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: