Robert Rosenberg: Climate Impact Screening of Nasdaq Helsinki 2015

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

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.

Financial industry reference South Pole Group and oekom research AG· 15th December 2016 Page 3

Page 4

Climate Change embraced by investors South Pole Group and oekom research AG· 15th December 2016

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

Climate Impact Analysis of the Nasdaq Helsinki South Pole Group and oekom research AG· 15th December 2016 Page 6

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

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

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

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

…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

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

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.

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

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%

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

Forward-looking vs. Snapshot South Pole Group and oekom research AG· 15th December 2016 Page 17

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

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

Fin

anced E

mis

sio

ns (

tCO

2e)

oekom Carbon Risk Rating

Nasdaq Helsinki - Financed Yearly Emissions (tCO2e) vs oekom Carbon Risk Rating

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

KP

I

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

What’s next? South Pole Group and oekom research AG· 15th December 2016 Page 21

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

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

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