies and climate disclosure requirements.
The Network for Greening the Financial System now includes numerous Asian central banks that are incorporating climate considerations into financial supervision. Additionally, updated stewardship codes in markets like Japan, Malaysia and Singapore increasingly emphasize climate engagement as part of investor responsibilities.
Among Asian asset owners, major sovereign wealth funds like GIC ( Singapore ) and GPIF ( Japan ) have strengthened their climate engagement approaches. Pension funds across the region show growing participation in collaborative engagement initiatives like Climate Action 100+. Insurance companies, particularly in Japan and South Korea, are increasingly active in climate risk management and engagement with their portfolio companies.
The regional approach to climate engagement has distinct characteristics. It tends to favour engagement over immediate divestment, aligning with cultural preferences for consensus-building. There’s greater emphasis on transition financing for carbon-intensive sectors rather than exclusion. Engagement often focuses on disclosure quality and governance structures as first steps towards more comprehensive climate action.
This trend is likely to accelerate as climate impacts become more pronounced across the region and as global capital increasingly flows towards climate-aligned investments.
