In order to succeed in the ambition of putting ESG higher up on corporate agendas, the financial industry must be better at drawing attention to the positive financial implications of proactive work in this area. We believe that positive incentives, such as increased long-term shareholder value and a generally reduced risk profile, are stronger drivers in compelling various groups of owners than the basic requirements for a company to act appropriately and decently.
What investors desire is an alternative where the soft parameters, such as ESG, match the hard ones, the financial parameters. In other words: an investment product that can be sustainable without sacrificing a good yield. Within the area of asset management we are already there, and Nordea is leading the way with its STAR concept. But for a corporate issuer of bonds or equity to be able to offer sustainable investment alternatives, it needs to accept some initial investments to achieve the key requirements. There will be costs for qualifying to be considered sustainable. These costs are long-term investments to create a more robust business model.
Securing a strong ESG performance will, for a company, over time mean avoiding problems and incidents related to sustainability. This should ultimately create a competitive advantage, both by reducing – or even avoiding – ESG-related costs, and by reducing volatility in the cash flow generated from the absence of such major incidents. Over time, this should reduce the risk premium investors will apply to the company’s cost of capital.
The reason we are making a much broader push at Nordea is because we believe the timing is right. It is happening right now, and we have a chance to be part of this and position ourselves together with our clients to become number 1 in this field. We also have a responsibility as the largest bank in the Nordics to help our customers. With the biggest balance sheet in the Nordics, the strongest Nordic DCM platform, highlighted recently by 12 different no. 1 positions in rankings by Dealogic, as well as the in-depth knowledge of ESG in Nordea’s asset management business, we could really contribute to accomplish lasting change.
Learn more about ESG
- Nordea Corporate & Investment Banking will host Nordea's first Nordic Sustainable Finance Conference, Friday 22 September 2017 in Stockholm. It is an exclusive event for invited business leaders only, and our aim is to provide a unique opportunity to network with key stakeholders taking part in shaping the future of sustainability in finance. Read more.
- Read an interview with Mathias Leijon, Head of Corporate and Investment Banking at Nordea on why ESG matters for both investors and corporates.
- Read an interview with Sasja Beslik, Head of Sustainable Finance at Nordea, about the work and increased focus within sustainable finance and sustainability at Nordea.