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Sweden: Lack of investment in climate solutions by fund management co's puts Paris agreement at risk, finds report; incl. co responses

"Turning the tide - The urgent need to shift capital flows to climate solutions: A case study of ten fund management companies", a new report by Swedwatch focuses on the role of the finance sector in reallocating large capital streams towards green investments. The report finds that the contributions made by Swedish investors are not sufficient to reach the goals of the Paris Agreement and calls on investors across the globe to act. 

SPP, Länsförsäkringar and Skandia's comments on the report are available on Swedwatch's website here. The Business & Human Rights Resource Centre invited the other companies named in the report to respond. AMF, Danske Bank, Handelsbanken, Nordea, SEB and Swedbank's statements are available below. Lannebo Fonder has not commented yet.

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Company non-response
24 January 2018

Lannebo Fonder did not respond re lack of investment in climate solutions

Company response
18 January 2018

Response by AMF

Author: AMF

AMF takes climate change seriously and think that the financial sector plays an important role, alongside with other public and private sector actors, in the transition towards lower carbon emissions and a more sustainable use of resources. At the same time as fossil energy has to be phased-out, in order to limit the increase of global warming, we see that fossil-based resources are and will be needed in a foreseeable future. This is especially true in the energy sector, but also in other sectors as part of the production process or as fuel.

We have read the Swedfund report with great interest and it is a valuable input to our continuing work with ESG-issues in our funds. For example, we will set a target for our CO2-footprint during 2018.

Company response
12 January 2018

Response by SEB

Author: SEB

We were one of the respondent and actively participated and engaged with Swedwatch. We do not fully agree with some of the conclusions in the report and we have addressed this directly to Swedwatch. We are in dialog with Swedwatch and have been for a number of years.

Company response
10 January 2018

Response by Nordea

Author: Nordea

Nordea has already commented directly to Swedwatch, and no need for further comments from our side.

Company response
8 January 2018

Response by Danske Bank

Author: Danske Bank

Danske Bank acknowledge that the financial sector plays a role in facilitating a transition to a low-carbon and sustainable economy – both directly through our own operations and indirectly through our business relationships with customers, portfolio companies and business partners...

Danske Bank has been carbon neutral since 2009 which we achieve by working on limiting our CO2 emissions and purchasing renewable electricity as well as carbon credits. Further, we have through our Treasury department invested almost DKK 2 billion in green bonds and this year we became the second largest green bond arranger in Sweden. Danica Pension, Danske Bank Group’s pension company, invests significantly in solar energy. As pointed out in the report, client demand for climate friendly funds is increasing, but according to Swedwatch too slow...

We agree to the fact the ambitions needs to be high, and we will increase our focus on climate impact in our investments decisions during 2018 with several initiatives, which fits with our ambitions as well as the Swedwatch recommendation to do more.

Read the full post here

Company response
8 January 2018

Response by Swedbank

Author: Swedbank

Swedbank Robur has actively managed sustainability within our portfolios for more than 20 years, whereby a serious approach to climate change has led to us becoming a leading global performer on carbon emissions. We have implemented several measures to reduce the carbon footprints of our funds including the exclusion of coal production companies (>30% revenue from coal) across the board, exclusion of fossil fuel producers and utilities from our Ethica funds, integration of carbon related data into fund management, and systematic engagement with companies on their climate and carbon management. We are also transparent regarding the companies held within each fund portfolio and report their carbon footprints on our website, empowering our customers to choose fund products with the least climate impact. 

Swedbank Robur plans to expand this work during 2018 with the aims of further reducing our carbon footprint, promoting renewable energy investment, and continuing to align our business activities with the latest climate science and international initiatives – such as the Paris Climate Accord and the Taskforce on Climate Related Financial Disclosures. 

Read the full post here

Company response
22 December 2017

Response by Handelsbanken

Author: Handelsbanken

Thank you for the invitation to respond to the Swedwatch report. 

For Handelsbanken, sustainability is deeply rooted in the corporate culture and in our business culture, where long-term business relationships, low risk-taking and cost-awareness are cornerstones. They form the basis of successful banking operations being run in a responsible, sustainable manner. 

Through our business operations, such as asset management and corporate lending, we can contribute to sustainable development. Climate change is a challenge that needs to be addressed in all industries, including the financial industry. It is also something that matters deeply to Handelsbanken's customers. When it comes to asset management, climate action has been part of our investment processes for quite some time. That is why roughly one third of our total AuM is fossile free and why none of our funds invest in coal power and extraction. Already ten years ago, we launched our Sustainable Energy fund, which invests in energy efficiency and green energy solutions. 

In the Swedwatch report, Handelsbanken's funds clearly outperform the 2 degrees pathway, through being invested in renewable power and through the exclusion of fossil fuels from a large part of our funds. Our funds are also outperforming on investment in electric vehicles. We are happy that this scenario analysis confirms the integration of climate action into our business and remain dedicated to necessary and further action that needs to be taken in order to reach the goals of the Paris agreement.

Article
12 December 2017

Comment from Skandia (Swedish)

Author: Skandia

Comments by Skandia are available in Swedish here.

Read the full post here

Article
12 December 2017

Comments from SPP on "Turning the tide" by Swedwatch

Author: SPP

  • On the whole we feel it provides a good overview of the challenges facing the financial sector in aligning itself with a sustainable 2 degrees scenario for climate change.

  • On page 5 the report seems to indicate that protecting value is given as the main reason for fund managers not reallocating funds on the level needed. This is not a view we share. At SPP we see long term financial stability and value creation as a reason to make urgent changes rather than a reason not to. 

  • Access to reliable and updated ESG data is a real and pressing problem in our industry. It is not, as seems to be indicated, an excuse SPP uses for not acting on climate change...

  • We think that the report would be even better if there was a summary of constructive initiatives that investors are doing on climate change. There is after all a significant movement in the industry and we feel it is important to support this momentum. 

Read the full post here

Article
12 December 2017

New report: Lack of green investments puts Paris agreement at risk

Author: Swedwatch

[A] new Swedwatch report shows that Sweden’s ten largest fund management companies are not contributing to the fulfillment of goals of the Paris agreement... [It] shows that:

  • The urgent need for concrete climate transition results, the ambitions and actions of the fund management companies are not sufficient.
  • The investors included in the study have not set any targets for reallocation of capital from investments in fossil production to investments in green finance and climate solutions for mitigation and adaptation.
  • Across the board, climate solutions are almost exclusively found in niche funds, which make up only a fraction of the total investments. Some investors deferred responsibility for choosing to invest in climate solutions to clients.

The fund management companies explain that one reason for not reallocating substantial capital is that climate risks are largely ignored in today’s short-term financial markets. Further, they refer to a current lack of green projects and climate solutions to invest in. They also describe that the fact that portfolio companies are not measuring and reporting their own climate impacts is a challenge for the sector.

However, in order to contribute effectively to the swift climate transition needed by 2020 [...] it is not an option for investors to wait for improved company reporting and substantially increased client demand for green, climate-solution focused savings products.

Read the full post here