04-06-2024 09:00

Nordea On Your Mind: Nordic sustainability champions

How did the Nordic region become a sustainability powerhouse in the corporate world? The Nordea On Your Mind team takes a deep dive into the topic of sustainability in the Nordics in the latest report, “Nordic sustainability champions.” Discover how the Nordic corporate sector is punching above its weight, and why we believe sustainability is here to stay.
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Nordic corporate sector punching above its weight, also in sustainability

The Nordic region accounts for a mere 0.3% of the global population, but 2% of global GDP and equity market cap, and 6% of the world's Nobel Prize winners to date. 60 out of the global Forbes 2000 most successful companies are Nordic. The Nordic countries have embraced sustainability, which is evident in multiple global rankings and the level of achievement of the UN Sustainable Development Goals from 2015. This has spilled over into the corporate sector, where 15 of the Corporate Knights' global 100 most sustainable companies are Nordic, as were five out of the 80 climate tech unicorns in the world in early 2023.

Strong Nordic outperformance in ESG rating scores has accelerated further since 2021

We have analysed MSCI ESG rating scores for companies globally since 2015. Nordic companies have consistently outperformed across sectors and the gap versus peers has increased further since 2021. European companies have started to catch up in the past three years. US companies have seen slowly but steadily improving ESG scores since 2015, but are sharply lagging the Nordics and Europe.


Nordic vs. global: Achieving goals

Source: Sustainable Development Report 2023

Adjusted ESG score across regions

Source: MSCI

Nordic ESG focus from societal values and a balanced mix of institutional and strategic owners

The Nordic region is comparatively spared from climate change-induced natural disasters, but has a strong societal focus on sustainability evident among consumers, employees and regulators. Nordic companies have been willing and able to embrace sustainability. We believe this has much to do with their owners. Nordic institutional investors have for many years raised ESG thresholds in their investment policies. And the Nordic model of corporate ownership is a balanced mix of financial institutions (which also focus strongly on financial returns) and strategic owners (who have patience and a long-term perspective and willingness to invest).

After a recent backlash, we believe sustainability is here to stay

Following some years of hype, sustainability saw major headwinds in 2022-23, as republican politicians in the US weaponised it to win favour with voters in a hyper-polarised political environment. ESG funds underperformed and saw net inflows dry up. US asset managers now seek to avoid being targets of political punishment, and are less vocal about ESG, but do not necessarily act very differently. Corporates are feeling some regulatory fatigue, but continue to implement sustainability and prepare for complying with coming reporting requirements. We believe sustainability may see more swings between hype and headwind, but is here to stay.


What are the top climate change issues already impacting your business?

Source: Deloitte

To what extent does your company feel pressure to act on climate change from your stakeholders?

Source: Deloitte

Corporate and owner perspectives on why sustainability matters

To gauge corporate views on embracing and succeeding in sustainability, we interview NKT CEO Claes Westerlind and Alfa Laval's Head of Sustainability Anna Celsing. To also catch the owner and investor angle on how and why sustainability matters, we interview Nordea Asset Management's Head of Responsible Investments Eric Pedersen.

About Nordea On Your Mind

Nordea On Your Mind is the flagship publication of Nordea Investment Banking’s Thematics team, which produces research for large corporate and institutional clients. The research does not contain investment advice and typically covers topics of a strategic and long-term nature, which can affect corporate financial performance.

Top decision makers at Nordea’s large clients across the Nordic region receive Nordea On Your Mind around eight times per year. The publication’s themes vary widely, and many are selected from suggestions by clients. Examples of covered topics include artificial intelligence, wage inflation, M&A, e-commerce, income inequality, ESG, cybersecurity and corporate leverage.

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