Our approach to climate change
Climate change is accelerating and has become the greatest and most urgent challenge of our generation. As a bank, we have both a responsibility and the ability to create financial solutions that accelerate the transition. We have committed to the Paris Agreement by the signing of the UNEP FI Principles for Responsible Banking, and one of the founding signatories of the Net-Zero Banking Alliance and the Net Zero Asset Managers initiative.
We aim to contribute to a more sustainable society by supporting our customers and portfolio companies in meeting their climate-related goals and we have an important role to play in channelling the vast investments required to make the transition happen. We do this by incorporating environmental and climate considerations into strategic planning, business development, risk management, in credit assessments and customer selection processes.
Managing climate change risks
We believe that one of the main drivers of the transition to a low-carbon economy will be the transformation of large corporate companies, especially in sectors with a material carbon footprint. SEB is a long-term major financial partner to Nordic large corporates and among the largest asset managers in the Nordic which makes us uniquely positioned to contribute to this transformation. Our ambition is to participate in the transformation by offering advisory leadership, innovative and sustainable financing, and investment solutions.
Direct and indirect impact
SEB’s impact on the climate is both direct through our own emissions and indirect through our customers’ and portfolio companies’ emissions. In order to manage the bank’s direct impact, we work actively to reduce our own carbon emissions and have set targets to limit them to 17,000 tonnes ±5 percent by 2025. The long-term ambition is to reduce own carbon emissions to close to zero in 2045.
As a corner stone in our efforts to manage the indirect impact the bank has developed the Customer Sustainability Classification Model, a tool that is used for assessing corporate and real estate customers’ current and future climate impacts. This model is used 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 model 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.
Ambitions and goals
SEB has defined three new climate-related ambitions and goals related to our indirect impact. These include laying out a path for the reduction of our fossil fuel credit exposure (Carbon Exposure Index – The Brown), setting growth ambitions for our sustainable products, advisory services and investments (Sustainability Activity Index – The Green) and assessing our customers’ climate impact and alignment with the Paris Agreement (Transition Ratio – The Future).
SEB has set net-zero aligned 2030 interim targets for specific sectors in its credit portfolio. The targets cover SEB’s lending commitments to the oil & gas, power generation, steel, car manufacturing, and Swedish household mortgage sectors. They are an important part of our effort towards reaching a net- zero credit portfolio by 2050 or sooner, and are in line with the ambition to limit global warming to 1,5 degrees Celsius in accordance with the Paris Agreement.
In November 2022 we shared for the first time our progress.
Our approach to fossil fuel
We firmly believe that there is a need for society to reduce its dependency on fossil fuel related products given their significant negative climate impact. In February 2021 SEB’s Board of Directors adopted a strengthened policy of fossil fuels. The policy includes a roadmap for how we will phase out our exposure to coal and to unconventional oil. It also strengthens SEB’s guidelines regarding environmentally sensitive areas such as the Arctic.
We have a restricted approach to coal and 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.
SEB’s Policy on Fossil Fuel (pdf)
Active part in the transition
SEB takes an active part in the global green transition. We have committed to several international initiatives targeting climate change. Among them is the UN-initiated Net-Zero Banking Alliance which SEB joined in 2021 and through which we commit to align our emissions from our lending and investment portfolios with pathways to net-zero by 2050 or sooner. Moreover, we participate in the ongoing development work in EU. Starting from 2018, SEB was a member of the Technical Expert Group that contributed to the development of the EU taxonomy, and we are today member of the expert group Platform on Sustainable Finance which advises on topics related to further developing the EU taxonomy.
SEB has 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.
Read more in the Annual and Sustainability Report 2021 (p.60–68) we describe how we manage climate change risks, our direct and indirect climate impact and how we work to classify our corporate credit portfolio, based on information about our customers’ carbon emissions.