The Storebrand Group now almost triples the amount of Assets under Management (AUM) in fossil free investment solutions, to EUR 26 billion– or a third of total AUM. The Swedish subsidiary, SPP, has as of today, made the decision make all their funds fossil free.
Last week the UN Environment Program (UNEP) launched its latest Emissions Gap Report. The Report makes sobering reading. Global Climate Emissions increased by 2% in 2018 to record levels. In addition, UNEP has estimated that the world needs to cut emissions by 7.6% on average each year from 2020 in order to limit global warming to 1.5 degrees.
– Against this backdrop, the need for rapid and wide-ranging decarbonization of the economy becomes clear. We believe that companies with a strategy in line with the UN Global Goals and Paris Agreement will create better returns in the long run.Along with all other sectors, the Financial Sector must recognize its important role in channeling investments into low carbon solutions, says Odd Arild Grefstad, CEO of Storebrand Group.
Strong customer demand
Storebrand Asset Management launched its first fossil free fund in 2015. When all funds of the Swedish subsidiary SPP Funds now being fossil free, the total AUM in fossil free investment solutions now amounts to EUR 26 bn, or a third of total AUM. A fossil free investment solution is restricted from investing in fossil companies.
– The growth in our fossil free funds is a result of strong customer demand and an increased allocation to fossil free solutions in our captive life insurance portfolios. Fossil free funds were initially niche, but has grown to become an important building block in the sustainable investment strategy for many clients, says Grefstad.
Institutional investors are to date the largest group of investors in fossil free funds and the demand has been strongest in the Swedish market so far, but Grefstad sees an increased interest all over Europe.
– There is a rising global demand for action on climate change. Countries, municipalities and cities are increasingly asking for different investment solutions to align their capital with their overall climate commitments, says Grefstad.
Discussing key actions with UN Secretary General at COP 25
Storebrand has, along with 15 other asset owners, joined the Net-Zero Asset Owner Alliance. The members of the alliance are committing to a net-zero investment portfolio by 2050. This Wednesday, the 11th of December, Grefstad will participate on a high-level meeting at COP 25, with, among others, António Guterres, Secretary-General of the United Nations. Grefstad and other senior executives of business, finance and civil society will discuss key actions necessary to reduce carbon emissions.
Finance must play an active role
The finance industry plays a key role in moving capital in the right direction. Upcoming EU regulations will put further pressure on financial institutions to take an active role.
– We need to do our part in providing the market with a smart mix of sustainable solutions. That includes broad based sustainable index funds, more specialized fossil free funds and active funds investing in solution companies. All these strategies are important building blocks in investing sustainably, Grefstad says.
– We also need to continue to use our power as an active owner to push for change in companies and make sure that they act responsibly and take an active part in the green transition, Grefstad concludes.
Read more about Grefstads participation at COP 25.