Cross-currents ahead:  Investors should be prepared for the rapidly approaching MiFID sustainability update 

Advertising Material for professional investors only*

Eric Pedersen, Head of Responsible Investments at Nordea Asset Management

With only a few months to go until the implementation of the MiFID sustainability update in August 2022, investors have been abruptly and brutally reminded that geopolitical and governance risks are real and must be taken into account. At the same time, questions about uneven implementation of the EU’s Sustainable Finance Disclosure Regulation and the upcoming MiFID sustainability update have already been raised. As always, NAM will stay true to our long history as an ESG investors and will serve clients across Europe and Globally with solutions that are fit for purpose.

Within the world of ESG investing, 2022 is set to be a year of change. Gliding on a path of success and following several years of explosive growth, the industry has been working at full throttle to implement the concepts that will be key to the new MiFID regime.

Beginning in August, European retail investors can expect their financial adviser to ask them questions about their sustainability preferences. These questions, according to the European regulator, should be centred around three issues: The Principal Adverse Impacts (PAI) of their investments on environmental and social issues, and the proportion of “Sustainable Investments”, and of EU Taxonomy-aligned investments, in a given investment product. How this will be implemented in practice in each country remains unsettled, as distributors are still determining their approaches, and national regulators are in some cases adding so-called “gold-plating” (i.e. added requirements) to the EU regulation.

At the same time, the demands on institutional investors regarding ESG continue to increase in both number and complexity. In the near term, this is especially topical in the area of portfolio decarbonisation and net-zero commitments, but social issues and biodiversity are important themes on the horizon, which will require attention.

At the time of writing, the invasion of Ukraine by Russian forces, and the knock-on effects of sanctions on energy markets are raising questions about the nature of ESG and the ability of ESG strategies to outperform in different market scenarios. At NAM, we believe this is the time to reiterate that ESG, broadly defined, is not in itself a guarantee of higher – nor of lower – returns over a given period. In situations characterized by tightness in the market for fossil fuels, strategies that do not own oil and gas assets will be challenged to keep pace. When defence budgets surge, strategies that avoid defence stocks must find other avenues for investment. On the other hand, investors that for ESG reasons had low or no exposure to Russia have reaped financial as well as moral benefits.

However, while not all ESG risk is financially material in the short term, the trend is for regulation and policy goals to change this: Only recently, the EU introduced regulation on supply chain due diligence, which will make the environment for companies ignoring biodiversity and human rights risk increasingly difficult. In the same way, the fact that higher carbon prices and direct regulation of emissions are coming is beyond debate. And finally, higher fossil fuel prices in themselves will, together with the underlying geopolitical considerations, support the decisions now taken by national governments to dramatically increase the pace of renewables coming online.

All in all, we remain convinced that prudent management of financially material sustainability risk improves the risk/return relationship in the long term – and we know from experience that our disciplined analysis and security selection has the ability to deliver strong performance, even in challenging times. We also know that in some cases, even things that one cannot put a price tag on are important – and that this is exactly what the SFDR concept of “double materiality” asks us to address.

It is on this basis that we will continue to give our investors and distributors a full range of choices in ESG investing, providing the data and disclosure needed to fulfil the requirements of SFDR and MiFID, and addressing the need to decarbonize investment portfolios in a way that creates real-world impact – all while striving to deliver superior investment performance. That is what being an ESG leader means to us at NAM.

The performance represented is historical; past performance is not a reliable indicator of future results and investors may not recover the full amount invested. There can be no warranty that an investment objective, targeted returns and results of an investment structure is achieved. The value of your investment can go up and down, and you could lose some or all of your invested money. Nordea Asset Management is the functional name of the asset management business conducted by the legal entities Nordea Investment Funds S.A. and Nordea Investment Management AB (“the Legal Entities”) and their branches and subsidiaries. This document is advertising material and is intended to provide the reader with information on Nordea’s specific capabilities. This document (or any views or opinions expressed in this document) does not amount to an investment advice nor does it constitute a recommendation to invest in any financial product, investment structure or instrument, to enter into or unwind any transaction or to participate in any particular trading strategy. This document is not an offer to buy or sell, or a solicitation of an offer to buy or sell any security or instruments or to participate to any such trading strategy. Any such offering may be made only by an Offering Memorandum, or any similar contractual arrangement. Consequently, the information contained herein will be superseded in its entirety by such Offering Memorandum or contractual arrangement in its final form. Any investment decision should therefore only be based on the final legal documentation, without limitation and if applicable, Offering Memorandum, contractual arrangement, any relevant prospectus and the latest Key Investor Information Document (where applicable) relating to the investment. The appropriateness of an investment or strategy will depend on an investor’s full circumstances and objectives. Nordea Investment Management AB recommends that investors independently evaluate particular investments and strategies as well as encourages investors to seek the advice of independent financial advisors when deemed relevant by the investor. Any products, securities, instruments or strategies discussed in this document may not be suitable for all investors. This document contains information which has been taken from a number of sources. While the information herein is considered to be correct, no representation or warranty can be given on the ultimate accuracy or completeness of such information and investors may use further sources to form a well-informed investment decision. Prospective investors or counterparties should discuss with their professional tax, legal, accounting and other adviser(s) with regards to the potential effect of any investment that they may enter into, including the possible risks and benefits of such investment. Prospective investors or counterparties should also fully understand the potential investment and ascertain that they have made an independent assessment of the appropriateness of such potential investment, based solely on their own intentions and ambitions. Investments in derivative and foreign exchange related transactions may be subject to significant fluctuations which may affect the value of an investment. Investments in Emerging Markets involve a higher element of risk. The value of the investment can greatly fluctuate and cannot be ensured. Investments in equity and debt instruments issued by banks could bear the risk of being subject to the bail-in mechanism (meaning that equity and debt instruments could be written down in order to ensure that most unsecured creditors of an institution bear appropriate losses) as foreseen in EU Directive 2014/59/EU. Nordea Asset Management has decided to bear the cost for research, i.e. such cost is covered by existing fee arrangements (Management-/Administration-Fee). Published and created by the Legal Entities adherent to Nordea Asset Management. The Legal Entities are licensed and supervised by the Financial Supervisory Authority in Sweden and Luxembourg respectively. A summary of investor rights is available in English through the following link: The Legal Entities’ branches and subsidiaries are licensed as well as regulated by their local financial supervisory authority in their respective country of domiciliation. Source (unless otherwise stated): Nordea Investment Funds S.A. Unless otherwise stated, all views expressed are those of the Legal Entities adherent to Nordea Asset Management and any of the Legal Entities’ branches and subsidiaries. This document may not be reproduced or circulated without prior permission. Reference to companies or other investments mentioned within this document should not be construed as a recommendation to the investor to buy or sell the same but is included for the purpose of illustration. The level of tax benefits and liabilities will depend on individual circumstances and may be subject to change in the future. © The Legal Entities adherent to Nordea Asset Management and any of the Legal Entities’ branches and/or subsidiaries.

Country selection

For more information about products in your area, please select a country below:


The information contained in these webpages is solely intended for professional clients.

Data, information and potential objectives released on these webpages are provided for information only.

Nothing in the information contained on these webpages shall be construed as an investment advice from NAM or any of its affiliated companies. The content of these webpages does NOT constitute i) a recommendation to invest in any financial instrument, financial product, investment structure or instrument, ii) tax or fiscal advice, to enter into or unwind any transaction or to participate in any particular trading strategy and (iii) substitute for user’ own research or their technical and/or business judgement based on their personal situation. These webpages are not an offer to buy or sell any security.

All publications, press release and other material including but not limited to video, brochure presented or released on these webpages are presented “as is” and to the best of NAM ́s knowledge when issued.

By clicking on “Proceed” I confirm that I am a professional client and I have read, understood and accept the General Terms and Conditions and the Privacy Policy for this website.
*A Professional client within the meaning of the Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 as amended.