Estwatchi värske raport avaldab, et Eesti pensionifondid investeerivad süsteemselt kliimamuutust oluliselt võimendavatesse ettevõtetesse ja arvestavad kliimariskide ja -kahjudega kas minimaalselt või üldse mitte.

Report: Sustainable banking in Estonia

Report | 1 February 2020

Estwatch report shows that the four largest banks in Estonia consider environmental and social risks and harm in their investment decisions either insufficiently or not at all.

Banks have an important role in shaping our environment and society, as they provide finance to projects, companies and governments, and thereby directly support investments’ societal and environmental impacts. Sustainability risks such as financial risks associated with climate change, in turn, affect investments’ financial returns, which is why banks must address environmental and social risks to manage their clients’ assets with prudence and competence.

All four main banks in Estonia have stated that considering environmental and social risks is important. However, banks have not been transparent enough in how they consider and mitigate sustainability risks in their financial decisions.

The study – based on the adaptation of the Sustainable Banking Assessment framework of the WWF – shows that only SEB and one of Swedbank’s subsidiaries have existing sources, as of December 2019, that acknowledge the importance of addressing sustainability risks and outline their positions on sustainable banking. LHV and Luminor have not disclosed such sources or documents.

However, none of the banks discloses from where they obtain sustainability data, which tools and methods are used in their analysis and whether banks have set indicators to assess and manage the sustainability performance of portfolio companies and funds. Further, none of the banks sufficiently discloses their goals, metrics and results on assessing and managing ESG risks. The results of the study also illustrate that Estonian banks appear not to recognise the exposure and vulnerability of climate risks on portfolios’ profitability.

The author of the study, Uku Lilleväli, points out that while financial institutions abroad increasingly consider sustainability risks as central financial risks, the study implies that Estonian banks are currently neglecting the financial materiality of risks such as climate change. “By assessing and comparing banks, we have created a tool that enables anyone to understand what banks are doing right now and what they could and should do better to be more responsible towards the environment and the society,” Lilleväli explains.

Publication: Report
Topic: responsibility, sustainability, banking, investments, climate change, environment, ESG risks, sustainability risks