For the past two years, Catella has deepened her work on sustainability. The basis of our investment philosophy and process lies in the belief in a connection between a sustainable business model and endurance in the company's profitability and growth.
Today’s global challenges are fertile ground for both profitable business models and new circumstances. We are able to transform this into value creation in our funds. As portfolio managers, we seek out erroneous pricing in the market. By taking greater account of a company’s sustainability profile, we turn another stone and thereby enhance our ability to identify underestimated structural trends or overestimated cyclical trends. We believe that we improve the accuracy of our assessment, and that this helps us to avoid a number of undesirable risks. Consequently, sustainability and value creation go hand in hand at Catella Fonder, and benefit our fund unitholders.
A greater focus on sustainability influences our investments in several ways. We analyse the business opportunities and sustainability-related risks of each company, giving us a better understanding of its long-term qualities. This analysis enables us to identify specific sustainability-related investments. In our absolute return funds, we select and take larger positions in sustainability-driven companies, and take short positions in companies with unsustainable characteristics. We completely avoid investments in controversial products and services, and in companies that violate international conventions. Last but not least, we work on advocacy with companies that we believe have the potential to improve.
Catella Sverige Aktiv Hållbarhet is our flagship when it comes to sustainability. This fund puts an emphasis on companies that have sustainability as part of their business concept, and has a higher threshold for companies to exclude. For our other funds, we have clarified and improved the sustainability processes, and we now have exclusion thresholds for all funds and work with corporate advocacy for all our holdings.
We also want to highlight Catella Hedgefond, which is currently one of Sweden’s largest hedge funds and has sustainability as an integral part of the investment process. This fund entirely avoids investments in sectors that we consider harmful to health or the environment, such as tobacco, alcohol, commercial gambling, weapons and pornography. And when it comes to fossil fuels, we have completely excluded companies that are involved in coal production. In addition, we set higher sustainability requirements for companies that are involved in production and services before we make an investment.