01-06-2021 15:43

Dialogue with companies leads to increased climate efforts

With almost a thousand engagements with companies and countries in 2020, Nordea Asset Management is driving change through active ownership. The new Climate report shows what else is needed for reaching our target, and reveals the carbon intensity of all Nordea funds.

Nordea Asset Management (NAM) has released its first Climate report, taking another step forward to increase transparency on our commitment to extensive climate change initiatives. Before reaching the net-zero emission target for 2050, the goal set for 2030 is to reduce the carbon intensity of NAM investments by 50%. 

“It will be a significant milestone on our way to comply with the Paris agreement goals for 2050. The necessity of this is really not debatable anymore, and we are determined to deliver on it,” says Eric Pedersen, Head of Responsible Investments in Nordea Asset Management.

The new report reveals the facts about the carbon footprints of each and every one of all the investment funds managed by NAM. The figures show that the carbon intensity for the whole of NAM investments at the end of 2020 was approximately half of that for the investments at the global leading stock markets, measured by MSCI World Index.

“Our funds’ carbon footprint already proves that our strategy has led to a clearly lower carbon intensity than benchmark indices. Although there is still a long way to go to reach zero, this is the way the world is moving, and we intend to continue to be an important player in achieving real-world impact in terms of emissions reduction,” Eric Pedersen confirms.

Our funds’ carbon footprint already proves that our strategy has led to a clearly lower carbon intensity than benchmark indices.

Eric Pedersen, Head of Responsible Investments


Ready, set, engage: Xcel Energy

An example from the Climate Report on Nordea pushing companies to accelerate decarbonization is Xcel Energy, a major electric power company that supplies electricity and natural gas to retail customers in the United States. When NAM started its engagement, 60% of the electricity generation was based on coal and other fossil fuels. Just nine months later, Xcel committed to delivering 100% emission-free electricity by 2050, the first utility in the US to do so. 

The ongoing dialogue with the company is currently focused on the company’s efforts in the 2020-2030 period, and the concrete possibilities for realising earlier-than-planned closures of coal-fired power plants and adding more renewables capacity.

How to achieve the goals set for investments

There are many ways for Nordea to work for a greener future. With a big toolbox you need to choose the right one for each task. Three key mechanisms that are to bring the investments to the 2030 and the 2050 goals are: 

  1. Pushing the companies, that NAM is invested in, towards accelerating decarbonization
  2. Investing in companies facilitating real-world decarbonization
  3. Shifting away from high emitting companies and industries 

“Targeting whole industries for exclusion is clearly the mechanism where the real-world impact is the least direct. You can say that blanket exclusions may give you a good conscience, but they don’t change much in the real world, at least in the short term. Still, exclusion will continue to be used in some cases. Both to make it possible to reach the targets, and because there are areas of the economy that do not have much of a future long term – coal mining being an obvious example,” Eric Pedersen says.

“In our ESG  funds - those that have environmental or social features beyond what applies to all Nordea’s funds - we also generally avoid energy companies, until they have taken significant steps to align their future business model with the Paris Agreement,” he says. “At the same time, we engage with and support shareholders’ climate resolutions in laggard companies on the basis of our investments in those funds that can still own them.”

Close to a thousand engagements with companies and countries last year 

In 2020 Nordea had 924 engagements with companies and countries to influence and push them towards better solutions for the climate, human rights and other key issues.

The figures together with many more facts can be found in another new report, the Responsible Investments Report 2020 from Nordea Asset Management.