Nordea’s new green finance expert: 'Every sector will be affected by climate risk'

Alexander Berg is no stranger to climate risk and opportunities.

The newest member of Nordea’s Sustainable Finance Advisory team, Alex has spent the past three-and-a-half years at Cicero, the independent climate research institute and leading provider of reviews for green bonds, known for its “shades of green” methodology.

“I have a lot of experience figuring out just how green a company, specific investment or transaction is,” says Alex. However, given Cicero’s role as an independent second party opinion (SPO) provider, Alex has not been able to advise companies and bond issuers on what they should do – until now.

“At Nordea, I’m now able to use the toolset I’ve acquired to actually advise clients, which I find very attractive,” he says. At Nordea, Alex will be advising clients on a range of sustainable finance issues, from green bond issuances and frameworks to sustainability-linked and green loans.

What goes around comes around

As someone focused on the E in ESG, Alex says one of the most salient themes in his work is climate risk. He sums it up with the old adage: what goes around comes around. What’s “going around” are changes in the global climate and local weather, driven by greenhouse gas emissions that accumulate in our atmosphere and lead to rising temperatures. What’s also going around are efforts to change that, such as multilateral agreements, the pricing of carbon emissions and regulations defining “green” economic activities and financial instruments.

Both of these processes, changes in climate and weather (physical risk) and efforts to curb emissions in all sectors (transition risk), make up climate risk, and they have started to “come around” to the sectors, companies and organizations that comprise the global economy.

“I don’t think anyone will be spared. Every sector will be affected by climate risk in one way or another. While the transition may be scary, it should be started sooner rather than later,” Alex says.

Getting on the disclosure bandwagon

“Companies need to show which climate risks may affect them, what this means for their operations and how they intend to deal with this risk,” says Alex.

Tools and methods have been developed to guide this disclosure, such as the Recommendations by the Task Force on Climate-related Financial Disclosure (TCFD) and the EU Sustainable Finance Action Plan. Such initiatives are driving corporate climate risk disclosure, which will help address many of the current uncertainties, according to Alex. As the financial sector will be able to include climate risk in their analysis and due diligence, companies can avoid higher costs of financing, and those that qualify can access green finance at a potential discount. Disclosure will also increasingly be a matter of complying with regulations and reporting requirements.

“In climate finance, transparency and honesty about green and brown activities is highly valued over pretending that all is green and clean,” Alex says.

As the largest Nordic financial institution, Nordea has the opportunity and responsibility to assist clients in understanding this emerging landscape of client risk and disclosure.

“Together with the Sustainable Finance Advisory team, I am looking forward to helping clients understand what goes around, and to be well prepared for what may come around,” he says.