Taking Stock of Sustainable Finance with Nordea

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    Stockholm (NordSIP) – On September 18, Nordea held its second Nordic Sustainable Finance Conference in Stockholm, as the bank aims for a leadership position in sustainability. As Sasja Beslik, Head of the Sustainable Finance group at Nordea, pointed out: whether sustainability is a threat or an opportunity is a choice to be made. NordSIP was there, and here provides a summary of key thoughts gathered throughout the day.

    Not long ago, few were sincerely interested in sustainability, as many companies admitted that integrating ESG was merely a box-ticking exercise. As the conference demonstrated, the trend has gained traction and is here to stay. Sustainability has become a real business opportunity driven by consumers as well as younger employees, but many challenges remain. How to find solutions was the overarching question the conference attempted to answer.

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    According to Casper von Koskull, CEO of Nordea, we are living in a VUCA-world (Volatile, Uncertain, Complex, Ambigious). Trends have been the same for several years, but the speed of change has increased significantly. Sustainability is now the “smart thing to do” and can be integrated almost everywhere and create customer value. According to Casper von Koskull, Nordea now has 10 years of track record showing sustainable funds outperformng non-sustainable ones. The bank’s Life and Pension arm recently moved all its capital to sustainable investments. Green mortgages have been introduced and the entire bank has set a goal to integrate sustainable business practices throughout its organisation.

    In an eloquent key-note speech, Allan Pollack, CEO of Danish pension fund PFA, explained that ownership and consumers are the strongest drivers of sustainability, but he also stressed that in addition to business and commercial aspects, the ethical side is important.

    Many institutions, such as the Norwegian Oil Fund (NBIM) have in addition to generally accepted principles created their own definitions of sustainability that their portfolio companies need to fulfill. Sustainability is no longer a matter of ticking boxes but has become a focus on quantifiable effects of investments and education, as Carine Smith Ihenacho, Chief Corporate Governance Officer at NBIM, pointed out. Everyone mentions the need for better data and reporting, to lift the subject matter to the next level.

    Within the Private Equity sector, larger institutions are increasingly focusing on helping their portfolio companies making their business models more sustainable in order to be long-term winners.

    Several speakers referred to the challenge of making sustainability quantifiable. Another  important point that emerged several times is the need for concrete and pragmatic action. The oil industry, for instance, needs to be a part of the solution during the long transition period to a society based on green energy. Creating common internal values throughout an organisation is another challenge. Portfolio managers and the ESG team sometimes have rather different views and values, and that gap needs to be closed.

    Sustainability within the financial sector has come a long way but much more work is needed on education, common quantifiable principles and integration. Let’s see what progress can be achieved by the time of next year’s conference.

    Picture © NordSIP

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