Show me the Data

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    Stockholm (NordSIP) – A few weeks ago, NordSIP met with Lars Erik Mangset, Senior Advisor for Responsible Investment at the Norwegian-based KLP Asset Management. He shared his thoughts about sustainable investing in Europe and what he believes investors should focus more on.

    In March this year, Mangset joined Norwegian municipal pension fund Kommunal Landspensjonskasse Gjensidig Forsikringsselskap, also known as KLP, as Senior Advisor for Responsible Investment. Previously, he was Senior Consultant for Climate and Sustainability at Norwegian classification society Det Norske Veritas (DNV GL) and Senior Advisor in Sustainable Finance for the WWF.

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    We met with Mangset at the Sustainable Investment Forum Europe in Paris. “Where are the discussions? What are the specifics?” is what brings him to these events. “In the world of sustainability, we hear a lot of festive speeches. They are inspiring but very high-level, and sometime I miss getting more of the specifics which can guide my day-to-day work. Climate risk is real, and disclosure is high on the agenda, but how far have we come, concretely?”

    “Perhaps it is just me being nerdy, but I want to know what is going on behind the scenes.”

    Mangset points out an exciting development in the market: “Before, we talked about how a company influenced the climate. Now we also take into consideration how the climate influences companies, taking a business risk perspective.” For example, one of the panellists, Jane Ambachtsheer at Mercer talks about the scenario analysis her firm has developed to assess the risk climate change represents for different companies. “New data, methods and tools are needed, because assessing transition risk requires much more than just calculating carbon footprint,” Mangset reminds us.

    “Sometime I miss getting more of the specifics which can guide my day-to-day work.”

    And while climate is often a central topic in the SRI community other environmental questions and challenges must not be forgotten, according to Mangset. Shipping is an interesting example, sailing close to home, given Norway’s strong ties with the sector. “While its widely recognized that shipping is the most carbon friendly mode of transport measured as CO2 emission per ton-kilometre, it has a relative higher environmental footprint in areas related to e.g. air quality, transport of marine invasive species and oil spills” says Mangset. “While there is no doubt that shipping is an enabler for a sustainable transport future, a holistic view is necessary in developing green shipping solutions.”

    “If we can classify what is ‘green’, we also need to better understand what is ‘brown’.”

    Overall, Mangset finds the EU’s latest discussions very encouraging. “The EU’s action plan that follows on the HLEG report is fascinating. The regulators are finally stepping up. There are discussions everywhere. From a Norwegian perspective, the taxonomy defining sustainable activities has the potential to become an essential tool if the set up is right. If we can classify what is ‘green’, we also need to better understand what is ‘brown’. In Norway, many industries are affected on top of the apparent dependency on oil & gas, from industries such as aquaculture and maritime to aluminium and fertilisers for example.”

    Nevertheless, in many instances, Mangset finds that transparency and clarity could be improved, especially in the financial sector. “Perhaps it is just me being nerdy, but I want to know what is going on behind the scenes. For instance, fully fledged transition scenarios are necessary for climate risk assessment, but these processes are data-driven, and if the underlying data, methods and assumption are kept in a black box, then that may affect their reliability.” In general, Mangset agrees that asset managers, which used to be a rather secretive group, are opening up and sharing the trick of the trade a little more willingly when it is about sustainable investing. “At times, it is feasible, other times it is not, but everyone understands that being the only one doing the right thing is not going to move the needle.”


    Picture © Lars Erik Mangset

    Aline Reichenberg Gustafsson, CFA
    Aline Reichenberg Gustafsson, CFA
    Aline Reichenberg Gustafsson, CFA is Editor-in-Chief for NordSIP and Managing Director for Big Green Tree Media. She has 18 years of experience in the asset management industry in Stockholm, London and Geneva, including as a long/short equity hedge fund portfolio manager, and buy-side analyst, but also as CFO and COO in several asset management firms. Aline holds an MBA from Harvard Business School and a License in Economic Sciences from the University of Geneva.
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