Sydbank will make in­vest­men­ts in a re­spon­si­ble and sus­tain­able manner. Our decisions will be made on a solid and updated basis where we analyse ESG issues in terms of financial and business risks. We will be active owners in a con­struc­tive dialogue with the companies we invest in.

Target: 50-70% reduction in CO₂e footprint from in­vest­men­ts in 2030 compared to CO₂e footprint in 2020.

Sydbank’s target to reduce the CO₂e footprint from in­vest­men­ts is about taking re­spon­si­bil­ity for society and for its customers. Sydbank takes re­spon­si­bil­ity for society by setting a target that complies with the re­quire­men­ts to limit tem­per­ature increases under the Paris Agreement. Sydbank takes re­spon­si­bil­ity for its customers by having a re­spon­si­ble approach to asset man­age­ment and by paying special attention to how we address ESG risks in the overall in­vest­ment process.

There is a risk that CO₂e emissions may have an adverse impact on the value of our in­vest­men­ts. Climate change driven by CO₂e emissions may con­tribute to more extreme weather which could affect companies’ physical assets, eg pro­duc­tion fa­cil­i­ties. In addition companies with a high level of CO₂e emissions risk becoming subject to a tax on these emissions or being out­per­formed by new and less emission-intensive technical solutions – and both outcomes would affect the earnings capacity of the in­di­vid­ual company and therefore also the value of our in­vest­ment. By having a target for the CO₂e emissions of our in­vest­ment portfolio we help to ensure the best possible risk-adjusted return for our customers.

At present CO₂e data is most advanced within listed shares and corporate bonds – in terms of quantity as well as quality. These two asset classes are therefore initially included in the cal­cu­la­tion of the CO₂e footprint. In­vest­ment ac­tiv­i­ties within gov­ern­ment bonds and mortgage bonds are not included. CO₂e data is improved on an ongoing basis and we expect that more asset classes can be included in the target as CO₂e data matures.

The CO₂e footprint of the in­vest­ment portfolio is cal­cu­lated in ac­cor­dance with the rec­om­men­da­tions of Finance Denmark’s CO2 model and covers companies’ scope 1 and scope 2 CO₂e emissions. The year of com­par­i­son as regards the target is the CO₂e footprint of the in­vest­ment portfolio at year-end 2020.

Our efforts to achieve this target involve active ownership and exclusion. Active ownership gives Sydbank the pos­si­bil­ity to impact companies’ de­vel­op­ment through en­gage­ment and voting at general meetings. We are basically of the opinion that selling off polluting companies in strate­gi­cal­ly important in­dus­tries, eg cement and steel, will not con­tribute ef­fec­tively to reducing de facto CO₂e emissions worldwide. In some instances the exclusion of companies and countries may however be necessary to ensure a re­spon­si­ble in­vest­ment process. In the in­vest­ment process we combine our focus on CO₂e emissions with a broader focus on companies’ overall man­age­ment of ESG risks to ensure that we do not harm other ESG themes when selecting in­vest­men­ts with a low CO₂e footprint.

One of the large chal­lenges with this target is that we are heavily dependent on actual de­vel­op­men­ts in global CO₂e emissions. The companies in our in­vest­ment portfolio must generally be able to reduce their CO₂e emissions sig­nif­i­cantly if we are to reach our target of a total in­vest­ment portfolio in com­pli­ance with the Paris Agreement.

Read more about Sydbank’s re­spon­si­ble in­vest­ment efforts here:

• “ESG in Core Business” in the 2023 Annual Report
• Sydbank’s re­spon­si­ble in­vest­ment and active ownership policy