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SKAGEN Vekst: Focus on governance pays off closer to home

We believe that many investors currently have an overly simplistic approach to ESG, focusing predominantly on a company's current sustainability rating, rather than expected improvements in ESG factors. In addition to ensuring that our holdings meet SKAGEN's existing ESG requirements, our research almost entirely focuses on the future. Our view is that ESG is no different to other valuation components; what is already known is typically reflected in the share price and it is the factors that change future earnings and/or risk premiums that drive fundamental value creation.

Open and transparent communication is key

Over the years, we have found that companies which tend to be unpopular in the public market are often so due to deficient or insufficient communication with other stakeholders. SKAGEN has since inception placed an emphasis on open and transparent communication both with clients and the companies we are shareholders in. In our view, a company's openness towards its shareholders is an essential part of good governance. Improving and strengthening governance has yielded good results both in the form of returns to clients and when it comes to risk management.

As owners of companies, there have been a number of instances where we have been able to either help companies develop their business or to apply pressure when things needed to be changed. As a result, we have witnessed openness and transparency gradually improving over time and we see that management and boards are open to shareholders' comments when they are addressed in the right manner.

Bonheur: active engagement to improve transparency

Over the past three years we have been engaged in close dialogue with the management and main owner of our long-term holding, Bonheur, a Norwegian holding company which has ownership stakes in numerous companies within energy, shipping and other sectors. The company has made fundamental, positive changes to their business over the past decade.

Nevertheless, until recently, Bonheur continued to be somewhat misunderstood by a large part of the market. Many of the adverse opinions surrounding the company were partly due to their historic engagements, complicated cross-ownership structure and lack of general information to shareholders. We started to address this lack of information at our meetings with management, also highlighting the somewhat unusual operational structure of the company as well as the unconventional board setup compared to other Norwegian listed companies.

Following three years of engagement, the company has become much more transparent and forward leaning when it comes to disclosure of related parties' transactions and company-related information. At the request of shareholders, Bonheur published clearer information about their election committee and board composition in their annual report for 2019, which assisted in clarifying the governance structure of the company.

Over the past year, the company has also launched their eagerly awaited and much appreciated quarterly presentations. These have been available on-line and with presentations of underlying companies and holdings provided in English for their growing audience of international shareholders. Although Bonheur has come a long way in their disclosure and willingness to share information with stakeholders, we still believe there is more to be done, and the market would continue to appreciate even more information provided in a timely manner.

In conclusion, great companies are not made from brilliant governance or corporate information, but good engagement can assist in lifting these elements and thus increasing the value of the company in the broader market.


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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 skills, the fund’s risk profile and management fees. The return may become negative as a result of negative price developments. There is risk associated with investing in funds due to market movements, currency developments, interest rate levels, economic, sector and company-specific conditions. The funds are denominated in NOK. Returns may increase or decrease as a result of currency fluctuations. Prior to making a subscription, we encourage you to read the fund's prospectus and key investor information document which contain further details about the fund's characteristics and costs. The information can be found on Storebrand Asset Management administers the SKAGEN funds which are by agreement managed by SKAGEN's portfolio managers.