The Climate Impact of the SEB ETHICAL SWEDEN Fund 15 October 2014
Dr. Maximilian Horster – Partner, South Pole Group
This report is solely for the use of client personnel. No part of it may be circulated, quoted, or reproduced for distribution outside the client organization without prior written approval from South
Pole Carbon Asset Management Ltd. This material was used by South Pole Carbon Asset Management Ltd during an oral presentation; it is not a complete record of the discussion.
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South Pole Group – Measuring and reducing impact About us
• 2006: Incorporation in Zurich /
Switzerland
• 2014: present on all continents
• 110 carbon pros from 22 countries
• 250+ projects in over twenty-five
countries
• Swiss Social Entrepreneur of the Year
• 2011 to 2014: Best Project Developer
• 1’000+ corporate and public clients
• Numerous health and education benefits
• 20’000 new jobs in developing countries
• 17’000 hectares of forest saved
Our impact for our clients
• 50 million+ tonnes of CO2 savings
• EUR 6bn renewable energy investments
• 35’000 Gwh renewable energy
1’000+ South Pole Group references:
Some Clients and Partners from the financial industry
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• Investment Impact on the Agenda
• Application
• SEB Funds
5
Every Euro invested either
finances or reverses Climate
Change
Portfolio Decarbonisation Coalition (PDC)
Leading institutional
investors have joined
forces to substantially
reduce the carbon
footprint of US$100
billion of institutional
investment worldwide.
23. September 2014
at the UN Climate Summit 2014
Montreal Carbon Pledge
“We need to put the Montréal
Carbon Pledge on steroids”.
Christina Figueres, Executive Secretary of
UNFCCC, 26. September 2014
“US$ 3 trillion of portfolio transparency commitment in time for the
UN Climate Change Conference in Paris in December 2015”
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• Investment Impact on the Agenda
• The Business Case
• Application and SEB Funds
It makes financial sense:Climate Risks &
Opportunities of Investments
Source: CDP
• Climate Change effects and policies put your
investments at risk
• Your investees might be part of the problem or the
solution to Climate Change challenges
• Companies prepared for Climate Change effects
can outperform the market
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• Investment Impact on the Agenda
• The Business Case
• Application and SEB Funds
Climate Impact Assessment & Action
Page 11
South Pole Group
measures the
climate impact of
SEB’s investments
SEB manages
investment climate
impact and reports to
stakeholders
Our Offering
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SEB Ethical Sweden: Investment GHG Footprint
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Approach
• Climate Impact of SEK 475m invested in the
SEB ETHICAL SWEDEN Fund
• Investing the same amount of EUR managed also into the respective
benchmark SBX ETHICAL Sweden
• QUANTITATIVE approach
Source: South Pole
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SEB ETHICAL Sweden 20% climate friendlier than
benchmark
Financed annual Scope 1 & 2 greenhouse gas emissions of SEK 475m invested:
SEB ETHICAL SWEDEN Fund: 1’798 tCO2e
SBX ETHICAL Benchmark: 2’241 tCO2e
Difference: 20%
NB: The average Swedish person emitts 10.6 tCO2e/ year
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Sector Analysis
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Attribution Analysis
• Sector allocation helped with a climate outperformance of 6.3%.
• Stock picking contributed 16.5% to the portfolio’s climate outperformance
-66 -2.9%
-254 -11.3%
196 8.8%
-3 -0.1%
11 0.5%
-45 -2.0%
56 2.5%
-17 -0.7%
2 0.1%
-22 -1.0%
- 0.0%
-140 -6.3% -370
Interaction Effect: 68
Portfolio Carbon Outperformance (tCO2e)
Portfolio Carbon Outperformance (%)
-443
-19.8%
Sector Allocation
Contribution to
Out/
Underperformance
(tCO2e)
Sector Allocation
Contribution to Out/
Underperformance
(%)
0.0%
Stock selection Contribution
to Out/ Underperformance (
% )
4.8%
-24.9%
-0.8%
-1.6%
0.1%
-16.5%
3.0%
Stock Selection Contribution
to Out/ Underperformance
(tCO2e)
108
-557
-18
-35
3
-45
139
-2.0%
6.2%
0.2%
0.0%
1.4%
Energy
4
0
32
-
Industrials
Materials
Consumer Staples
Financials
Health Care
Consumer Discretionary
Information Technology
Utilities
Telecommunication Services
Cash/Others
Total
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The top ten ghg contributors to the SEB Ethical fund
Weight in
Portfolio
CO2e In
portfolio
(t)
% of Total Source
0.62% 339 19% Disclosed
2.11% 307 17% Disclosed
2.00% 277 15% Disclosed
5.79% 142 8% Disclosed
1.48% 113 6% Disclosed
1.16% 110 6% Disclosed
2.55% 76 4% Disclosed
2.51% 62 3% Disclosed
3.08% 57 3% Disclosed
8.96% 39 2% Disclosed
REZIDOR HOTEL GROUP AB
SVENSKA CELLULOSA AB-B SHS
SANDVIK AB
HENNES & MAURITZ AB-B SHS
Company
BILLERUD AKTIEBOLAG
ABB LTD-REG
NCC AB-A SHS
ICA GRUPPEN AB
SKF AB-B SHARES
AUTOLIV INC
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In terms of transparency, the Index performs slightly
better
SEB Ethical Benchmark
44%
22%
22%
12%
Sources of Emissions (Per Company)
CDP
CSR
Approx
Bloomberg
88%
6% 6%
Weighted Disclosure of Money Invested
Disclosed
Approximated
Non-Equity
57%16%
16%
11%
Sources of Emissions (Per Company)
CDP
CSR
Approx
Bloomberg
95%
3% 2%
Weighted Disclosure of Money Invested
Disclosed
Approximated
Non-Equity
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Holdings versus their sector
Company TickerEmissions (tCO2e)
/Revenue Millions
Quartile Relative to
Peers
(emissions/employ
ees)
BILLERUD AKTIEBOLAG BILL SS Equity 23.9 Q1
ABB LTD-REG ABBN VX Equity 6.0 Q4
ATLAS COPCO AB-A SHS ATCOA SS Equity 1.1 Q1
SANDVIK AB SAND SS Equity 5.2 Q3
SKF AB-B SHARES SKFB SS Equity 7.4 Q3
ALFA LAVAL AB ALFA SS Equity 2.4 Q1
SECURITAS AB-B SHS SECUB SS Equity 1.3 Q1
ASSA ABLOY AB-B ASSAB SS Equity 4.0 Q1
SKANSKA AB-B SHS SKAB SS Equity 3.2 Q1
NCC AB-A SHS NCCA SS Equity 4.2 Q3
SVENSKA CELLULOSA AB-B SHS SCAB SS Equity 36.0 Q4
AUTOLIV INC ALV US Equity 3.9 Q2
MEKONOMEN AB MEKO SS Equity 4.4 Q3
ORIFLAME COSMETICS SA-SDR ORI SS Equity 2.3 Q2
ASTRAZENECA PLC AZN LN Equity 3.2 Q3
ELEKTA AB-B SHS EKTAB SS Equity 0.6 Q1
MEDA AB-A SHS MEDAA SS Equity 1.6 Q1
SWEDISH ORPHAN BIOVITRUM AB SOBI SS Equity 3.9 Q3
MODERN TIMES GROUP-B SHS MTGB SS Equity 0.5 Q1
AXFOOD AB AXFO SS Equity 0.5 Q1
REZIDOR HOTEL GROUP AB REZT SS Equity 49.0 Q4
CDON GROUP CDON SS Equity 0.7 Q1
HENNES & MAURITZ AB-B SHS HMB SS Equity 2.7 Q2
TELE2 AB-B SHS TEL2B SS Equity 4.6 Q3
ETRION CORP ETX CN Equity 0.7 Q1
NORDEA BANK AB NDA SS Equity 0.4 Q2
SVENSKA HANDELSBANKEN-A SHS SHBA SS Equity 0.1 Q1
SKANDINAVISKA ENSKILDA BAN-A SEBA SS Equity 0.1 Q1
SWEDBANK AB - A SHARES SWEDA SS Equity 0.6 Q3
HUFVUDSTADEN AB-A SHS HUFVA SS Equity 3.4 Q1
JM AB JM SS Equity 0.6 Q1
ERICSSON LM-B SHS ERICB SS Equity 1.1 Q1
TIETO OYJ TIE1V FH Equity 1.4 Q2
MILLICOM INTL CELLULAR S.A. MIICF US Equity 4.6 Q1
INVESTOR AB-B SHS INVEB SS Equity 0.0 Q1
INTRUM JUSTITIA AB IJ SS Equity 4.5 Q4
ICA GRUPPEN AB ICA SS Equity 108.1 Q3
ARISE AB ARISE SS Equity 1.9 Q1
CAVOTEC SA CCC SS Equity 4.1 Q3
CONCENTRIC AB COIC SS Equity 5.8 Q3
RECIPHARM AB-B SHS RECIB SS Equity 4.4 Q1
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SEB Ethos Fund: Climate Impact Assessment
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Approach
• Climate Impact of part of the
SEB ETHOS Fund
• Investing the same amount of EUR managed also into the respective
benchmark SIX PX SWEDEN
• QUANTITATIVE vs QUALITATIVE approach
Source: South Pole
Title and Sector Analysis ETHOS
The SEK 2.9 billion invested in ETHOS account for annual
greenhouse gas emissions (Scope 1-2) of 17’980 tonnes of CO2e.
Investing the same amount in the SIX PX would amount 24’500
tonnes of CO2e.
Supply chain and product usage (Scope 3) adds about 4 times the
CO2e emissions.
Forward - looking Analysis
Board/ executive level
oversight of climate
change issues
Monetary incentives
related to climate
change targets
Climate Change
integrated into
business strategy
• Setting Climate Targets
• Progress towards Climate Targets
• Engagement with Supply Chain
• Reductions achieved
Other Indicators
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Risk/Opportunity Management (example)
Source: CDP
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Communicate
Engage on Transparency and Performance
Ticker Company Comment Source of comment
GB0006091408 A & J Mucklow Group Plc Decline to report to CDP CDP
GB00B6774699 Abcam Plc No publicly available GHG data South Pole
GB0000595859 ARM Holdings
Did not achieve emission reductions due to emission reduction
activities in 2012 CDP
GB0000536739 Ashtead Group Poor reporting South Pole
GB0000536739 Ashtead Group Weak reporting of risks and opportunities CDP
GB0000536739 Ashtead Group
Did not demonstrate that climate change issues are integrated into
the overall business strategy CDP
GB0000536739 Ashtead Group
Did not achieve emission reductions due to emission reduction
activities in 2013 CDP
GB0000536739 Ashtead Group Does not report any emission reduction target CDP
LU0552383324 Az Electronic Materials S.A. Decline to report to CDP CDP
LU0552383324 Az Electronic Materials S.A. No publicly available GHG data South Pole
GB00B02L3W35 Berkeley Group
Did not achieve emission reductions due to emission reduction
activities in 2014 CDP
AU000000BHP4 BHP Billiton
Did not achieve emission reductions due to emission reduction
activities in 2015 CDP
AU000000BHP4 BHP Billiton Does not report any emission reduction target CDP
GB0007980591 BP Does not report any emission reduction target CDP
GB00B1P6ZR11 Brown (N) Group Plc Poor reporting South Pole
GB00B0744B38 Bunzl Plc Poor reporting South Pole
GB0031743007 Burberry Group
Did not demonstrate that climate change issues are integrated into
the overall business strategy CDP
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Establish low carbon investment guidelines
• Offset GHG emissions with high quality emission
reduction project in a country the portfolio is
invested in.
• GHG emissions are being reduced locally. Local
population experiences important social and
health improvements.
• Offsetting SEB ETHOS costs 6.8 basis points,
SEB ETHICAL SWEDEN costs 3.8 basis points.
Price in Externalities
Offsetting Costs of Selected Benchmarks
Index Country Offsetting in BPS
MSCI UK ALL
CAP UK 25.3
FTSE ALL
WORLD GLOBAL 33.3
STOXX 50 EUROPE 56.9
SMI SWITZERLAND 11
SIX PX SWEDEN 9.4
Many thanks!
Maximilian Horster [email protected]
Nicole Neghaiwi [email protected]
+41 43 501 35 50
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