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SEB comments on TV program on coal energy

The investigative programme Kalla Fakta on Sweden’s TV4 alleges in a program on 1 February that SEB has financed a new coal-fired power station in Germany and that the bank has thus violated its own policy from 2015 not to finance new coal energy. SEB rejects Kalla Fakta’s allegations. The bank has complied with its policy.

Here are SEB’s comments on some of the allegations made by Kalla Fakta in the programme and also the bank’s view of its role in the transition to a low-carbon economy and a more sustainable society.
Firstly, how do you see your role and your responsibility in the climate transition?

Climate change is the greatest challenge we face today and SEB is and will be part of the sustainability transition that must come. We have committed to this by signing the UN Principles for Responsible Banking. This means that we are committed to adapting our business strategy and lending so that they are aligned with and contribute to the UN’s sustainability goals and the Paris Agreement.

As a bank we have a big responsibility for how we conduct our business, what we finance and what we invest in. This means that we both engage with and support our customers in their transition to a more sustainable future in those cases where such a transition is possible, but at the same time we might need to terminate a customer relationship if we do not share goals and have no possibility to influence them. We also see that we have a key role in being involved in financing the enormous transition which is taking place and which will accelerate in the future, including renewable energy, new technology and new solutions which help our societies to reduce their dependence on fossil fuels.

Our commitments to the UN climate goals and the Paris Agreement are not in opposition to having customers with a large climate footprint – quite the opposite. If we are to meet the goals of the Paris Agreement, those companies with the largest climate footprint must transition. SEB has chosen to get involved in being part of that transition. We must work on a broad front if we are to succeed in meeting the threat from global warming.

As we help to accelerate our customers’ transition, the bank’s exposure to fossil fuels will decrease. SEB has also taken other steps to reduce this exposure and has, for example, completely exited from parts of the oil sector. Further, the bank will during the coming year phase out its exposure to coal. SEB sets an annual ceiling for its credit exposure to fossil fuels in the oil and gas sectors – a ceiling which is lowered on a yearly basis. Through an updated sector policy for fossil fuels which SEB will publish soon, we will further strengthen the guidelines to cover more areas and further clarify our position.

Why can’t SEB’s CEO Johan Torgeby answer questions about individual companies?

As a bank, the bank secrecy laws do not allow us to comment, confirm or deny individual customer relationships. This is both out of respect for the integrity of our private and corporate customers – and violation of bank secrecy is a crime.

Just as you cannot ring the bank and check how much your neighbour has in his savings account or mortgage, the bank cannot comment on whether a company is or is not a customer of the bank or comment on a relationship. Just as journalists must keep to the laws and regulations there are for journalism, such as source protection, we must follow laws regarding bank secrecy.

Kalla Fakta alleges that SEB financed a new coal-fired power plant which Uniper has just taken into production in Germany and that SEB has therefore violated its own policy from 2015 not to finance new coal energy or new coal mines. Is that right?
No. Kalla Fakta’s allegation is wrong. In 2015 SEB introduced a policy which means that we do not finance new coal-fired power stations or new coal mines. We have complied with that policy and it remains in place.

We may not, due to the laws on bank secrecy, confirm or deny or discuss individual customer relationships. However, we note that public sources report that the new coal-fired power station that Kalla Fakta names in its programme, Datteln-4, was in principle complete back in 2013 although because of various delays, including appeals, did nor start operating until 2020.

But according to Kalla Fakta you have made loans to Uniper whose biggest project in recent years has been a new coal-fired power station. How do you know that your loans were not used for this coal-fired power station?

Generally we can say that even if a company which is a customer of SEB has fossil fuel operations or is building a new coal-fired power station you cannot conclude that a loan from SEB has automatically gone to a fossil fuel project. In Germany we have for example lent money to energy companies with fossil operations but where our loan has financed investments in renewable energy such as wind power as part of the company’s sustainability transition.

We also have methods for following up how the money we lend is used and know that we have complied with our policy from 2015 to not finance new coal energy or new coal mines.

Kalla Fakta alleges that SEB’s lending to companies with a large climate footprint is a dirty secret which the bank has attempted to hide. Is that right?

No. That is an erroneous allegation. This lending is clearly shown in the figures for our lending and credit exposure which are published and updated every quarter. It is also clear from our carbon policy from 2015 where we committed to not finance new coal-fired power stations or new coal mines as well as in public information on our stance towards the climate challenge and our role in the transition, for example here:

Kalla Fakta also says that SEB has lent money to RWE which is expanding its coal mines. How does this fit in with the bank’s climate policy?

Once again, because of the law on bank secrecy we cannot confirm or deny individual customer relationships. However, it is no secret that we have a few customers in Germany who partly have coal operations.

In general we have chosen to get involved in order to contribute to the transition that these companies must make in order to have a future in the more sustainable world we are heading into and to comply with the legal requirements in Germany regarding the country’s plan to phase out the use of coal.

Our customers have ambitious transition plans and we want to be there supporting them on this journey. We consider that this is a responsibility we have as a bank – to be involved in financing renewable energy and new sustainable technology. If we should choose not to support transition, we would obstruct development in the sector with the greatest need for transition – and where there is also the greatest potential for a positive effect on the climate when companies reduce their climate footprint. However, there must be willingness and an opportunity to transition. If in a sustainability dialogue with our customers we discover that we do not have shared goals, we will terminate the customer relationship.

Why do you still have customers that use coal?
We have a few customers, including German energy companies, who still have coal as part of their energy mix.

That coal is still used in Germany is due among other things to a decision by the country’s government a few years ago to shut down nuclear power plants. Therefore for a number of years to come Germany will depend on a certain amount of coal energy to meet its electricity supply.

It is however important to remember that German energy companies, and our customers, are investing heavily in renewable energy such as wind and solar and on phasing out coal energy in accordance with the Paris Agreement and decisions made by the German government. We are supporting them in this essential transition for example by financing investments in renewable energy. So dependence on coal energy is falling fast in Germany.

It is also important to remember that all countries have their specific challenges and plans for transition. This applies to Sweden, where in principle all electricity comes from nuclear or hydro power plants, and Germany where, despite major investments in renewable energy, they will depend on coal energy for a number of years to come for society to function. We operate in each country with their specific challenges and solutions and are part of the transition in all countries where we do business.

Why don’t you just terminate your exposure to coal?

That process is ongoing and SEB will over the next 5-10 years phase out its exposure to coal with the exception of Germany where we will support our customers in responsibly transitioning in accordance with the country’s phase-out plan. The 2015 policy to not finance new coal energy or new coal-fired power stations is part of that process. Through an updated sector policy for fossil fuels which SEB will publish soon we will further strengthen the guidelines to cover more areas and further clarify our position.