Environment and climate
Questions and answers
Enviroment and climate
We address environmental aspects in financing and investments as well as in managing our own environmental impact. Our responsibility concerns the impact that we or our business partners have on living and non-living natural systems, including ecosystems, land, air and water. We incorporate environmental and climate considerations into strategic planning, business development, risk management, in credit assessments and customer selection processes. Our impact is both direct through our own emissions and indirect through our customers' emissions.
In order to manage our own environmental impact, we have set targets to reduce carbon emissions to zero by 2045. This targets includes milestones to reduce emissions with 66 per cent by 2025 and with 75 per cent by 2030, both compared to baseline year 2008. From 2021 onwards, our goal is to reach a net effect of zero through climate compensation.
To manage our indirect impact, we have developed a tool that is used for assessing corporate customers' current and future climate impacts, the Customer Sustainability Classification tool.
We use this tool to engage with customers in constructive dialogues about their decarbonisation strategies. Hereby we can support companies in transition with advisory services and financing for potential investment needs.
The tool also enables us to measure and report on the aggregate climate impact of our credit portfolio and to set strategic goals for shifting and aligning our activities with the climate objectives of the Paris Agreement. We describe our approach to climate change, and how we manage our direct and indirect climate impact in the Climate report (prepared based on the recommendations from the Task Force on Climate-related Financial Disclosures, TCFD), included in SEB's Annual and Sustainability Report 2023.
In April 2021 SEB joined the UN-initiated Net-Zero Banking Alliance through which we commit to align our attributable emissions from our lending and investment portfolios with pathways to net-zero by 2050 or sooner.
As part of our sustainability strategy and ambition to be a leading catalyst in the transition to a low-carbon society, SEB strives to reach a net-zero credit portfolio by 2050 at the latest. In order to steer our business towards that goal, and to measure our progress along the way, we have developed two proprietary metrics – the Carbon Exposure Index (The Brown) and the Sustainability Activity Index (The Green) – and set interim 2030 sector targets in line with our commitment to the Net-Zero Banking Alliance (NZBA).
As a bank, we have a key role in financing the transition that has already started and which must accelerate in the future. We offer our customers advice and financial solutions to increase access to renewable energy and other technologies that support the transition and decrease the dependency on fossil fuels. We help our customers identify sustainable business opportunities and manage potential risks, and based on a common view of a desired future we agree on a path forward. In those cases where we don't share a joint understanding we will however over time disengage in an orderly way. An important corner stone in this work is the Customer Sustainability Classification tool.
We recognise the need for society to reduce its dependency on fossil fuel related products given their significant negative climate impact. SEB’s policy on fossil fuels includes a roadmap for how SEB will phase out its exposure to coal and to unconventional oil. It also highlights SEB’s guidelines regarding environmentally sensitive areas such as the Arctic. We will continue to gradually reduce our credit exposure to fossil fuels within the oil- and gas sector by applying a cap to exploration, production and oilfield services activities. This cap is lowered annually.
SEB has a restricted approach to coal which is stated in the sector policy on fossil fuel. For existing operations we avoid providing financial services to, or invest in, companies engaging in the practice of mountain top removal. SEB will exit current business relationship where more than 5 per cent of the revenues by 2025 is derived from thermal coal mining. For Germany there is a time-limited exception, related to the German national legislation. We shall avoid entering into new business relationships with companies operating thermal coal mines or providing dedicated financing to thermal coal mines. For several years we have excluded financing of new coal-fired power plants.
For new projects and capacity expansion we also avoid providing financial services to, or invest in projects that are dedicated to thermal coal extraction, greenfield or brownfield thermal coal mining expansions as well a infrastructure projects that are dedicated to thermal coal.
SEB's fund company has a strict approach to fossil fuels. All funds exclude companies that extract or process fossil fuels, including extraction of unconventional fossil fuels, such as oil sands and deep-sea drilling in particularly sensitive areas. Similar restrictions apply for power generation and distribution of fossil fuels. Exceptions can be made for companies that have clear targets and show ongoing active transition plans in line with the Paris Agreement.
SEB Investment Management works to accelerate and support companies in establishing climate strategies in their business models through active ownership, either by engaging directly with the company or in partnership with other investors. We engage with some of the world’s largest corporate greenhouse gas emitters via IIGCC, Climate Action 100+ and other initiatives, including ISS ESG.
SEB Investment Management is a signatory of Net Zero Asset Management initiative (NZAM) and is committed to reach net zero greenhouse gas emissions (measured in tCO2e) by 2040 for the total assets under management in funds. Interim targets, with a baseline of 2019:
- By 2025 reduce emissions from the fund offering by 50 per cent
- By 2030 reduce emissions from the fund offering by 75 per cent
Green products and services
SEB's product offering reflects one of our main ambitions – to support our customers in the transition to a low-carbon economy and to contribute to a more prosperous future for people and businesses. Among the examples are:
Corporate customers
Corporate customers can choose activity-based or performance-based solutions. Green, social and sustainability loans support environmental or social purposes and activities. Clients may seek to attach the green/social label to their funding for various reasons, including communications with their stakeholders.
In performance-based solutions such as sustainability-linked loans and bonds, the financing cost is linked to the customer’s ability to perform on pre-defined sustainability-related KPIs such as climate change mitigation or social issues.
See example of how we support our corporate customers: Net Zero Transition
SEB also offers sustainability-linked supply chain financing, green guarantees, green mortgages and green leasing for private customers.
Green bonds
A green bond is a fixed-income instrument designed to fund specific projects that have positive environmental and/or climate benefits. SEB is a pioneer and have been a global thought leader in green bonds since 2008 the World Bank issued the world’s first green bond, arranged by SEB.
Green loans
A green loan is like any other loan, but the money must be used to support climate and environmentally friendly purposes. For a loan to be eligible for funding by SEB's own green bonds, it needs to adhere to SEB's Green Bond Framework
Sustainability-linked loans
The loan cost is linked to the client's ability to perform on ESG issues such as climate impact mitigation. SEB was a pioneer in linking a sustainability linked loan to Science Based Targets, which links the corporates climate impact reduction to the Paris Agreement. This makes it scientific, measurable and monitorable.
Sustainability-linked bonds
A sustainability-linked bond is linked to the issuer's sustainability strategy and performance based on predefined and externally verifiable key performance indicators. If the target for the KPIs are not reached, it will lead to a cost for the issuer and a premium for the investors, which can i.a. be regulated either through an adjusted coupon or, as in this case, an adjusted redemption price, which are determined in a reconciliation prior to the bond's maturity.
Green constructions loans
SEB offers the possibility to apply for green construction loans when financing residential and commercial properties of any size. SEB uses green funding to finance the properties that are classified as green.
Green car leasing
SEB offers green car leasing, which is yet another way for us to contribute to the shift to a low-carbon society. The solution is offered to corporate customers and organisations that choose electric or biogas cars.
Green mortgages
SEB was the first large bank in Sweden to offer green mortgages and loans to housing associations. This is based on SEB's belief that the houses that qualify as green will have substantial energy savings making them less exposed to energy price fluctuations but also more attractive and thus easier to sell.
What is included in SEB’s green loan portfolio?
SEB has a green bond framework in place since 2017, which was updated in 2022. The Green Bond Framework ensures that SEB’s green bonds, by financing green loans, are used for low-carbon and climate change resilient projects and investments. In addition, the green loans should promote environmental and ecosystem improvements and thereby also support the SDGs.
Under this framework, SEB issues green bonds to finance projects and assets that support an environmentally sustainable society. SEB has four green bonds outstanding. As per 31 December 2023, the pool of eligible green assets amounted to SEK 61.5bn, an increase of 32 per cent since 31 December 2022. The growth came mainly from financing of renewable energy and green buildings.
SEB green bond Investor Report 2023 (pdf)
SEB's Green Bond Framework 2022
Green investment products
SEB has various savings and investment products that aim to mitigate climate change. As an example all SEB labelled funds exclude companies that extract or process fossil fuels, including extraction of unconventional fossil fuels, such as oil sands and deep-sea drilling in particularly sensitive areas. Similar restrictions apply for power generation and distribution of fossil fuels. Exceptions can be made for companies that have clear targets and show ongoing active transition plans in line with the Paris Agreement.
Among other investment products that contribute to reducing greenhouse gas emissions are the SEB Global Climate Opportunity Fund and the SEB Nordic Energy Fund.
SEB has chosen not to certify according to any international Environmental Management Standard, e.g. ISO 14001. However, we have major elements of an environmental management system implemented in the organisation. We have a clear organisational structure in place, governing our sustainability work and structure as well as clarifying responsibility for environment aspects. We have an environmental policy and set annual environmental targets that is followed up and reviewed by a third party audit.
Contact us
SEB's sustainability experts have extensive knowledge in areas such as climate and financing solutions, sustainable investments and regulatory development in the European Union.