Responsible lending and risk management
Responsible financing and lending are cornerstones of SEB’s business, creating long-term sustainable value for customers and shareholders. SEB is committed to supporting its customers in their work on transitioning to sustainable solutions.
The bank integrates risks and opportunities related to environmental, social and governance aspects into customer dialogues, policies and processes. According to SEB’s Credit Policy on Corporate Sustainability, sustainability risks shall be considered in all credit decisions, with focus on the repayment capacity of the customer, the underlying value of collateral, as well as reputational consequences for SEB. The aim is to identify, analyse and manage these issues, including in the areas of human rights, anti-corruption, labour rights, social relations and environment.
Knowing our customers
SEB takes great care to know our customers well and we view responsible financing and credit granting as a cornerstone of our business, creating sustainable customer and shareholder value. SEB includes risks and opportunities related to environmental, social and governance aspects in the credit review.
In the customer dialogues, the bank engages on the same aspects on a regular basis. These aspects include human rights, labour rights and social relations, anti-corruption and environment. The aim is to understand the customers’ challenges and opportunities so that SEB can make the appropriate credit considerations and be a better business partner
For more than a decade, SEB has supported large corporations and financial institutions in finding sustainable financing solutions, such as green bonds. 2018 was the 10th anniversary of the world’s first green bond for institutional investors, issued by the World Bank and initiated by SEB. Over the years, SEB has gradually developed its role as a global thought leader and has proactively contributed to setting the standard for this financing vehicle. In 2018, SEB was the fifth largest underwriter and SEB’s global share of underwriting was 3.7 per cent, corresponding to a volume of USD 5bn (source: Bloomberg).
SEB recognises the need for further harmonising the green bond market and thus supports the EU Commission’s action plan for sustainable finance and the ambition to create a green bond standard among other things.
SEB's own green bond
In 2018 SEB’s green loan portfolio increased by SEK 3bn to SEK 16bn. The proceeds are used to finance SEB’s green loan portfolio, which consists of assets and projects that contribute to lower carbon emissions and support the UN’s SDGs.
Half of the green loan portfolio consists of renewable energy projects and the remainder is sustainable forestry, certified buildings and clean transportation. The quantitative environmental impact of the green bond was in last year 232,234 CO2e reductions (tonnes). SEB’s first own green bond in the amount of EUR 500m was issued in 2017. Read the SEB Green Bond Investor Reports 2018 here.
SEB offers sustainable financing solutions also for private individuals. In 2018, SEB was the first large bank in Sweden to launch green mortgages. This initiative meets increasing customer demand for sustainable products, which is in line with SEB’s business strategy. The loans are available to anyone with housing that fulfils specific requirements, for example Sweden’s National Board of Housing, Building and Planning has assigned an A or B rating for energy efficiency.
Position statements and sector policies
SEB has taken a position on three specific sustainability issues – climate change, child labour and access to fresh water – and established policies for six industry sectors – arms and defence, forestry, fossil fuels, mining and metals, renewable energy and shipping.
The purpose of these statements and policies is to establish a common framework for a pro-active and future-oriented dialogue on key issues with our clients, as well as for internal guidance. The sector policies and position statements are included in the regular business review as well as in the annual credit review for large and medium-sized corporates since 2011. Read more about the policies here.
Climate change and TCFD
SEB believes that climate change is one of the most serious global challenges the world is facing. It will have significant impact across many sectors and the bank has an important role to ensure transparency around climate-related risks and opportunities. In 2018, SEB endorsed the Task Force on Climate-related Financial Disclosures (TCFD) recommendations, a global initiative aiming to increase and harmonise companies’ climate-related financial disclosure to stakeholders. Since then, the bank has initiated work to implement the recommendations.
Climate change can have an impact on SEB’s credit portfolio and fund holdings, and it is important that this is considered in the risk analysis and management. The bank has developed a methodology to capture the more long-term effects of material sustainability and disruption issues in the credit analysis. SEB’s ambition to better understand the impact of different climate scenarios, in terms of a transition to a low-carbon environment and physical consequences of climate change, as well as opportunities and risks implied. This will be important for future strategic decisions and risk management.