Climate Strategy 2020

Swedbank Robur’s Climate Strategy

SWEDBANK ROBUR’S CLIMATE STRATEGY

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Swedbank Robur’s Climate StrategyPurpose Swedbank Robur Fonder AB, below referred to as” Swedbank Robur” is an asset manager and a wholly owned subsidi-ary of Swedbank AB (publ). Swedbank Robur’s vision is to be world leader in sustainable value creation. Sustainable value creation refers to our ambition to create long-term returns for our customers, while also contributing to a positive development of the society and the environment. We consider sustainability as an integral part of well-man-aged and profitable investments. We aim to achieve this by being a key player that supports and influences positive sustainable change.

Swedbank Robur wants to invest in sustainable businesses with the potential to achieve positive impact. Swedbank Robur addresses sustainability using three methods; inclusion, exclusion and engagement. For more information on integration see Swedbank Robur’s Inclusion Strategy, for more information on exclusions see Swedbank Robur’s Exclusion Strategy and for more information on engagement see Swedbank Robur’s Engagement Strategy.

Climate change – the greatest challenge of our timeClimate change is the greatest global challenge of our time. Rising global temperatures are creating a number of physical and biological effects that will reshape politics, markets, technology, economies and most of all, lives all over the world. Minimising the global temperature increase and its effects is critical and requires a long-term, coordinated effort by a range of actors, including the financial sector. To achieve the Paris Agreement’s objective of limiting the global temperature to a maximum of 1.5 degrees Celsius, the Intergovernmental Panel on Climate Change (IPCC) has determined that global greenhouse gas (GHG) emissions must be decreased by 50% by 2030 and reach net zero by 2050.

Swedbank Robur is taking responsibility and actions to address climate change. We see this as an opportunity to invest in business ideas that offer solutions to reduce climate change.

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A common framework for Swedbank Robur In 2019, Swedbank Robur’s Board of Directors adopted two climate strategy goals. Our Climate Strategy is guiding us in our efforts to reduce climate-related risks and enable a transition to a low-carbon economy. Our aim is to stay ahead of policy decisions and to drive investments in technologies and services that promote a healthy climate. We also support a broad transition to a low-carbon economy by also investing in companies that contribute to global warming today, but can demonstrate a willingness and potential to align their business with the Paris Agreement. Our Climate Strategy lays the foundation for how we create long-term value for our customers, while also taking responsibility for reducing carbon emissions and investing in a sustainable future.

Swedbank Robur integrates this strategy into its investment decisions based on the investment process of each fund. Swedbank Robur manages a range of different funds and asset classes. The methodology used for integration varies depending on the philosophy, process and fund type.

The common goal for all our funds is to fulfill Swedbank Robur’s Climate Strategy Goals:

1. The combined fund capital will be aligned with the Paris Agreement’s goal to limit the global temperature increased to 1.5 degrees Celsius by 2025.

2. The combined fund capital will be carbon-neutral by 2040.

The aggregate fund capital will follow a track in line with the target of the Paris Agreement, starting from 2020. We will adjust our invest-ments in the most relevant sectors, and use acknowledged models to conduct scenario analyses.

Over the long term, the aggregate fund capital will go further than required by current sce-narios to be in line with the Paris Agreement. Accordingly, we will be climate neutral by 2040, ten years before the target of 2050. Emissions from companies and issuers will be net zero. The emissions covered are scopes 1 and 2, as well as relevant scope 3 categories. Net zero emissions are defined as [absolute emissions] - [negative emissions] (carbon capture through land use, carbon capture and storage etc.) and will be zero or negative. This corresponds to how global emissions should be in 2050 under a scenario of 1.5 degrees Celsius, according to the IPCC.

A systematic approach is needed to implement the Climate Strategy and the Sustainable Development Goals:s are important aspects when building a solid framwork. Swedbank Robur use three methods to reach our climate goals:

1. Include investments in companies that will drive the change (eg. Green bonds, companies and funds with clear climate transition goals).

2. Exclude investments in fossil companies with the largest climate related risks in their products and services (execeptions can be made for transition companies)

3. Engage to drive change though nomination committees, General Meetings, dialogues och cooperation with other stakeholders.


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InclusionWe will reallocate our investments in the most carbon-intensive sectors in line with the Paris Agreement require-ments e.g, energy production, transport, construction and property, agriculture and forestry and finance. This means increased investment in, for example, renewable energy and electric vehicles, and reduced exposure to the most fossil-fuel intensive sectors. We will invest in companies that can demonstrate a willingness to adapt their business to climate change, or companies that are already making a direct contribution to climate-change mitigation. We will also work for a fair transition. Our aim is to invest in investments running or adapting to economically sustainable technol-ogies and business models. For more information on different methods of inclusion see Swedbank Robur’s Inclusion Strategy.

ExclusionIn order to limit our exposure to companies with the largest climate related risks, Swedbank Robur has chosen not to invest in companies with ties to fossil fuels. Our definition of fossil fuel includes coal, oil and gas as well as shale oil, shale gas, arctic drilling and oil sand.


Fossil fuel Extraction Transportation Electricity generation Service

Coal 5 % 5 % 5 %** 50 %

Oil 5 %** 5 %** 5 %** 50 %

Gas 5 %** 50 % 50 % 50 %

** Investments may be made in transitioning companies in accordance with the definition. Invested companies can be found on Swedbank Robur’s Green List

Exceptions can be made for companies that have communicated clear transition goals, so-called transition companies. The transition companies will be published on Swedbank Robur’s Green List. For more information on our exclusion criteria, see Swedbank Robur’s Exclusion Strategy.

Companys that may be defined as “Transition companies”

◊ Fossil operations must not generate more than 50 per cent of the company’s revenue.

◊ The company generates no revenue from shale oil/gas, arctic oil/gas or oil sand.

◊ The company has committed to work in line with the Paris Agreement’s objectives to keep the increase in global average temperature to well below 2 degrees Celsius, for example by using Science Based Target, and the commitment is considered credible.

◊ The investment decision must be approved and documented by Swedbank Robur’s Sustainability Council.

EngagementEngagement as an owner with holdings on climate issues is an important part of the investment process. We conduct proactive (and reactive) dialogues as owner, with the aim to communicate clear expectations on what we would like to see achieved, but also support and promote climate issues to be discussed on board and management level. Our effort in this field is a continuous team work together with nomination committee members, corporate governance special-ists, fund managers and sustainability analysts.

Dialouge and cooperation with other investors is also an important part of our strategy. Therefore, we have e.g. com-mitted to the Climate Action 100+ initiative. As a signatory to Climate Action 100+, we are participating and engag-ing with the world’s largest green house gas (GHG) emitters urging them to take necessary actions to reduce climate change. We are also actively engaged in the Institutional Investors Group on Climate Change (IIGCC), a European mem-bership body for investor collaboration on climate change. Swedbank Robur has as also signed the international initia-tive Net Zero Asset Managers, according to which asset managers undertake to work to reduce the carbon footprint in their investment portfolios, and to support the companies in which they invest to achieve net zero emissions by 2050. For more information on our methods for engagement, see Swedbank Robur’s Engagement Strategy.

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Metrics and targetsIn September 2018 Swedbank Robur signed the framwork Task Force on Climate Related Financial Disclosures (TCFD) a framework for managing climate related risk for companies all over the world.

The initiative was founded in 2016 when the Financial Stability Board announced that climate change posed a risk to financial stability and that a coordinated global strategy was required. They established a task force, TCFD, to develop recommendations for reporting climate-related disclosures for companies and investors. The TCFD recommendations are structured around four thematic areas that represent core elements of how organisations operate:

◊ Governance: The organisation´s governance around climate related risks and opportunities.

◊ Strategy: The actual and potential impacts of climate related risks and opportunities on the organisation’s busi-nesses, strategy and financial planning.

◊ Risk management: The processes used by the organisation to identify, assess and manage climate related risks.

◊ Metrics and targets: The metrics and targets used to assess and manage relevant climate related risks and op-portunities.

Swedbank Robur reports according to the TCFD recommendations in the annual Climate Report. The Climate Report alos include the carbon footprint of our equity and balcance funds in accordance with the Swedish Investment Fund Association’s guidelines.


Climate strategy methods and measurable targets in different fund typesSwedbank Robur’s funds have different investment processes to integrate and implement the Climate Strat-egy and have therefore also chosen slightly different methods.

Swedbank Robur’s funds have different investment processes to integrate and implement the Climate Strat-egy and have therefore also chosen slightly different methods.

Equity fundsEquity funds are funds with an active investment strategy based on fundamental analysis and focus on the selection of companies. Sector-, region- and thematic analysis are significant elements of the strategy. As a re-sult of the fund’s investment strategy and concentration to relatively few holdings per fund, the fund manager can conduct a sustainability process tailored to the compa-nies in the fund. To have a proactive dialogue on the com-pany’s climate strategy and goals, is an important part of the investment process. As a large owner, it gives us the opportunity to influence, push and support companies to transition their business models to a fossil free economy.

Some funds also apply thematic investments with a specific focus on transitioning the companies. Structural themes are e.g. energy generation, new technologies, energy efficiency and energy storage. We want to invest in companies with a decarbonisation strategy in line with the Paris agreement, the TCFD-recommendations and with Science Based Targets.

The Science Based Targets initiative (SBTi) drives ambitious climate action in the private sec-tor by enabling companies to set science-based emissions reduction targets The SBTi is a partner-ship between CDP, the United Nations Global Com-pact (UNGC), World Resources Institute (WRI) and the World Wide Fund for Nature (WWF). Science-based targets provide a clearly-defined pathway for companies to reduce greenhouse gas (GHG) emissions, helping prevent the worst impacts of climate change and future-proof business growth.Targets are considered ‘science-based’ if they are in line with what the latest climate science deems necessary to meet the goals of the Paris Agree-ment – limiting global warming to well-below 2°C above pre-industrial levels and pursuing efforts to limit warming to 1.5°C.

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Quant funds (incl. close to index funds)Quant funds are funds with a rule-based and system-atic selection method where investments are chosen using mathematical models and statistical relationships. The fund manager integrates sustainability into the funds by adapting the selection process using quantita-tive sustainability data and guides the funds towards sustainability-related metrics. For example, funds may be optimised to increase exposure to companies that are quantitatively considered to have a high level of sustain-ability, that contribute to fulfilling the 17 UN Sustain-able Development Goals or have low carbon emissions. Quantitatively managed funds may either be actively managed or close index.

The framework behind EU Sustainable Finance Bench-mark Regulation for Paris Aligned Benchmarks is used to systematicly manage some quant funds in line with the Paris agreement. This means inter alia that the fund shall have at least 50% lower carbon intensity than its bench-mark and continuously decrease the carbon intensity compare with its benchmark with 7% annually. Examples of companies rewarded in the investment process should 1) be “the best in class” handling the climate challenges in industries facing large climate related risk, 2) have evidence based targets to reduce emissions and 3) be targeting SDG 7 and 13. Examples of companies excluded in the investment process are fossil fuel companies or companies where the company’s emissions of green-house gases are significantly greater than average in their industry.

Credit fundsCredit funds are funds that invest in corporate credits. Credit funds are managed through an active invest-ment strategy where the choice of individual securi-ties focuses on the selection of companies, and where sector-, region- and thematic analysis are also significant elements of the strategy. Swedbank Robur’s funds prioritise investments that contributes to the 17 UN SDG:s on climate transition to a more sustainable world. This means the fund’s investments target the theme and individual companies that are expected to make a positive contribution to climate-related SDGsTransition companies must demonstrate a strategic direction and goals towards reducing climate impact, such as steer-ing towards the Paris goal or Science Based Targets. The engagement focuses on increased transparency around the companies’ climate risks, including improved sustainability reporting. An important focus area within credits is sustainable bonds, which is an area with strong growth in terms of both volume and scope, for further information on sustainable bonds (eg green bonds and criteria for transition bonds, see Swedbank Robur’s Inclu-sion Strategy and Swedbank Robur’s Exclusion Strategy.


Facts about carbon measurement and methodsThe weighted average carbon intensity of the fund provides the fund’s exposure to carbon intensive companies. In addition to the company’s green houes gas (GHG emissions), there are two other factors that maybe used to compare the fund with a benchmark: the company’s sales and the company’s portfolio weight.This means that a decline in sales will result in a higher company carbon intensity, and an overweight of carbon intensive companies in the fund will result in a higher carbon footprint in the fund relative to the benchmark.

‘Scopes’ are used to determine how much of the companies’ direct or indirect emissions are included in the carbon footprint measurements, in accordance with the Greenhouse Gas Protocol (GHGP) Standards. We cur-rently report our Scope 1 and 2 GHG emissions. Metrics to also measure and report on Scope 3 and 4 are under development.

Scope 1: direct emissions (emission sources owned or controlled by the company). Scope 2: indirect emissions from consumption of electricity, heat or steam. Scope 3: life cycle emissions (limited data) Scope 4: avoided emissions (an important concept rather than a method)

The EU Climate Transition Benchmarks has been developed by a technical expert group on sustainable finance (TEG). TEG assisted the EU Commission in the development of a unified classification system for sustainable economic activities, an EU green bond standard, methodologies for low-carbon indices, and metrics for climate-related disclosure. The sustainable economic activities aims at supporting the delivery on the objectives of the European Green Deal by channelling private investment into the transition to a climate-neutral, climate-resilient, resource-efficient and just economy, as a complement to public money.

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Rate funds Rate funds are funds that invest in different types of fixed-income instruments. The funds base their strategy on analyses of the macroeconomic situation, the valua-tion of credit risks and liquidity requirements. Since the credit risk is low, the currency risk in most cases zero, while liquidity in investments should be good, manage-ment largely relies on a small number of bonds, namely Swedish government, municipal, regional and covered mortgage bonds. The sustainability agenda for these is therefore focused on managing the sustainability risks, including climate risks, inherent in these types of bonds and their issuers. An important focus area within credits is sustainable bonds, which is an area with strong growth in terms of both volume and scope, for further informa-tion on sustainable bonds (eg green bonds and criteria for transition bonds, see Swedbank Robur’s Inclusion Strategy and Swedbank Robur’s Exclusion Strategy.

Balanced funds Balanced funds are funds that invest in equities, credits, rates, alternative investments, either through direct investments, derivatives or in other funds. The funds pursue an active investment strategy where key ele-ments comprise asset allocation together with sustaina-bility-, sector- and regional analysis. Several of the funds also apply thematic investments. Several of Swedbank Robur’s balanced funds invest primarily in other funds, both internal and external funds. The fund selection process includes sustainability as one important element when deciding on an investment. Through an active dialogue with external fund management companies, we can engage and communicate our positions linked to sustainability and climate.

Further informationOn our website we disclose more information about responsible investments and documents with respect to sustain-ability such as:

◊ Swedbank Robur’s Policy for Responsible Investments

◊ Swedbank Robur’s Principles for Shareholder Engagement

◊ Swedbank Robur’s Proxy Voting Dashboard

◊ Swedbank Robur’s Inclusion Strategy

◊ Swedbank Robur’s Exclusion Strategy

◊ Swedbank Robur’s Engagement Strategy

◊ Swedbank Robur’s Black List

◊ Swedbank Robur’s Green List

◊ Prospectus for each fund


Climate Strategy 2020

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