Our Climate Strategy

Our climate strategy focuses on minimizing risk and maximizing the opportunities of sustainability. Read on to learn more about how we work.

Why are climate issues important to Storebrand?

As a financial services company and major investor, Storebrand holds an important position. We are Norway’s largest private investor, managing assets of more than NOK 700 billion, and we were one of the first companies to adapt our investment portfolio according to accommodate concerns about climate change. We work strategically to make a positive impact on environmental and climate change issues in our business operations.

Minimizing our own carbon footprint

In 2008, Storebrand became Norway’s first completely «climate neutral» financial group. We have achieved this status by setting stringent requirements for limiting our CO2 emissions, and establishing specific goals to minimize our own CO2 consumption and reduce our carbon footprint when choosing which sources we buy power from and when we go on business trips.

We reduce our own emissions by buying electricity generated by renewable energy and heating solutions with a guarantee of origin, through working systematically with the properties we manage and through dialogue with our tenants.

Storebrand operates in Norway, Sweden and Lithuania. In order to cut down on business travel, we utilize technological solutions such as video conferencing; we encourage travelling by train whenever possible; and our employees can borrow electric cars for shorter trips.

When it comes to the CO2 we do produce, we compensate for the impact on the environment by purchasing emission quotas. For 2018, we compensated by purchasing quotas for a wind turbine project in Sri Lanka that replaces coal operations through UN's CDM market (Clean Development Mechanism).

Climate: Opportunities and Risks

Storebrand has included an assessment of environmental impact in our sustainability rating for potential investments. We look for companies that offer innovative and sustainable products. We have observed how consumers increasingly equate quality with sustainability. Hence, consumers are the driving force behind the “green shift”. New investment categories such as green bonds are experiencing rapid growth, and help channel funds towards businesses that focus on sustainability.

At the same time, climate change is one of the most significant risk factors for sustainability. According to the International Energy Agency, we have to refrain from using two-thirds of the known reserves of oil and gas if we are to reach the two-degree target That is why Storebrand does not wish to invest in companies with a significant environmental impact, and as a result, we have excluded around 60 companies from our investment ecosystem. Read more about the companies we do not invest in, under «Exclusions».

Opportunities

Climate impact is at the core of all our investments, as well as when we analyze companies.

Our sustainability analysis helps identify those companies that have a positive impact on the environment.

Storebrand manages assets worth more than NOK 725 billion, and we work actively to invest in companies that are serious about sustainability. We conduct extensive sustainability analyses of the companies we consider investing in. Our analyses consist of two main components: An analysis of the company’s business practice, and a positioning analysis. The analysis is tailored to the specific sector under evaluation, meaning that our environmental assessment is appropriate for each company which we deal with.

The business practice analysis assesses the sustainability and environmental profile of each company. The positioning analysis investigates the risks and opportunities associated with each company in terms of climate change and prospective regulatory changes. We consider the following elements:

  • The companies’ commitment to developing innovative solutions and technology for the future
  • Their use of renewable energy as well as a commitment to efficient energy consumption
  • Whether they set environmental requirements for their suppliers
  • Using environmentally friendly products, services and solutions
  • Their carbon footprint
  • Management systems for addressing environmental issues
  • Environmental certifications
  • The carbon footprint of their production processes
  • Greenhouse gas emissions

For example, many companies operating in the energy sector face the risk of «stranded assets», and are therefore rated according to the degree in which they invest in industries such as coal mining and oil sand extraction.

Our analysis covers over 2500 companies. Each company is rated on a scale from 0-100, indicating their level of sustainability. This rating is used in all investment decisions we make, including index tracking products. We invest more in companies with a high sustainability rating, and less in companies that are not committed to sustainability in their business operations – that is, those with a low score.

Green Bonds

Storebrand is one of the main investors in «green bonds» in the European market. Green bonds are a new financial instrument that enables the lender to not only select who gets to borrow money, but also what the money can be used for. Green bonds offer the same financial terms as regular bonds, with the added dimension that they contribute to the “green shift”. We also invest in Climate Bonds and Social Bonds.

Green bonds are associated with projects that are typically related to

  • renewable energy
  • energy efficiency (including energy-efficient/ green buildings)
  • sustainable waste management
  • sustainable property development (including forestry and agriculture)
  • biodiversity conservation
  • low-carbon transport (transport with small carbon footprint?)
  • water purification and
  • drinking water supply

Green bonds are as a rule subject to third-party assessment. We keep a list of pre-approved operators for third-party assessments, who have been vetted according to their expertise and experience, among other factors. In addition, Storebrand’s sustainability analysis division carries out independent research of the quality of third-party assessments in terms of factors like relevance and materiality.

Storebrand’s ambition is to ensure that our green bonds portfolio have genuinely positive impact on society and the environment, at the same time as they are of sound financial quality. Storebrand conducts an annual review of the portfolio holdings in order to ensure that the reporting meets our quality standards. Both financial reporting and impact reporting will be assessed by our investment team and sustainability analysts.

Risks

We work to reduce climate change through our investments. We have identified companies with the greatest carbon footprint, primarily in the oil sand extraction and coal mining, and excluded them from our investment ecosystem. In addition, we have drawn attention to the second part of the climate equation– by excluding palm oil plantations that do not operate in a sustainable manner.

Exclusions: Coal Mining

According to the International Energy Agency, 2/3 of the known fossil fuel energy reserves cannot be exploited if the world is to achieve the two-degree target by 2050. With the high CO2 emissions associated with the combustion of coal, it is necessary that the world turns to more sustainable energies. Due to stricter regulations, demands for increased energy efficiency, decentralization of energy production and increasing competition from newer and cleaner sources of energy make, the future prospects of companies involved in the coal industry are not positive.

We have been working to reduce Storebrand’s coal exposure since 2013, and during 2014 and 2015 we have increased our efforts. We now exclude companies that derive more than 25% of their revenue from coal.

Read more about our improved coal policy here

Exclusions: Oil Sands

There are several reasons why we consider oil sands to be problematic:

  • Greenhouse gas emissions
  • Water consumption
  • Discharge of chemicals
  • Biodiversity loss
  • Problems with the rehabilitation of areas after extraction activities
  • Basic human rights issues

In our opinion, these challenges are so significant that we do not deem it possible to operate this business in a sustainable manner.

Comparisons between oil sands and other forms for oil extraction show that the adverse impact on the environment caused by oil sand extraction far exceeds that of conventional oil extraction.

Since we first started reducing our exposure to oil sand extraction in 2013, there have been strong economic arguments against this form for extraction. As recently as in November 2014, Carbon Tracker published a report estimating that 92 % of future oil sand production will require a price of USD 80 / bbl to break even, and an assumed higher market price in order to be approved. Even without speculating on future oil prices, investments in oil sands extraction will be difficult to justify economically. We are also working with “active ownership” in this field, and have for years teamed up with Greenpeace to vote against Statoil’s oil sand activities in Canada.

You can read more about what kind of companies we do not invest in, under “Exclusions”.

Storebrand deforestation policy

Storebrand deforestation policy is a call on companies to eliminate deforestation

This policy defines our minimum standard for investment and outlines the objectives of our engagement with the sector. We encourage higher standards and collaboration with other investors to help companies improve. Storebrand's deforestation policy lays out what we expect of companies regarding their disclosure and management of deforestation risks. It calls for companies to demonstrate a commitment to eliminating deforestation by taking the following steps, among others:

  • Stronger awareness and governance regarding deforestation risks, including oversight at the board of directors level;
  • A publicly-disclosed commodity-specific deforestation policy with quantifiable, time bound commitments covering the entire supply chain and sourcing geographies;
  • Traceability across the entire commodities supply chain;
  • Monitoring and verification processes to ensure that suppliers are complying with the company’s deforestation policy.

You can read the whole deforestation policy here

«The Task Force on Climate-Related Financial Disclosures (TCFD)»

  • Based on the recommendations from "The Task Force on Climate-Related Financial Disclosures (TCFD)", The Storebrand Group began to address climate risk in our investments in 2017.
  • This framework was used in the work of structuring information for our
  • In 2018, Storebrand Asset Management participated in UNEP FI's TCFD Investment Investor Group to take a step further towards more comprehensive reporting.
  • Through PRI, Storebrand is in dialogue with the companies we are invested in to ensure optimal exchange of information through the TCFD.