Nordea's entire USD 425 billion wealth unit is going ESG
The entire wealth and asset management business of Nordea which currently oversees about USD 425 billion may exclude all investments that aren’t deemed sustainable in as little as half a decade.
By Kati Pohjanpalo / BLOOMBERG
The unit is already "very close" to that goal, and will probably be "100 percent ESG" in "5 to 10 years," Frank Vang-Jensen, Nordea’s chief executive, said in an interview. About 70 percent of fourth-quarter flows into the wealth arm targeted products tied to environmental, social and governance goals, driving assets under management to a record.
As ESG investing grows, questions remain around what constitutes a sustainable asset. Driven by investor demand, issuers and asset managers are increasingly focusing on transition products, whereby companies that aren’t green yet have committed to cleaning up their acts, and get added to portfolios marked as sustainable. Some definitions are so broad that even chemicals shippers are included.
Issuance in sustainable assets, including transition products, will soar to more than USD 1trn worldwide this year, according to estimates by SEB AB, the bank that helped arrange the world's first green bond over a decade ago.
Banks in the Nordic region are touting increasingly ambitious ESG agendas in an effort to draw in customers. SEB said this week it will start blacklisting all fossil-fuel assets at its investment funds as it steps up exclusion criteria.
The last piece
The most elusive category of ESG remains the S, which stands for social investments. It’s a category that’s "been more difficult to figure out," Vang-Jensen said. Nordea is now looking at public-private projects and investments in digital infrastructure, but definitions aren’t yet uniform.
It’s "the last piece of ESG and hasn’t, in my opinion, shown the same pace as the two others," Vang-Jensen said.
Nordea’s focus on sustainability is a key reason its asset management soared in value at the end of last year. The bank recently announced it was closing its USD 7.4bn climate fund to new investors, a step it said was necessary "to ensure a liquid and tradeable portfolio."
Nordea’s Stars funds, with USD 12bn in assets under management, also offer sustainable investments and remain open to new inflows, amid seemingly insatiable demand for such products.
Nordea isn't charging wealth clients more for ESG strategies, despite the extra cost involved in providing such products.
They "are a bit more expensive to produce, but there could be a stickier client relationship," said Snorre Storset, who heads the wealth unit from Oslo. "So you’ll get paid over a longer period of time."
Vang-Jensen also took the opportunity to quash rumors that Nordea might sell its wealth business.
"We have a clear strategy," he said. "We want to grow our own asset management business, it’s growing well and we believe we can do even more."
”Getting green technology companies through the growth phase is like sailing a ship through a perfect storm,” says Laurits Bach Sørensen, Senior Partner at Nordic Alpha Partners.
Investors and asset managers remain positive about the benefits of artificial intelligence – despite some concerns about geopolitics and their possible effects on tech giant Nvidia.
So far, Ridge Capital’s Nordic high yield strategy has exceeded the targeted return, founders and portfolio managers Måns Levin and Christoffer Malmström tell AMWatch.
KLP and the KLP funds are excluding the American machinery manufacturer due to the risk of contributing to violations of human rights and international law in the West Bank and Gaza.
Kyrkans Pension broke FSA rules when the pension fund made a major investment in real estate company Stelvalvet, the Swedish Financial Supervisory Authority says.
Akademikerpension is divesting investments worth DKK 324m (EUR 43.4m) in 30 drilling companies. Until now, the pension fund had been unaware of the involvement of these companies in fossil expansion.
American Century’s Pia Michelsson tells AMWatch that impact investing in the Nordic region is ”next level” in this first article of our 2024 Summer Series featuring international asset managers.
The Head of Danske Bank Asset Management, Christian Heiberg, had expected more new mandates by now for its EMD strategy, which has shown world-class performance since a new team took over.
The owners of infrastructure fund manager AIP Management have sold the majority of their shares to Storebrand, one of Norway’s largest financial groups.
Northvolt, the Swedish manufacturer of sustainable batteries for electric vehicles, is facing a mountain of problems as the market for its products appears to be saturated.
So far, Ridge Capital’s Nordic high yield strategy has exceeded the targeted return, founders and portfolio managers Måns Levin and Christoffer Malmström tell AMWatch.
American Century’s Pia Michelsson tells AMWatch that impact investing in the Nordic region is ”next level” in this first article of our 2024 Summer Series featuring international asset managers.