World Water Day has been celebrated annually since 1993, to highlight the importance of freshwater, raise awareness about the 2.2 billion people who lack access to safe water, and encourage action to address the global water challenges. So where does SEB Water fit into the picture?
What is SEB Water and what is your mission?
SEB Water is a new unit within SEB, which was established to identify the water-related challenges facing our society. Our team’s mission is to understand what these challenges mean for SEB’s clients and to develop advisory capacity and, where possible, banking solutions to help address them.
What are the main water-related challenges that society is facing today?
The world is currently experiencing a number of water-related challenges ranging from an outdated water infrastructure overwhelmed by increasing demand to climate change-driven shifts in water patterns. We have grouped them into four areas:
- Too much water (floods)
- Too little water (scarcity)
- Too dirty water (pollution)
- Too old “water” (outdated infrastructure)
All four areas threaten our quality of life and need to be addressed.
Why is the topic of water important for a bank such as SEB?
The OECD and The World Bank have estimated that we need to raise USD 22.600bn over the next 25 years to meet the water-related challenges. This means that there is a need for a re-allocation of capital. Our clients who are working on the solutions to these challenges need banks that can support this work with capital. At the same time, it’s a question of credit risk management.
But it is important not only for SEB. The economy, including infrastructure and industry, cannot operate without water and the stress we are witnessing in, for example, Gotland (scarcity), Valencia (floods) or Östersund (pollution), is unfortunately a part of a trend that is expected to accelerate. If we want to maintain our quality of life as a society, we need to act together to address these challenges.
How can SEB support its clients in managing and seizing water-related risks and opportunities?
First, we need to make sure that we have a credible and robust platform – that’s what we are building now. Then we need to spread this knowledge across the organisation, so that we can support our clients on all levels in understanding how we see these risks and how we can assess the possible impact they will entail for them. And then we need to be ready to support the re-allocation of capital and the financing of the necessary solutions, such as rebuilding of the outdated infrastructure.
Can you share any specific initiatives or solutions the team will be working on?
We have over the past 10 years been working with Blue Bonds, which are, in principle, the same as Green Bonds, but have a focus on water. As part of this work, we have, for example, supported the re-financing, in the volume of around SEK 100bn, of water infrastructure in the Netherlands. We want to utilize this experience on a broader scale. We have also defined blue lending under our Green Bond Framework, including areas like water drainage which is a way of adapting to the negative effects of climate change, and have thereby made it easier to identify other relevant water projects in the future.
What are you looking forward to the most in this new role?
To repeat the collaboration which we, as a bank, have had internally, as well as with our clients, to establish the Green Bond market – but this time for the Blue.