Stockholm (NordSIP) – The financed emissions and lack of consistent transition policies of the five largest banks active on the Swedish market put them at odds with their own stated long-term net-zero targets. This is the conclusion of a new report published on 24 January 2024 by Fair Finance Guide and the Swedish Society for Nature Conservation.
The reports authors focused on the financed emissions of the credit portfolios of SEB, Nordea, Danske Bank, Swedbank, and Handelsbanken. Until the European Union’s (EU) Corporate Sustainability Reporting Directive (CSRD) makes Scope 3 reporting mandatory in 2025, banks are only required to report Scope 1 and 2 emissions, which typically account for a very small portfolio of the total carbon footprint. According to Fair Finance, Scope 3 emissions accounted for 99.9% of Nordea’s 2022 carbon footprint. The methodology used in the report therefore employs estimates and proxies to fill this data gap.
Banks out-polluting Sweden
The overall results show that the five banks together finance emissions totalling more than twice the Swedish nation’s territorial annual emissions of 45.2 million tCO2e (tonnes of carbon dioxide equivalent). While it is commended for the completeness of its carbon reporting, SEB is found to be well ahead of its peers in terms of the scale of its financed emissions. Not only are its 34 million tCO2e well ahead of second placed Nordea, but more than half of that figure stems from loans to oil and gas projects. Nordea’s 23 million tCO2e are almost entirely made up of loans to other sectors. Nordea also exhibits a lower emission intensity (i.e. tCO2e per MSEK in lending), which would indicate that its large carbon footprint relates to the sheer size of its loan portfolio rather than direct support for the fossil fuel industry.
The inherent contradiction between the banks’ long-term net-zero targets, which all align with or exceed the goals of the Paris Agreement, are evident in their shorter-term targets and current policies. Fair Finance found that none of the institutions had set in place targets for 2025 and apart from Nordea had only published partial plans for the medium term 2030 milestone. Deforestation policies were deemed incomplete, and none of the emissions targets covered all the banks’ financial services. Moreover, only Danske Bank and Handelsbanken’s policies excluded lending to firms expanding their fossil production. None of the five banks required portfolio fossil fuel companies to disclose and implement transition plans.
Banks must align with their own long-term net-zero goals
Fair Finance concludes that the largest banks in Sweden are not taking their 2050 net-zero targets seriously and urges them improve the quality and scope of their financed emissions reporting in line with internationally agreed standards and covering all aspect of their business activities. It also wants the five banks to follow the recommendations of the United Nations’ High Level Expert Group report on the Net Zero Emissions Commitments of Non-State Entities, which was presented at COP27 in Egypt. This would involve them introducing Paris-aligned short and medium-term targets, and implanting a crackdown on portfolio fossil fuel companies, immediately axing those working to expand their output and those that have no credible transition plans.
