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Robert Rosenberg: Climate Impact Screening of Nasdaq Helsinki 2015

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Robert Rosenberg from SouthPole Group presents the results from a study that assessed the carbon footprint of the Nasdaq Helsinki listed companies in 2015. The study also compares the carbon-intensity of investments made in Nasdaq Helsinki and Nasdaq Stockholm and presents a global view.

Published in: Economy & Finance

Robert Rosenberg: Climate Impact Screening of Nasdaq Helsinki 2015

  1. 1. Climate Impact Screening of Nasdaq Helsinki South Pole Group and oekom research AG· 15th December 2016 Page 1 Robert Rosenberg, Senior Consultant, South Pole Group
  2. 2. About South Pole Group South Pole Group and oekom research AG· 15th December 2016 Page 2 We measure and reduce environmental and social impact for 1’000+ clients. We enable our customers to create value from sustainability-related activities. Our staff of 150 employees in 17 offices worldwide are passionate to fight climate change.
  3. 3. Financial industry reference South Pole Group and oekom research AG· 15th December 2016 Page 3
  4. 4. Page 4 Climate Change embraced by investors South Pole Group and oekom research AG· 15th December 2016
  5. 5. South Pole Group and oekom research AG· 15th December 2016 Page 5 Topic 2015 2016 Introduction Basic introduction to the topic Detailed analysis of The Paris Agreement, 2oC scenario, legislation, voluntary initiatives Carbon footprinting Nasdaq Helsinki and OSEBX Nasdaq Helsinki and Nasdaq Stockholm Methodology Full methodology Full methodology and calculations, found in the Annex Finnish market deep-dive and case studies N/A Research into Finnish investor activities across carbon footprinting and climate risk analysis – case studies on Varma, Ilmarien, the Church Pension Fund, Mandatum Life, Nordea and OP Financial Group Forward looking analysis CDP Oekom and 2oC portfolio analysis Report structure 2016
  6. 6. Climate Impact Analysis of the Nasdaq Helsinki South Pole Group and oekom research AG· 15th December 2016 Page 6
  7. 7. South Pole Group and oekom research AG· 15th December 2016 Page 7 Screen the 124 companies of the Nasdaq Helsinki for their climate impact. Set the results in relation to investments into the index. Compare the outcome against the Nasdaq Stockholm (Sweden), DAX (Germany), Eurostoxx 50 and MSCI World. Review and analyse the key sustainable finance topics in Finland. Task
  8. 8. Approach Page 8 Establish the carbon footprint of 1’275 companies. Relate results to each index investor’s «ownership» of these companies to establish an «investment carbon footprint». Complement this with qualitative climate strategy data of the underlying companies, alongside our partner oekom research. South Pole Group and oekom research AG· 15th December 2016
  9. 9. EUR 1m invested into the Nasdaq Helsinki and the Benchmarks. Nasdaq Helsinki’s annual greenhouse gas exposure is the 3rd highest of the indexes Nasdaq Helsinki Nasdaq Stockholm MSCI World Dax Eurostoxx 50 Total Emissions Scope 1&2 (tCO2e) 236 66 181 465 247 Comparison Nasdaq Helsinki versus Benchmarks South Pole Group and oekom research AG· 15th December 2016 Page 9
  10. 10. When including indirect emissions, the intensity more than doubles… South Pole Group and oekom research AG· 15th December 2016 Page 10 Nasdaq Helsinki Nasdaq Stockholm Scope 3 481 171 Scope 1 & 2 236 66 - 100 200 300 400 500 600 700 800 Scope 1, 2 & 3 emissions Scope 1 & 2 Scope 3
  11. 11. …resulting in the Nasdaq Helsinki as the joint 2nd lowest emitter South Pole Group and oekom research AG· 15th December 2016 Page 11 EUR 1m invested into the Nasdaq Helsinki and the Benchmarks. Nasdaq Helsinki Nasdaq Stockholm MSCI World Dax Eurostoxx 50 Total Emissions Scope 1 & 2 (tCO2e) 236 66 181 465 247 Total Emissions Scope 1, 2 & 3 (tCO2e) 716 237 716 1’212 929
  12. 12. Materials and Utilities companies are the largest contributors South Pole Group and oekom research AG· 15th December 2016 Page 12 20% 13% 2% 26% 3% 4% 5% 14% 5% 9% 6% 47% 1% 0% 0% 6% 2% 1% 35% 1% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% Nasdaq Helsinki: Sector allocations and emissions Sector Allocation Sector Emissions
  13. 13. Attribution analysis the key differential between Nasdaq Helsinki and Nasdaq Stockholm South Pole Group and oekom research AG· 15th December 2016 Page 13 Sector Sector Weighting Difference Sector Allocation Effect in % Stock Selection Effect in % Industrials - 9% 3% Materials 7% Consumer Staples - 1% 1% - 4% Financials - 7% 2% 5% Health Care - 2% 0% 0% Energy 3% - 8% - 11% Consumer Discretionary - 8% 4% - 5% IT 8% - 2% 1% Utilities 5% - 1% Telecom 5% - 2% 1% Cumulative Performance Net Performance 12% - 48% - 43% - 80% - 124% - 214% - 257% The fund, because of its investment strategy, has higher exposure to emission intense sector, however the carbon intensity of stocks selected in these sectors is lower in comparison to the benchmark.
  14. 14. The 10 largest contributors account for 90% of emissions.. South Pole Group and oekom research AG· 15th December 2016 Page 14 Company Weight in portfolio tCO2e in portfolio % of Total Source Fortum OYJ 5.1% 82 35.0% Disclosure SSAB AB 0.9% 38 16.3% Disclosure UPM-KYMMENE OYJ 4.0% 27 11.5% Disclosure STORA ENSO OYJ 2.5% 18 7.7% Disclosure NESTE OYJ 3.9% 14 6.1% Disclosure OUTOKUMPU OYJ 1.0% 10 4.3% Disclosure FINNAIR OYJ 0.2% 9 4.0% Disclosure HUHTAMAKI OYJ 1.8% 4 1.6% Disclosure KEMIRA OYJ 0.7% 4 1.6% Disclosure VIKING LINE ABP 0.1% 3 1.5% Approx
  15. 15. Four of the 10 largest contributors account for almost 60% of emissions.. South Pole Group and oekom research AG· 15th December 2016 Page 15 Company Sector (GICS) Portfolio Weight Data Source Emissions (tCO2e) % of Total NORDEA BANK AB Financials 14.29% CDP 0 0.02% NOKIA OYJ Information Technology 12.1% CSR 1 0.46% SAMPO OYJ Financials 8.8% CDP 0 0.00% KONE OYJ Industrials 8.1% CDP 1 0.23% TELIA CO AB Telecommunication Services 6.9% CDP 2 0.71% FORTUM OYJ Utilities 5.1% CDP 82 34.97% UPM-KYMMENE OYJ Materials 4.0% CDP 27 11.52% NESTE OYJ Energy 3.9% CDP 14 6.08% WARTSILA OYJ Industrials 3.2% CDP 0 0.19% STORA ENSO OYJ Materials 2.5% CDP 18 7.71%
  16. 16. 33% of companies report their greenhouse gas emissions, 34% in 2015 South Pole Group and oekom research AG· 15th December 2016 Page 16 Not reporting is typically an indicator for lack of a climate strategy. 23% 5% 67% 5% Nasdaq Helsinki: Sources of Emissions (Per Company) CDP CSR Approx Other 16% 5% 75% 4% Nasdaq Stockholm: Sources of Emissions (Per Company) CDP CSR Approx Other 23% 5% 67% 5% Nasdaq Helsinki: Sources of Emissions (Per Company) CDP CSR Approx Other 16% 5% 75% 4% Nasdaq Stockholm: Sources of Emissions (Per Company) CDP CSR Approx Other
  17. 17. Forward-looking vs. Snapshot South Pole Group and oekom research AG· 15th December 2016 Page 17
  18. 18. Including trend indicators into the analysis South Pole Group and oekom research AG· 15th December 2016 Page 18 0 5 10 15 20 25 30 35 40 45 Average oCRR (per company) Weighted Average oCRR of Money Invested Average oekom Carbon Risk Rating Nasdaq Helsinki Nasdaq Stockholm
  19. 19. Companies with high emissions also have high oCRR South Pole Group and oekom research AG· 15th December 2016 Page 19 FORTUM OYJ SSAB AB-A SHARES UPM-KYMMENE OYJ STORA ENSO OYJ-R SHS NESTE OYJ OUTOKUMPU OYJ FINNAIR OYJ HUHTAMAKI OYJ KEMIRA OYJ VIKING LINE ABP 0.00 10.00 20.00 30.00 40.00 50.00 60.00 70.00 80.00 90.00 100.00 0 10 20 30 40 50 60 70 FinancedEmissions(tCO2e) oekom Carbon Risk Rating Nasdaq Helsinki - Financed Yearly Emissions (tCO2e) vs oekom Carbon Risk Rating
  20. 20. 0.0 0.5 1.0 1.5 2.0 2.5 Position on climate change Greenhouse gas emission inventories Greenhouse gas emission reduction targets and action plans Transparency on climate change risks and mitigation Score KPI Average KPI Scores Nasdaq Stockholm Nasdaq Helsinki oekom Carbon Risk Rating performance across KPIs South Pole Group and oekom research AG· 15th December 2016 Page 20
  21. 21. What’s next? South Pole Group and oekom research AG· 15th December 2016 Page 21
  22. 22. Free tool for screening your own Finland portfolio South Pole Group and oekom research AG· 15th December 2016 Page 22 www.sitra.fi/sites/default/files/u489/20151030_final_nasdaq_omx_helsinki_tool.xlsm
  23. 23. Outlook South Pole Group and oekom research AG· 15th December 2016 Page 23 Climate Change is decoupling from ESG: Every investor will have to take a stand. New transparency initiatives regarding investments and climate change on the rise Numerous climate-focussed investment strategies and products will be launched
  24. 24. Thank you South Pole Group and oekom research AG· 15th December 2016 Page 24 Robert Rosenberg r.rosenberg@thesouthpolegroup.com Dr. Maximilian Horster m.horster@thesouthpolegroup.com Franziska Sinner f.sinner@thesouthpolegroup.com

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