Existential Questions for a Sustainable Trailblazer

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    One of the early trailblazers in Swedish sustainable investing, Gunnela Hahn, joined Nordea last autumn leaving behind the Church of Sweden where she spent the past 15 years. A few months into the job, we caught up with Hahn to discuss her ambitions at the bank, her current projects and her take on the state of sustainability in the Swedish investment landscape. She also shared her worries about a 3-degree world and the need to act, as well as her exasperation over chasing pointless data and the urgency of generating change in the real economy.

    “Sustainable investing has the wind in its sails right now,” Hahn starts. “The regulatory development of these past few years as well as the general level of consciousness about investment benefits that come from integrating ESG, for example, have led to increased maturity in the field. The topics have evolved way beyond the discussions we were having more than 15 years ago when I started at the Church. It doesn’t mean we don’t have anything left to say. To the contrary, this is a time for innovation and growth. That’s why I thought this would be a good time to switch platform and join the biggest bank in the Nordics.”

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    Being used to a small independent team and direct reporting lines, Hahn is enthusiastic about the change in organisation size. “It’s very exciting! The variety of activities within sustainable investing and finance is incredible in such a large bank. The Church has a small and impactful team, and we achieved a lot given our size, primarily by being vocal on our stewardship, but it is not primarily a financial actor. Nordea certainly is. I believe I could contribute more at this stage with my 20+ years of sustainable finance industry experience in this place” she explains.

    As an entry point in the giant Nordic banking group, Hahn has joined the bank’s wealth management department. There, she develops the sustainability assessment of the offering to the end clients. In this context, one of her first assignments has been to upgrade the sustainability framework for investment and savings products called “Sustainable Choice”.

    “We’re working on an update of the existing framework. At the Church, we had an investment policy that guided external asset managers to our view on sustainable investing. Here, it is different as we need to describe how we assess a range of products offered to clients, and adjust it to new regulation. Nordea AM is a provider, but we also include other external managers, such as Robeco. Most of these products are mutual funds, and they need to pass our team where we assess the asset manager and the product according to this framework,” Hahn says.

    In the context of the new regulatory updates, the framework is adjusted to the SFDR and MiFID II. “We evaluate how well sustainability is integrated in the investment process and investment decision. We also divide the ethical part from the sustainable value creation. Some exclusions are there primarily for ethical reasons: alcohol, tobacco, and weapons, for example. Value creation, on the other hand, is based on the belief – backed up by research – that companies performing well on sustainability risk management and seizing related opportunities, will also be better financial investments,” she continues.

    “Many people mix that up! The idea of ethical investments started long time ago with exclusionary policies for some controversial sectors. Quakers were the pioneers in this movement, excluding for instance weapons and slavery. After the Earth Summit in Rio in 1992, when the world launched Agenda 21, sustainable development was on everybody’s lips. A responsible investor combines the two strategies – excludes the worst and includes the best – and adds a third: engagement with the company to make them improve. Today, we must be realistic and pragmatic. Climate is already changing, and biodiversity is being lost. This is a new paradigm for the economy. Perhaps the idea isn’t new, but we begin to understand that society and environmental issues are part of the same equation,” says Hahn who reminds us that humanity is in a precarious position due to the climate and nature crises.

    “Despite the Paris Agreement of limiting global warming to two degrees at the most, we’re currently heading for three degrees, which would make life impossible in most parts of the world”, she continues. “But we still have a window open to save our economies, if we hurry up. Covid-19 showed us that we can mobilise money and science; huge sums were deployed by governments worldwide in a short period of time. If we did the same with climate and biodiversity, a safe future could be at hand.”

    At Nordea, Hahn also provides food for thought. “I just finished a written overview of typical investment risks seen from a sustainability perspective, how to manage these risks and why it also makes sense financially,” she says. This content was launched on June 12, and is officially published on the bank’s website. It will become a resource for communicating with advisers and clients.

    Hahn also believes that individuals should have better access to private assets, such as microfinance or green infrastructure. While the boundaries between ESG, sustainable investments and impact are sometimes unclear, she believes that providing capital to climate and biodiversity solutions is more important than labels. We know what we have to do, and should focus on swift action in the real economy.

    Image courtesy of ©Binniam Halid for NordSIP
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