Reduced emissions and improved resilience – climate reports for 2020

Net zero emissions by 2040... What does this entail in practice for an asset manager? And how can insurance operations help limit global warming? These questions and how they relate to risks and potential returns are addressed by Handelsbanken Liv and Handelsbanken Fonder in their respective climate reports for 2020.

Climate change, together with the global pandemic and growing inequality, represents one of our generation’s greatest challenges. No country, no company and no individual can manage these challenges alone. As a major provider of pensions solutions and insurance solutions, Handelsbanken Liv and Handelsbanken Fonder both have an important role to play in the transition to sustainable development.

“We believe in the power of collaboration in the fight against global warming, and we are actively involved in the efforts being made to meet the goals of the Paris Agreement. We are also keen to contribute to greater transparency, in line with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD)”, says Simon Park, sustainability analyst at Handelsbanken Fonder, and continues:

“Handelsbanken Fonder are proud to present quantitative targets for what we want to achieve by 2030: we shall reduce the intensity of our emissions by 50 per cent and double the proportion of investments in climate solutions. Reaching these targets will bring us closer to our overall goal of net zero emissions by 2040.”

Summary of the climate reports

Handelsbanken Liv – Report 2020

During the year, Handelsbanken and Handelsbanken Liv took the next step towards net zero emissions of greenhouse gases. A new sustainability goal was drafted that encompasses a long-term climate commitment and three clear climate goals. The climate commitment of both Handelsbanken and Handelsbanken Liv is net zero emissions by 2040 at the latest. Handelsbanken Liv’s climate efforts include favouring fund management companies that have systematically reduced greenhouse gas emissions in their holdings. We actively exclude funds that invest in fossil fuels. Sustainability and climate goals at Handelsbanken

2020 in brief:

• Climate goals adopted for 2020 to 2025.
• Increasing the selection of funds with an environment/climate focus in unit-linked insurance to 9 (4) per cent of the range of funds in unit-linked insurance.
• Continuing to reduce exposure to fossil fuels. 91 (86) per cent of the funds in unit-linked insurance exclude investments in coal, oil and gas.
• Reducing the climate footprint (carbon dioxide intensity weighted average) from Handelsbanken Liv’s investments in listed shares by 18 per cent, from 11 tonnes to 9 tonnes CO2e/SEK m.

Managing climate-related transition risks:

• Scenario analyses and stress tests have shown that the portfolios are affected by transition risks in fossil-intensive sectors.
• During the year, the exposure to climate-relevant sectors in the equity portfolio was reduced from 5.8 per cent in 2019 to 4.1 per cent in 2020.
• Our strategy for managing climate-related risks has also shown that there is resilience in the portfolios in the various scenarios.

Handelsbanken Fonder – Report 2020

• In December, Handelsbanken Fonder became a signatory to the Net Zero Asset Manager Initiative. An important part of our commitment is the action plan describing how we intend to reach net zero and this is something we cover in more detail in our climate report for the year.
• In 2020, we took important steps in measuring how our investments contribute to the Global Development Goals, where contributions aimed at limiting global warming represent an important part.

What does our commitment to reaching net zero emissions by 2040 entail in practice?

We have set targets for what we aim to achieve by 2030:

• We must reduce our emissions intensity by 50 per cent
• We must double the proportion of our investments in climate solutions

We are constantly taking initiatives and making important progress in our efforts to reach these goals:

• We have developed a more robust process for our dialogue with companies in key sectors relating to climate transition.
• In May, Handelsbanken Fonder became the first Swedish fund management company to change the index for five of its global and regional index funds to Paris Aligned Benchmarks. The assets under management in the funds changing to the new index total SEK 127 billion. This is an important step forward on our journey towards net zero emissions.
• At the beginning of June, our actively managed Norwegian funds were completely adapted to our exclusion framework. This means that operations involving the production and distribution of fossil fuels are excluded. This transition is a step forward towards achieving our climate goals. These funds also have the opportunity of investing in companies in transition, meaning, companies which have a certain degree of fossil exposure, but also have credible transition plans in line with the goals of the Paris Agreement.

Managing climate-related risks and opportunities:

• For the third consecutive year, the fund management company reduced its overall greenhouse gas intensity.
• Stress tests carried out during the year showed that we are better at finding climate-related opportunities as a result of our efforts in investing in companies in transition within the power sector.
• Our strategy for managing climate-related risks also shos that there is resilience in the portfolios in the various scenarios.

Here you can find the Climate Report Handelsbanken Liv 2020 (Swedish)
Here you can find the Climate Report Handelsbanken Fonder 2020 (English)