Managing climate-related risk
Climate change and its impacts, such as extreme weather conditions, are becoming increasingly apparent risk factors. The physical risk of damage caused by climate change and risks arising from a transition to a low-carbon economy may have a negative impact on SEB’s credit portfolio, and on customers’ investments in SEB’s funds.
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.
SEB is developing a methodology to capture material sustainability impact as well as disruption risks in the credit analysis. Qualitative sector analyses are being performed on high climate change impact sectors, including energy, transport and the manufacturing industries. These are also expected to be the most affected industries in the transition to a low-carbon economy. With regards to physical risk, industries such as real estate, forestry and insurance are deemed to be more impacted.
By implementing the TCFD recommendations, our goal is to better understand, manage and communicate how transition- and physical risks will affect our financing and investment activities in different climate scenarios. This will be important for future strategic decisions and risk management.