Norwegian Transparency Act Statement

This statement has been prepared by the Pareto Securities Group¹ (hereinafter jointly referred to as “Pareto Securities" or “we”, “our”, or similar) for the purpose of providing a public statement in line with the requirements that follow from the Norwegian Transparency Act²  (the “Transparency Act”). Please note that the content of this statement may be updated over time and that the latest version will be made available on our websites without any notifications thereof.

For any questions in relation to this statement, please reach out to the e-mail address set out at the end of this statement.

¹ Pareto Securities AS with branches in Denmark and Germany, Pareto Securities AB with branch in Norway, Pareto Securities Oy, Pareto Securities Ltd, Pareto Securities AG, Pareto Securities Inc, Pareto Securities Pty Ltd and Pareto Securities Pte Ltd.
² Nw: Lov om virksomheters åpenhet og arbeid med grunnleggende menneskerettigheter og anstendige arbeidsforhold (LOV-2021-06-18-99).

Pareto Securities is an independent full-service investment bank with a leading position in the Nordic capital markets and a strong international presence. Headquartered in Oslo, Norway, with 12 offices in 10 countries, Pareto Securities raises equity, debt and facilitates project finance solutions for a wide range of industries in the international capital markets. We also provide business management services through Pareto Business Management AS, rig broking services through Pareto Offshore AS, and technical maritime advice services through Pareto Maritime Service AS. Except where a specific entity is mentioned, this statement relates to all entities within Pareto Securities.

Our main role is to contribute to a well-functioning financial market and efficient allocation of capital by providing several regulated financial services and activities. Pareto Securities and other market participants in the financial markets in which we operate are subject to extensive supervision by financial supervisory authorities in various jurisdictions.

We are committed to respecting fundamental human rights and decent working conditions as set out in the International Bill of Human Rights and implementing the United Nations Guiding Principles on Business and Human Rights and OECD Guidelines for Multinational Enterprises throughout our business operations. Respect for the dignity of individuals and for the importance of fundamental human rights and decent working conditions form the basis of the behaviours we expect of everyone who works for us, either as a direct Pareto Securities employee or indirectly as a business partner or supplier.

We do not accept any form of discrimination, harassment or bullying within Pareto Securities or its supply chain, and we are firmly opposed to child labour. We endeavour to run our business in accordance with the Ten Principles of the UN Global Compact, which requires businesses to be proactive in protecting human rights, labour rights and the environment and in promoting anti-corruption.

Pareto Securities operates with key policies and processes that help us to ensure respect for fundamental human rights and decent working conditions within our business operations and our value chain.

Our Human Rights Policy describes our approach to managing human rights risks within our operations, clarifying our expectations on the importance of conducting business consistent with the principles described in the policy and improving our awareness of our continuous efforts to reduce the risks of human rights violations. Accordingly, we have established guidelines on how we address our obligations under the Transparency Act, including the requirements to conduct due diligence assessments, publicly account for the due diligence assessments and provide information about the due diligence upon request.

Our Ethical Principles explain the behaviour we expect of every employee and stakeholder and are based on our core values: trust and quality. To establish a consistent understanding of our Ethical Principles, all employees are required to confirm that they have read and will follow the Ethical Principles.

Our Sustainability Policy establishes standards and principles to ensure that fundamental responsibilities in human rights and decent working conditions, as well as environmental responsibilities, are met.

Our Anti-corruption Policy reflects that we are firmly opposed to corruption in all forms, including bribery and trading in influence, and that we do not allow anyone involved in our business to offer, give, ask for, accept, or receive any form of bribe, including facilitation payments.

Our Diversity and Inclusion Policy reflects that we have zero tolerance for discrimination or harassment.

We have established a framework to ensure that Pareto Securities complies with statutory requirements in various processes through routines, client measures, electronic monitoring, sanctions regulations, whistleblowing functions, procurement, and procedures for internal control.

We also present relevant information about our work and focus areas within environmental, social (including human rights) and governance (ESG) in our annual Sustainability Report.

5.1 Introduction

Pareto Securities AS is, in accordance with the Transparency Act, obliged to conduct an enterprise-wide assessment on the promotion of fundamental human rights and decent working conditions to identify, assess and understand the risk that the operations of Pareto Securities have resulted in, or which may result in negative consequences for such rights and working conditions (the “Enterprise Assessment”). The Enterprise Assessment shall be updated at least annually, or more frequently if required, and be tailored to the nature and size of Pareto Securities.

The Enterprise Assessment is made by and for the use of Pareto Securities AS, in accordance with the Instruction in relation to the Transparency Act as adopted by the Board of Directors of PSEC Norway. The content of this statement is based on and summarises the results from and conclusions made in the Enterprise Assessment.

5.2 Organisation: employees and location of offices

Pareto Securities has approximately 480 employees, of which the vast majority are full-time employees on permanent employment contracts based on Norwegian standard template employment contracts that have been reviewed by legal counsels and adapted to fit the relevant jurisdiction. The use of temporary contracts is only associated with interns and student assistance, combining temporary work with ongoing studies to obtain broader working experience, and many students are offered permanent contracts at the end of their studies. We have not identified any cases of involuntary use of temporary work during our gender equality and diversity inquiries.

Approximately 80% of the employees work in Pareto Securities’ offices in Norway (HQ) and Sweden, while the remaining 20% work in offices in Denmark, Finland, the United Kingdom, Germany, Switzerland, the USA, Singapore, and Australia. These countries are characterised by solid regulatory frameworks, governance, and rule of law, with a low presence of conflict from a human rights perspective, implying that the general risk of actual or potential adverse impacts on fundamental human rights and decent working conditions among our employees – because of the place of business - is considered low.

Fundamental human rights considerations are integrated into the Human Rights Policy, relevant policies, supplementary guidelines, and processes in Pareto Securities, cf. Section 3.

Pareto Securities AS is obligated to report on gender equality and anti-discrimination measures and associated staff data in compliance with Norwegian law, specifically the Act on Gender Equality and the Prohibition of Discrimination. In line with this obligation, we publish annual statements on gender equality and anti-discrimination on our website.

All permanent employees are covered by a health insurance programme.

We have a Working Environment Committee consisting of both women and men that meet regularly and have appointed safety representatives according to local regulations.

We have established internal reporting channels for employees who wish to raise their concern about censurable condition within Pareto Securities, including a whistleblowing reporting service handled by an independent law firm, which allows for anonymity.

On this basis, we consider the risk of our activities leading to actual or potential negative consequences for fundamental human rights and decent working conditions as low, because of how we are organised.

5.3 Industry wide assessment

The preparatory works³ to the Transparency Act underlines that it is important to avoid unnecessary administrative work to comply with its obligations and that businesses within the same sector may cooperate in developing joint assessments. The Norwegian Securities Dealer’s Association (VPFF) has, therefore, together with a reputable Norwegian law firm, developed an assessment and a draft routine which aim to assist entities which are investment firms or banks. The Enterprise Assessment is based on the material prepared by the Norwegian Securities Dealers Association for the parts that concern our activities as an investment firm.

The Enterprise Assessment seeks to provide an analysis of existing and potential negative consequences on fundamental human rights and decent working conditions arising because of the business activities of Pareto Securities, including its supply chain and business partners, with an aim to propose mitigating measures to reduce negative impact.

5.4 The Securities Business

In brief, the business model of the Securities Business is to assist clients with capital raising and secondary trading in securities. The former dominates in terms of revenue, while the latter dominates in terms of trading volume. In addition, the Securities Business provides M&A advice (advisory services relating to the acquisition and divestment of companies), fairness opinions, valuations, currency exchange and provision of investment recommendations and other forms for research products and services. The provision of investment services is a regulated activity, and the Securities Business is subject to supervision by the relevant Financial Supervisory Authorities for each office. Most of the business (in terms of turnover, result and number of employees) is based in Norway and Sweden. The client base is international, with clients operating in several different industries.

We have made a thorough analysis of the Securities Business in the Enterprise Assessment. As a starting point, the risk of being misused in an Investment Banking assignment to negatively affect fundamental human rights or decent working conditions is considered low. We have identified a few risk areas for improvement, and we have implemented new procedures accordingly. Our standard terms and conditions for Investment Banking assignments have been updated with wording to ensure that our clients also confirm to us that they carry out their business activities in accordance with fundamental human rights and decent working conditions and that they enter into the mandate agreement in question will not result in any negative effect on these. Further, when conducting capital raising assignments for issuers, it is customary to conduct various degrees of legal and or technical due diligence/confirmation exercises. As part of such investigations, it is customary to request certain standardised⁴ confirmations from the issuer. Such confirmations typically include statements on that they have conducted their business in accordance with applicable rules and regulations such as anti-corruption laws, anti-money laundering laws, applicable sanctions etc.

As for brokerage services, research, and project finance, our overall assessment is that the risk for negatively affecting the promotion of fundamental human rights or decent working conditions is considered low.

5.5 Business Management 

Pareto Business Management AS (PBM) manages the accounting and business management functions for real estate and shipping/offshore SPVs syndicated by Pareto Securities. The provision of accounting services is a regulated activity in Norway, and PBM is subject to supervision by the Norwegian Financial Supervisory Authority. The company is subject to the Transparency Act and conducts its own risk assessment on the promotion of fundamental human rights and decent working conditions and has published a separate statement on this basis. 

5.6 Technical advice to project shipping companies 

Pareto Maritime Services AS provides maritime technical and commercial expertise consulting services and management services in shipping projects, primarily established by Pareto Securities AS. The company is certified under ISO 9001 and has two employees. Our overall assessment is that the risk of negatively affecting the promotion of fundamental human rights or decent working conditions in Pareto Maritime’s role as adviser to projects is considered low. 

5.7 Offshore brokerage 

Pareto Offshore AS provides brokerage services and expert advisory for the offshore energy industry and has four employees. The main role of Pareto Offshore is to assist rig-owning entities in connection with the purchase and sale of rigs. The role of intermediary and advisor in respect of a transaction in assets could only, to a limited degree, be argued to contribute to the financing of companies which carries out activities that have a negative effect on the promotion of fundamental human rights and decent working conditions.

³ Prop. 150 L (2020-2021) page 67.
⁴ Reference is made to the Norwegian Securities Dealers Association’s Completeness statement which in one shape or form is used throughout most equity or bond capital raising processes facilitated by the Securities Business.

6.1 Introduction

Pareto Securities’ major suppliers and business partners are the landlords of our office spaces, well-known international IT providers and market information providers. 80% of the employees in Pareto Securities work in our offices in Oslo and Stockholm. Pareto Securities Group’s suppliers are mainly located in Europe and a few in the United States. 

Understanding the profile of the largest suppliers and business partners of Pareto Securities from a human rights perspective, including those where Pareto Securities may have a leverage to reduce any risks identified, is prioritised as part of our sustainability commitment. The Chief Operating Officer is responsible for the mapping of risks before any agreements are signed. 

Our suppliers and business partners are sorted into two main groups in the mapping process. Suppliers are defined as companies that have a direct input on our products and services, i.e., is a component in the final product or service. The distinction between suppliers and business partners is important since Pareto Securities is required to assess the supply chain (sub-contractors) only for the suppliers under the Transparency Act as per the wording of section 4 b) of the act.

Further, suppliers and business partners that are themselves subject to the Transparency Act are, at this stage, not further followed up after the risk assessment unless there are specific circumstances that indicate potential risks. As these entities would be subject to their own obligations under the Transparency Act, Pareto Securities’ view is that such an approach is feasible and justifiable under a risk-based approach. Subject to the final decisions, outcome, and implementation of the upcoming EU Directive on Sustainable Due Diligence – a similar approach is envisioned for suppliers and business partners within the EU who are subject to the said directive – once entering into force. 

If any concerns related to a business partner or supplier’s business practice, human rights, working conditions and environment is identified, a more comprehensive review will be conducted to clarify if the business partner or supplier meets our requirements before any agreements are signed.

In general, the risk of Pareto Securities activities having a negative impact on fundamental rights and decent working conditions through Pareto Securities’ supply chain and business partners within the meaning of the Transparency Act is considered low. The supply chain is relatively clear and simple, and the business partners are mainly located in countries that have established legislation to safeguard basic human rights and decent working conditions, or the supplier and business partners have internal systems and guidelines to follow up on this.

6.2 Mapping and assessment of the negative impact on fundamental human rights and decent working conditions

As a starting point, there are various external drivers of risk that can contribute to a range of adverse impacts through our supply chains and business partners. These drivers tend to be related to where a supplier or business partner is located and what activity they undertake and can be used to identify high-risk locations and sectors. Typical risk drivers in our mapping process include geographic risks, sector risks, product risks and enterprise-level risks.

Geographic risks
Geographic risks are conditions in a particular country⁵ which may make sector risks more likely. Geographic risk factors can generally be classified as those related to the regulatory framework (e.g., alignment with international conventions), governance (e.g., the strength of inspectorates, rule of law, level of corruption), socio-economic context (e.g., poverty and education rates, vulnerability, and discrimination of specific populations) and political context (e.g., presence of conflict)⁶. In this context we use recognised lists of high-risk countries⁷. We have professional and well-known business partners and suppliers based in Europe and/or USA, and therefore consider the risk for a negative impact on fundamental human rights and decent working conditions to be low. 

Sector risks 
Sector risks are risks that are prevalent within a sector globally because of the characteristics of the sector, its activities, its products, and its production processes. Dangerous production processes, widespread use of contract and agency workers, reliance on female workers or child labour, a predominance of low-skilled labour, and use of hazardous chemicals or dangerous production processes are often associated with risks related to impacts on fundamental human rights or decent working conditions. In a Norwegian context, examples are hiring/staffing, construction/ facilities, transport, and cleaning. Our major provider of cleaning services is registered in the register of the Norwegian Labour Inspection Authority, and the major provider of kitchen services is a top-ranked company on both the Dow Jones Sustainability Index and EdoVadis.

Most of our suppliers and business partners are within the real estate sector (office rent), ICT sector (ICT systems) and consultant sector (lawyers and consultants). The owners of the premises we rent and the ICT systems we use are well-known and respectable companies, while the consultant sector is considered to have low risk in this context. On this basis, we consider the risk of a negative impact on fundamental human rights and decent working conditions pertaining to sector risks to be low.

Product risks
Product risks are risks related to inputs or production processes used in the development or use of specific products. For example, ICT products and office supplies such as batteries may contain components that are a risk of being mined from conflict areas . It is recognised that the products that we use may contain components and parts that derive from such locations in the world that may call for higher scrutiny. However, our business partners for these products are professional and well-known companies. We, therefore, consider the risk of a negative impact on fundamental human rights and decent working conditions to be low by our business partners.

Enterprise-level risks 
Enterprise-level risks are risks associated with a specific enterprise, such as weak governance, a poor history of conduct in relation to respecting fundamental human rights, decent working conditions or anti-corruption standards. We have not identified any actual or potential risk for a negative impact on fundamental human rights and decent working conditions on an enterprise level in our diligence. 
 

⁵ FATF Jurisdictions under increased monitoring.
⁶ Cf. UNHR - Human Rights Indicators.
⁷ Cf. the Norwegian Agency for Public and Financial Management (DFØ) offers guidance on public procurement and human rights, including a High-Risk list that can be relevant.

As described in the above, our assessment is that our activities and the way we are organised mean a low risk for a negative impact on any fundamental human rights or decent working conditions. However, to address regulatory requirements and provide our employees with guidance on what, and what not to do – the various entities in Pareto Securities are subject to several written instructions and policies which directly or indirectly will reduce any remaining risk of our organisation or activities resulting in negative consequences for fundamental human rights or decent working conditions.

In our organisation, the key mitigating measures that have been deployed within our own business is mainly to implement written instructions and policies which apply to all employees, as well as introducing new provisions in our standard terms, which our client contractually agrees to. In respect of written instructions and policies, each new employee confirms to the relevant Pareto Securities entity that they have read and understood the written instructions in place and in the initial phase of their employment – they typically attend introduction courses held by the Compliance department where key instructions are mentioned and addressed.

Employees are encouraged and required to speak up and to report any suspected or observed violations of the law, according to our Ethical Principles, or if they are asked to do something that might be a violation. Reports may be made to a supervisor or through our anonymous whistleblowing channel.

In our supply chain, all business partners and suppliers of goods and services to Pareto Securities are assessed prior to the order/entering any contract in relation to relevant risks with using the supplier, including sustainability risk and human rights risk. The Chief Operating Officer is responsible for these assessments.

Business partners and suppliers from industries or countries with a higher risk of human rights violations, among other things, are subject to a more in-depth analysis. By using internet searches and other information tools, we also investigate whether the business partner or supplier in question has been involved in any controversial incidents, including actual or potential violations of human rights or decent working conditions. The decision on which measures to implement is based on an assessment of risk and severity, Pareto Securities’ connection with the risk, and the type of delivery/how close to our business operations the supplier is, which is often also a factor in our ability to exert an influence.

We are currently assessing whether it is feasible to implement a Code of Conduct for business partners and suppliers to emphasise their responsibilities in relation to human rights and working conditions when conducting business with us, as well as to strengthen the management processes of these parties. It is expected that a conclusion will be made during 2023, and relevant information will be included in the next revision of the Enterprise Assessment.

In the coming years, we will also be assessing whether we can enhance our systematic human rights and environmental due diligence approach across our supply chain and business partners. The aim is to enhance the integration of sustainability into the business, strengthen responsible sourcing, and improve our ESG reporting, including increasing transparency to demonstrate our progress on the ESG dimensions. We will also seek to focus on internal training within these areas.

Upon written request, any person has the right to information from Pareto Securities regarding how we address actual or potential adverse impacts on fundamental human rights or decent working conditions.

Please send a request to:
E-mail: esg@paretosec.com
Pareto Securities AS, Dronning Mauds gate 3, PB 1411 Vika, 0115 Oslo, Norway

This statement shall be updated and published at www.paretosec.com no later than 30 June of each year and otherwise in case of significant changes to the Enterprise Assessment.