Green bond investor presentation May 2019
Disclaimer This presentation contains forward-looking statements that reflect management’s current views with respect to certain future events and potential financial performance. Although Nordea believes that the expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will prove to have been correct. Accordingly, results could differ materially from those set out in the forward-looking statements as a result of various factors. Important factors that may cause such a difference for Nordea include, but are not limited to: (i) the macroeconomic development, (ii) change in the competitive climate, (iii) change in the regulatory environment and other government actions and (iv) change in interest rate and foreign exchange rate levels. This presentation does not imply that Nordea has undertaken to revise these forward-looking statements, beyond what is required by applicable law or applicable stock exchange regulations if and when circumstances arise that will lead to changes compared to the date when these statements were provided. 2
Sustainability at Nordea 3
Nordea’s work on sustainability was initiated almost 20 years ago Nordea’s Green Bond issuances are built on a long -term focus on sustainability New Group Sustainable Finance Head of organisation Sustainability New Sustainability Systematic ESG Policy CDP reporting screening of Sector Guideline for large corporate Head of CSR Defence Industry customers 2001-2007 2008 2009 2010 2014 2015 2016 2017 2018 2019 Annual CSR New Corporate Green Bonds Responsible reporting Values framework Investments Business Ethics & Framework Green Bond Values Committee UNEP FI Principles Framework for Responsible Banking Inaugural Green Bond issuance Green corporate loans launched Climate Change across the Nordics Position Statement First Sustainable 5 Finance Conference
Nordea’s Sustainability Governance Board Operations and Compliance Committee Board committee established 2017 Group Executive Management CEO decides on strategic sustainability direction and focus areas including plans, targets and KPIs Business Ethics and Values Committee Decision-making committee Sustainability Committee Operational sub-committee to Business Ethics and Values Committee Commercial & Personal Banking Business Banking Group Sustainable Finance Asset & Wealth Wholesale Banking Centre of Excellence regarding sustainability working Management for the overall benefit of Nordea and its customers Group Functions 6
Current sustainability focus at Nordea Short-term sustainability targets* Achieved in 2018 New short term targets to reach by 2021 Enhance the ESG screening tools for Establish baseline for climate change and Ingrate sustainability into our savings NEW responsible investment, financing and human rights-related risks throughout the advisory process procurement value chain Launch a risk management framework in Measure investment portfolio alignment and Develop and launch green corporate loans in NEW NEW order to identify key sustainability risks in the set strategy to work towards the Paris all four Nordic countries value chain agreement Establish a KPI framework with individual 7 % reduction in air travel for internal NEW NEW Complete sustainable savings offering KPIs meetings Continue implementation of the updated Increase assets under management in New vendor agreements aligned with the NEW NEW Sustainability Policy and principles for sustainable savings offering (Q418 EUR Supplier Code of Conduct sustainable financing, investment and advice 5,1bn AuM) Launch position statement and guidelines Launch Position Statement on Human rights NEW Expand green mortgages in the Nordics NEW within relevant areas, e.g. defence and and Sector Guidelines on Gambling, Oil & shipping Gas, Real Estate and Forestry Develop scenario analysis for climate risk for 80 % completion rate group wide for the Green mortgages launched in Sweden (and NEW NEW our large corporate lending portfolio Sustainable Finance e-learning for all staff also Finland in Q119) * Nordea Sustainability Report 2018 7
ESG at Nordea Dedicated ESG teams We also continuously assess and evaluate transformative themes and areas which we believe shape the future landscape of businesses, since social and technology change as well as climate change and other environmental issues impact business models. We have two dedicated ESG teams to support the organization with research and analysis based on the Nordea ESG methodology. One team works within responsible investments and the other within lending and financing. We underpin our approach with externally sourced ESG research and ratings. This provides coverage of over 4,000 companies globally both in terms of their practices and tracking controversial issues. ESG analysis integrated into investments ESG analysis integrated into financing Nordea bases its investment approach on internationally We have built up a strong in-house ESG analysis team recognized principles for sustainable investment and active that supports our credit analysts and client executives to ownership. Nordea has developed its policies, procedures and integrate ESG aspects in financing. Nordea is committed to investment products to ensure that the companies we invest in engaging with customers on ESG matters and to all live up to various criteria of sound environmental, social and understanding the challenges and opportunities customers governance performance. have in their respective businesses and industries. We have developed an internal ESG database available to The ESG analysis conducted in relation to our customers all investment professionals. This way we assure that concludes in an ESG risk rating which is included in credit investment and portfolio development decisions are based on memorandums. In total, we have five ESG risk categories, a fuller set of information – key factors to improve risk ranging from low to high risk. Companies assigned a high ESG management and thereby risk-adjusted returns for our clients. risk are escalated to a group-level credit committee which can, if deemed necessary, consult our Business Ethics and Values Committee (BEVC) – a committee that has overall After years of dedicated work with ESG analysis , Nordea responsibility for conduct and sustainability in Nordea. For has extensive experience in sustainable investments. We companies rated in the highest risk category, long-term believe that by engaging and investing in ambitious financing is typically offered only on specific terms. companies, we can make a considerable difference; selecting companies with high sustainability performance and potential of generating economic value with low risk for our clients. 8
2018 selected highlights Nordea was one of Nordea ranked as 28 banks from one of the top 100 Nordea Nordea is included in Bloomberg’s around the world most sustainable representative CFI Awards for who founded the corporations in the appointed as a 2019 Gender Best ESG Process Principles for world by Corporate driver in EU work Equality Index for 5th year in a row Responsible Knights for the on sustainable the third banking under second year in a finance consecutive year row (47 th ) UNEP FI 9
A well recognised sustainability background Strong ESG ratings Sustainability acknowledgements Rating agency Rating Nordea’s publicly stated commitments: Company Rating: C (A+ to D-)* • The UN Environment Program Finance Initiative (signed 2001) • The UN Global Compact (signed 2002) ESG Score: 20.3 (0 to 100)** • The United Nations’ Universal Declaration of Human Rights ESG Rating: BBB (AAA-CCC) • The UN Guiding Principles on Business and Human Rights • The ILO-conventions • The OECD Guidelines for Multinational Enterprises Nordea ESG evaluation process • The Equator Principles (signed 2007) The Nordea ESG evaluation process includes an assessment of • Paris Pledge for Action in support of COP 21 (signed 2015) large corporate borrowers with respect to: • Governance • The UN Convention against Corruption • Environmental, health and safety management processes • The Rio Declaration on Environment and Development • Social aspects including human and labour rights • The UN Principles for Responsible Investments (signed 2007) • Potential controversies * Highest rating within sector is C+ 10 ** Lower score represents lower ESG risk (scale has changed, previously the other way around). Nordea currently ranked in the top 6th percentile among banks
Nordea Green Bonds 11
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