Stockholm (NordSIP) – As global efforts to stem the tide of global warming persevere, some asset managers have sought to do their share in bearing the responsibilities agreed to at the 2015 Paris Agreement. Storebrand Asset Management was the most recent such institution to do so as it unveiled a new wide-ranging climate policy outlining how it uses its investments to facilitate climate change mitigation and adaptation.
“We are not only vulnerable to the systemic disruptions that climate change will unleash on ecosystems, societies, and our own portfolio companies. We also have a key role to play in accelerating the de-carbonization of the global economy,” says Jan Erik Saugestad, CEO Storebrand Asset Management. “As we combat COVID-19, we need to take the opportunity to refinance the recovery and growth in line with the Paris Agreement and the UN Sustainable Development Goals. The rebuilding period will be our best opportunity to make substantial progress towards a greener and more climate-resilient economy.”
Policy Highlights
Methodologically, Storebrand is endorsing the scientific consensus by committing to align the investments with commitments outlined in the Paris Agreement at all times. Moreover, it will use the Intergovernmental Panel on Climate Change (IPCC) as the scientific basis for investment decision making. The asset manager also states it will continue a “holistic, ecosystem-based approach to climate change that focuses on the need to preserve nature’s ability to absorb carbon from the atmosphere and store it in carbon sinks”. According to Storebrand’s new policy, halting deforestation is at the forefront of these efforts.
However, the most salient feature of Storebrand’s new policy is perhaps its exclusions. The asset manager has committed to excluding companies that actively lobby against the Paris Agreement and climate regulation. More quantitatively, it has also decided to blacklist companies that derive more than 5% of their revenues from coal or oil sands. The list of exclusions cover 27 companies, including BASF SE, Chevron Corp, Exxon Mobil Corp, Rio Tinto PLC, Southern company, China Longyuan Power Group Corporation Limited, Dominion Energy, Polskie Gornictwo Naftowe I, Japan Petroleum Exploration Co Ltd and ConocoPhillips.
The stick of exclusions will be branded side-by-side with the carrot of promoting investments aligned with the goals of the Paris agreement. Storebrand will focus on investments that reduce emissions from high emitting sectors, by exclusions but also through engagements. In this context, it explicitly aims to continue to build a positive dialogue with energy companies, aiming to support their transition to low carbon and climate-resilient activities greening the real economy. It is also committing to increase capital flows into low-carbon, climate-resilient and transition companies to avoid risks, identify opportunities and improve resilience to the effects of climate change.
All of these efforts are to be supported through regular reporting both on the result of engagement efforts as well as risk analyses at the portfolio level.
For a More Sustainable Future
As of the end of August 2020, Storebrand has a total of US$34 billion in fossil-free investment solutions. The new policy aims to inform investment decisions and provide clients with a comprehensive range of sustainability and low carbon funds to help them decarbonize their portfolios.
“We aim to maintain our position as a leading provider of sustainable solutions. With this policy, we will excel and improve our work on climate and greening the financial system. We will use all the tools at our disposal, including divestment, investing more in solutions and engaging with companies in order to achieve substantial change,” Saugestad concludes.
Image courtesy of Storebrand Asset Management
