At Lynx, we strive to be a responsible investor which we define as an investor who supports the development of sustainable financial markets and the long-term health and stability of the market as a whole. We believe that a responsible investor acknowledges the importance of continuous learning and development in the area of sustainability and responsible investment.
Lynx Asset Management has adopted a firm-wide policy that outlines how we apply sustainability principles at a firm level and in our investment process and how we promote responsible investment throughout the industry. The Policy is reviewed annually and is adopted by the Lynx Board of Directors.
In order to achieve high risk-adjusted returns, Lynx is dependent upon the health and the efficient functioning of the financial markets, as well as of the society in a wider perspective.
Lynx manages quantitative strategies using a fully systematic investment process. Investments are made in futures contracts on equity indices, fixed income, commodities and currencies, and in currency forwards. Lynx has a conservative market selection approach with a focus on the most liquid markets in order to minimize market impact and not disrupt or materially affect market prices. We aim to ensure that our positions and trade volumes are small in relation to the daily volumes in those respective markets and we have a dedicated team – Execution Research – that is responsible for the algorithms used in our trading process. Execution Research gathers data on each order, focusing on market liquidity and trade volumes, and reports to the Investment Committee with their findings.
The investment styles adopted, and the derivatives traded in the form of futures and forwards, do not involve discretionary fundamental analysis or security selection of single stocks or corporate bonds. Therefore, no screening is performed based on ESG factors, a practice that is more common for asset classes like equities and credit. Further, the instruments traded do not entail any legal ownership of the underlying assets and as such no voting rights can be exercised that would enable Lynx to be an active owner with influence on any company or other entity. With that said, the Lynx program is screened quarterly by the independent Brummer & Partners’ Risk and Sustainability teams. These teams collaborate with the an external expert to identify direct holdings in companies involved in certain controversial activities linked to established ESG standards, such as the UN Global Compact framework and the OECD Guidelines for Multinational Enterprises. The screening process also covers companies directly involved in coal, or the development, production, maintenance or sale of weapons that are illegal or deemed particularly controversial because of the disproportionate harm they may cause. As expected, the derivative instruments traded by the Lynx strategies render this type of screening service to be less relevant.
In light of our commitment to responsible investing and our aspiration to be early adopters, we acknowledge the emergence of equity index futures that incorporate ESG factors into their construction process. Lynx is monitoring this development, and plans to assess these index futures for potential inclusion in our portfolios in 2020.
Lynx Dynamic, one of the strategies managed by Lynx Asset Management, will stop trading energy contracts during 2020.
Where our interests and approaches are aligned, Lynx engages with other market participants to apply the concept of responsible investments and to improve standards for the industry.
he UN Principles for Responsible Investment (UN PRI)
Lynx has been listed as a UN PRI signatory since 2016. The PRI is a member-led initiative aimed at promoting responsible investment across the investment industry and it encourages investors to use responsible investments to enhance returns and better manage risks. Its six principles are voluntary and aspirational, offering a menu of possible actions and providing direction for responsible investment efforts.
The Standards Board for Alternative Investments (SBAI)
Lynx is a signatory of the SBAI, formerly known as the Hedge Fund Standards Board. The SBAI is an initiative that is aimed at creating and promoting standards of good governance, transparency, valuation, risk management and shareholders conduct for the alternatives industry.
Sweden´s Forum for Sustainable Investment, Swesif, is an independent association that has its purpose in sustainable investment and its mandate in the breadth and representativeness of its members. Swesif has launched an ESG profile, Hållbarhetsprofilen, a standardized information leaflet for funds. Its purpose is to provide clear and easy access to information on how a fund applies various sustainability criteria in its fund management.
Swiss Sustainable Finance (SSF)
SSF is a Swiss association aiming to strengthen the country´s position in the global marketplace for sustainable finance. In 2018, SSF coordinated an initiative for an Open letter to global index providers to exclude controversial weapons from mainstream indices. In March 2019, Lynx became a signatory of this effort along with 166 signatories corresponding to 8.8 trillion USD in assets.
Environmental resource management
In accordance with Swedish legislation, as an employer, Lynx has the overall responsibility for the Company’s environmental resource management.
The Company’s Chief Executive Officer has the specific responsibility for compliance with this obligation. The ongoing work with the Company’s environmental resource management rests with Lynx’s Office Management function, which also communicates with the landlord on these issues.
The aim of our environmental resource management plan is to increase the awareness of both the Company and its employees and to proactively work against any negative environmental impact of the business. The goals are to reduce the Company’s power consumption, to sort waste and recycle when possible, to ensure that hazardous waste is handled in a safe manner and to use eco-labeled products to the extent possible. All business related flights are compensated for CO2 emissions.
As a financial market participant, we are an integrated part of society. Lynx actively supports the 17 sustainable development goals, adopted in 2013 by the United Nations as part of the 2030 Sustainable Development Agenda. For this purpose, the firm has formed an internal group consisting of Lynx employees from different divisions within the firm, and with varying backgrounds and expertise, to evaluate and recommend charitable organizations and initiatives to the Board.
In addition to the organizations described below, Lynx aims to participate in local charitable efforts in order to contribute positively to our neighboring area.
Rise Up – Home for Children
Rise Up Nepal provides housing, schooling, medical care and food for children up to the age of 18.
More about Rise Up.
Against Malaria Foundation
Against Malaria Foundation funds long-lasting insecticidal nets as an effective means of preventing malaria.
More about Against Malaria Foundation.
Hand in Hand Sweden
The organization´s goal is to eradicate poverty through grassroots entrepreneurship. The organization focuses on empowering women through business training and access to credit.
More about Hand in Hand Sweden.
Maskrosbarn is a children rights organization that supports young people whose parents are mentally unwell or have an addiction.
More about Maskrosbarn.
Evidence Action’s Deworm the World Initiative
Evidence Action’s Deworm the World Initiative combats worm infection by regular treatment with a simple pill that is delivered to schools through existing education infrastructure, administered by teachers with support from the health system.
More about Evidence Action’s Deworm the World Initiative.