Nordea sustainability expert: ‘We have to make sure everyone is with us’

Catrine Birkevold Liem has acquired a wealth of experience in her 20+ years in banking, from working with export credits to origination and syndication in investment banking. For the past four years, her focus has been on how the financial sector is changing due to climate change and the impact this change can have on customers. 

“When banks make sustainability commitments, it’s actually the clients that need to deliver, not the banks,” says Liem. “Understanding that mechanism, how banks have to integrate sustainability into their business and credit models and how that will affect their relationship and capital allocation to clients, has been a key focus for me the past few years.”

That issue remains front and centre in Liem’s role as Nordea’s Sustainable Finance Advisory lead in Norway. 

What drew you to the field of sustainable finance?

“It has been quite obvious that climate change would have a huge impact. But how to integrate it into decision-making is not a quick fix, neither for us nor for our customers. Working at another bank at the time, I got curious about how we could help solve the problem and decided to dive into this area. Capital is a key ingredient for a successful transition, making banks an important tool for governments and regulators. For us to be efficient capital allocators, we need to understand and act on the climate risk and opportunities in our customer portfolio.” 

What do you enjoy most about your role at Nordea?

“The clients are the ones that are doing the hard lifting here, but to do so, they often need more capital. To be able to have close dialogues and assist clients in their transition is very motivating. My hope is that our advice and financing will help them change. I love being on the front line, learning from customers. I’ve never been to a sustainability meeting where I haven’t learned something new. All sectors have different challenges, and it is so useful to get information from different angles and perspectives. The bank can be a great platform for linking different clients and sectors, sharing sustainability expertise and discussing the solutions for the future.”

In your years working with sustainable finance, have you experienced any big changes?

“The awareness has increased a lot, particularly in climate-sensitive sectors. We’re also in the process of moving from glossy reports with a lot of words to standardised numbers to be reported across a range of sustainability issues. You can’t just talk about what you want to do; you need to show what you’ve done and explain what you are doing next to reach your sustainability goals. That’s an incredibly important transition. And it will make it easier to ensure good structures for future sustainable finance products.” 

What do you consider challenging when it comes to the sustainable transition?

“I’d say the risk of mismatch between high-level commitments, for example under the Paris Agreement, and what companies feel is realistic. We need to find ways to match up the top-down and the bottom-up approaches. Companies can get frustrated when the goals no longer seem ambitious but unrealistic. They can lose the willingness to continue on the path if they see that the gap is too big or the risk is too high. We should have started this transition 20 years ago, but we didn’t. So we all are working under extreme time pressure. It’s important to understand the challenges in the different sectors. We have to move fast, but we also have to make sure everyone is with us. If not, we risk a backlash.”

Do you see any game changers for the sustainable transition in the coming years?

“We’ll expand from climate to a much more holistic view on sustainability that also includes nature, biodiversity and a just transition in terms of social impact. We’ll continue to move from ambition to actual numbers, from words to hard facts. We’ll also see more harmonisation in data and reporting, making it easier to compare numbers between companies, sectors and geographies. In Europe, we have the Corporate Sustainability Reporting Directive (CSRD), which means that the biggest European companies will have to follow the same reporting standard. That will be a game changer rolling out in the next 2-4 years, depending on the size of the company.”

What trends are you seeing when it comes to sustainable financing?

“In both the bond and loan market, we see an increased interest among investors for sustainable financing. You will have a larger investor base if you choose a sustainable format. We’ve also seen strong interest in sustainability-linked formats, which can be used for general corporate purposes. Most companies can use these formats if they have set KPIs that are ambitious, concrete and measurable over time. But that’s also where we see the biggest risk of greenwashing because these formats are so open and company-specific. I think the risk is lower in the Nordics, where companies tend to be further ahead on sustainability, but it’s important we keep strict standards and follow well-established sustainable finance principles. The KPIs should be difficult to achieve and go beyond business as usual.

My role is to help clients take advantage of the sustainable financing products available for their kind of business and investments. I think the use of sustainable finance also can link sustainability closer to a company’s business strategy and day-to-day operation.”

How is progress in the Nordics?

“Many Nordic companies are moving in the right direction. It’s not a question of if they’re doing it; it’s a question of how fast. We see a lot of good effort out there. The high-emission sectors that are hit the hardest tend to be the most forward-leaning, which is good. It’s the sectors that are further away from the direct emissions that may need to step up their game. Building a sustainable business model is not just about emissions. It’s about the whole value chain and also includes other angles, such as circularity. A technology company may sit back, thinking they don’t have high emissions, but they may also build products that don’t last very long. It’s not only the companies with high emissions that have to change.”

What is the situation like in Norway?

“Norway has a good starting point, with a lot of clean energy such as green hydropower, which new industries can be built on. We need to shift the focus from oil, but in such a way that the European energy transition is optimised. The technology used in the oil sector is very high tech and can be used in sustainable ways. And with green energy available, there’s a great deal of opportunity here.”