“From our perspective, it's about responsibility as an employer, an investor, and a lender.” Vesa Oksanen, environmental specialist at Nordea
CONTINUOUS SCREENING
In the field of financing, a lot is based on trust and a company’s reputation. Environmental specialist Vesa Oksanen, who is part of the CSR team at Nordea, lists the three most important social responsibilities from his bank’s perspective: responsibility as an employer, an investor, and a lender. In 2007, Nordea became the first Nordic bank to sign the UN Principles for Responsible Investment, and the principles have since become the norm in all of the company’s investment decisions in the asset management business. One third of the value of Nordea’s shares is owned by investor companies who have signed the same principles. Therefore major mistakes or success could show in Nordea’s share value. All funds managed by Nordea are screened every six months in order to catch not only abuse of local legislation but also international ESG – environmental, social and corporate governance – norms.
"If we have evidence that there has been abuse by a company in which one of our funds has invested, we begin a process to find out if it is willing to improve its practices. The process can take a long time, but if we do not see improvement we will eventually make the decision to divest the shares,” Oksanen explains. PERUSAL PER YEAR
When it comes to the lending business, financing of projects with capital costs of over USD 10 million falls under the scope of the Equator Principles (EP), a voluntary framework for financial institutions to manage environmental and social risks in project finance. Project finance is often used to finance large power plants, mines, oil or gas projects, pulp and paper mills, or transportation infrastructure. These are all cases where several parties are involved in the development or financing of the project. “Such projects are subject to detailed environmental and social requirements on the international level, even if the project is undertaken in a developing country. The process involves independent environmental and social consultants who work on behalf of the lenders,” Oksanen explains. In more typical cases of lending to companies, Nordea utilises tools called ERAT and SPRAT to identify and assess the environmental, political and social risks that the customer faces. All customers are subject to an annual review, at a minimum, and the risk definitions build on commonly accepted international standards from the World Bank and the UN Global Compact. The credit decision is based on fulfilment of the ERAT and SPRAT requirements.
iDEAL Borenius Group magazine