Nordea’s approach to clients' climate transition plans
By engaging our clients in constructive sustainability dialogues and offering tailored support, we aim to facilitate the journey to a net-zero future while mitigating risks. Our climate transition maturity ladder is a key tool in that effort.
At Nordea, we are committed to driving the shift to a sustainable economy together with our clients. One tool we’ve developed to help steer and guide these efforts is our climate transition maturity ladder.
Launched in 2023, this approach is designed to evaluate clients’ climate transition plans and give frontline staff a tool to engage with clients on these issues.
“By understanding our customers’ transition plans and how they need to adapt their business models and strategies, we can mitigate climate and environmental risks embedded in the lending portfolio through targeted engagements. We are also gaining a better understanding of how Nordea can support as their financial partner in their transition journey. We believe the climate transition plan approach can help us proactively drive business and sustainability in the same direction,” says Anne Schult Ulriksen, Head of ESG for Nordea’s Large Corporates & Institutions division.
Anne Schult Ulriksen, Head of ESG, LC&I
Forward-looking perspective
The maturity ladder classifies companies based on four dimensions: their climate targets, greenhouse gas (GHG) reporting, implementation and governance. Data is collected from publicly-available sustainability and annual reports as well as directly from customers. We use that data to score clients across five tiers, ranging from those aware of climate issues in the lowest tier (5) to those with transition plans aligned with the Paris Agreement in the highest tier (1). The expectations for climate disclosures and commitments increase as you move up the ladder.
The climate maturity ladder ties directly to Nordea’s target of ensuring that 90% of our exposure to large corporate customers in climate-vulnerable sectors is covered by transition plans by the end of 2025. (See the definition of "transition plan" here.) The maturity ladder adds a forward-looking perspective, supplementing the “point-in-time” financed emissions calculation, to help steer commercial decisions and thereby capital allocation.
The maturity ladder approach supports our product and services offering, credit assessments as well as business selection criteria.
“We have to remember that this is a transition, which is a change process, and we have an ambition of being an active advisor and an integral part of our customers’ transition journeys through their different stages. After all, the real change comes with the actions taken to decarbonise the economy, and we aim to facilitate the journey to a sustainable economy together with our clients while mitigating risks,” says Anne Schult Ulriksen.
Insights from the Climate Transition Maturity Ladder
Nordea has developed the Climate Transition Maturity Ladder, a customer engagement tool that enables us to understand:
Our clients’ climate transition commitments
How they plan to adapt their business model towards a low-carbon economy
What actions they are taking
How Nordea can support their transition as a financial partner
Whether their climate actions are sufficiently aligned with Nordea’s own strategy
Mikael Salomonsson, Director in LC&I Sweden
A framework for constructive dialogue
Over the past year, we have initiated customer transition plan dialogues with our customers in climate-vulnerable sectors.
Mikkel Vogt, a managing director in Large Corporates & Institutions Norway, was an early mover in bringing the maturity ladder approach into dialogues with his clients. He says the schematic maturity ladder has helped to structure the conversation and build a deeper awareness of clients’ climate concerns and transition actions.
“Overall, clients have responded well to our interest in their sustainability efforts, and it seems to be a topic they are keen to take follow-up meetings on,” he says, adding that the dialogues have opened up discussions about sustainability-linked and green financing options.
Mikael Salomonsson, a director in Large Corporates & Institutions Sweden responsible for ESG and strategy, adds that the dialogues are a great opportunity not only to get to know clients better, but also for them to get to know Nordea better.
“We can explain how we look at these sustainability topics, how they affect our business selection and how we follow up on financed emissions at Nordea. Some are surprised to learn that it’s not only investors that look at these issues,” he says. “We also open up the discussion and invite them to give feedback on our approach so we can continuously improve.”
What is a transition plan?
We have a target of ensuring that 90% of our exposure to large corporate customers in climate-vulnerable sectors is covered by transition plans by 2025. Transition plans in this context are defined as having a quantifiable and time-bound target to reduce greenhouse gas emissions – or being classified in Tier 4 as a minimum.
As of end-2023, an estimated 70% of Nordea’s large corporate customers in climate-vulnerable sectors are covered by transition plans.
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