Nordea has set targets to become a net zero emissions bank by 2050. Reclaim Finance welcomes the publication of an intermediary target, by 2030, but remains concerned about the bank’s lack of ambitious coal and fossil fuel policy.
Nordea has set a mid-term objective to reduce carbon emissions from its lending and investment portfolios by 40-50% by 2030. The baseline measurement for the objectives is 2019. The 40%-50% commitment seems unsufficient to secure enough GHG emissions reduction by 2030, to align with a 1.5°C trajectory.
The 2030 timeline makes the comparison with AXA and Allianz‘s 2025 targets complicated. However, while Nordea’s target covers both its investment and lending portfolio while Allianz and AXA’s targets only cover their investment, its mid-term objective seems more ambitious than those adopted by other financial institutions. AXA committed to reduce the carbon footprint of its general fund assets by 20% by 2025, compared to a 25% GHG reduction target for Allianz.
The difference of ambition could be explained by a different starting point. Contrary to Allianz and even more to AXA, Nordea has adopted very minimal exclusion criteria for the coal sector, as well as for the oil and gas sector. Nordea could achieve higher GHG emissions reduction by 2030 than the two insurers through the adoption of robust coal and fossil fuel exclusion criteria, which would lead to the exclusion of companies already excluded from AXA and Allianz’s portfolio.
Nordea’s President and Group CEO Frank Vang-Jensen said that the group will achieve its objectives “by supporting and working together with our customers towards sustainable development and ensure that we have a plan for sectors where the climate impact is significant”. Nordea does not specify which sectors it is referring to, nor the specific objectives and demands that will underpin its exclusion and engagement strategy.
A first step would be to stop supporting companies that continue to worsen the climate situation by developing new high-carbon projects which are incompatible with the remaining carbon budget. For example, Nordea could adopt a robust coal exit policy and stop supporting companies that keep developing new fossil fuel projects, starting with coal and unconventional fossil fuels – shale oil and gas, tar sands, oil and gas drilling in the Arctic and ultradeep waters. Considering the fossil fuel production needs to decline by 6% per year between now and 2030, this is a prerequisite to be taken seriously on the objective of achieving carbon neutrality.