Max Horster, ISS-Ethix Climate Solutions 16.1.2018,Assessing climate impacts of investments and climate-related financial risks, Sitra

1. ISS-Ethix Climate Solutions
Climate Impact Screening of
Nasdaq Helsinki 2017

2. 2
ISS-Ethix Climate Solutions
We provide holistic advisory and data in the area of climate
change and investments.
We help our clients
▪ understand climate change implications for their investments
and their investment impact on the climate
▪ measure climate impact, risk and opportunities
▪ act by reporting, investing and voting
2 Trillion+ EUR
Investments screened
for their climate risks
and impact

3. 3
2017 Report Structure
Topic 2017
Introduction
Overview of what is covered in the report – including the new features for
2017.
Key Trends in the Global
Market
Detailed analysis of key trends in the global market, covering events,
initiatives and approaches to climate change – expanded to cover more
topics than 2016.
Key Trends in the Finnish
Market
Full section dedicated to the Finnish market, covering key highlights, green
bonds and a case study on Elo.
Methodology
Full methodology and calculations, split into three sections covering Carbon
Footprinting, Climate Impact and Norm Based Research (new for 2017).
Analysis Findings
Split into three sections following the methodology order. Covering new
climate impact metrics and assessments, across 11 benchmark indices,
versus four in 2016.
Opportunities for Action
Using the understanding of the report – opportunities for investors to act
upon their climate impact.

4. 4
Where do investors stand on Climate Change?
2 Trillion+ EUR
Investments
screened for their
climate risks and
impact
Impact
Risk/ Opportunities
Ex-post
Measurement/
Disclosure
Ex-ante
Investment
Process

5. 5
Existing and Emerging Investment Climate Reporting Regimes
Where Who/ What Initiative Ask Standard
Global TCFD Self governance Voluntary No
Global Montreal Pledge Self governance Voluntary No
Global PRI Reporting Self governance Voluntary No
Global ISO 14097 Self governance Voluntary Yes
Global AODP Civil Society Voluntary No
Europe (EU) IORP Regulator Mandatory No
Europe (EU) High Level Expert Group Regulator tbc tbc
France Art 173 Regulator Mandatory No
California California Fossil Disclosure Regulator Mandatory Yes
Sweden AP funds Self governance Voluntary Yes
Switzerland FOEN (Ministry of the Environment) Regulator Voluntary Yes
Netherlands Platform Carbon Accounting Financials (PCAF) Self governance Voluntary Yes
the regime is already in place
regime to be expected

6. 6
Carbon footprint analysis of the
Nasdaq Helsinki

7. 7
Task
Screen the 129 companies of the Nasdaq Helsinki for their
carbon footprint, climate impact and ESG controversies.
Set the results in relation to investments into the index.
Compare the outcome against 11 other indices:
Nasdaq Stockholm, CAC 40, DAX, Euro Stoxx 50, Euro Stoxx 50
Low Carbon, FTSE 100, MSCI All Country World Index (ACWI),
MSCI World, Solactive Eurozone Low Carbon, Stoxx Global 1800
and Stoxx Global Climate Change Leaders.
Review and analyse the key sustainable finance topics globally
and specifically in Finland.

8. 8
Approach
Establish the carbon footprint and climate impact of all
companies within each of the 12 indices.
Relate results to each index investor’s «ownership» of these
companies to establish an «investment carbon footprint».
Complement this with climate impact analysis of constituents,
looking at transition risk, physical risk and climate goal
alignment.
Assess the ESG controversies across constituents.

9. 9
Comparison
Nasdaq
Helsinki
versus
Benchmark
EUR 1m invested into
the Nasdaq Helsinki and
the Benchmarks.
Nasdaq Helsinki’s
annual GHG exposure is
the 3rd highest of the 12
indices.
Nasdaq Stockholm is
less carbon intense
than two of the low
carbon indices.
Emissions Scope
1&2
(tCO2e/1mEUR)
Nasdaq Helsinki 199
Nasdaq Stockholm 41
CAC 40 UCITS ETF 386
Euro Stoxx 50 174
iShares Core Dax 295
iShares FTSE UCITS
ETF
143
iShares MSCI ACWI
ETF
143
iShares MSCI World 137
Stoxx Global 1800 138
Euro Stoxx 50 Low
Carbon
65
Solactive Eurozone
Low Carbon
105
Stoxx Global Climate
Change Leaders
32

10. 10
Materials and Utilities companies are
the largest contributors

11. 11
When including indirect emissions, the
intensity more than doubles
Nasdaq Helsinki Nasdaq Stockholm Solactive Eurozone Low Carbon
Scope 3 411 100 407
Scope 1 & 2 199 41 105
0
100
200
300
400
500
600
700
Emissions(tCO2e)
Scope 1, 2 & 3 Emissions
Scope 1 & 2 Scope 3

12. 12
…and makes
some other
indexes
more carbon
intense than
the Nasdaq
Helsinki
EUR 1m invested into
the Nasdaq Helsinki and
the Benchmarks.
Nasdaq Helsinki’s
annual greenhouse gas
exposure is the 5th
highest of the 12
indices.
Nasdaq Stockholm
remains less carbon
intense than two of the
low carbon indices.
Emissions Scope
1&2
(tCO2e/1mEUR)
Total Emissions
Scope 1,2 & 3
(tCO2e/1mEUR)
Nasdaq Helsinki 199 610
Nasdaq Stockholm 41 141
CAC 40 UCITS ETF 386 1,139
Euro Stoxx 50 174 705
iShares Core Dax 295 786
iShares FTSE UCITS
ETF
143 844
iShares MSCI ACWI
ETF
143 592
iShares MSCI World 137 564
Stoxx Global 1800 138 564
Euro Stoxx 50 Low
Carbon
65 303
Solactive Eurozone
Low Carbon
105 512
Stoxx Global Climate
Change Leaders
32 111

13. 13
An investment into the Nasdaq Helsinki provides 1/3
less carbon exposure than 2 years ago
0
50
100
150
200
250
300
350
2015 2016 2017
Emissions(tCO2e)
GHG Emissions per EUR 1m invested over time
Nasdaq Helsinki Nasdaq Stockholm

14. 14
Company
Portfolio
Weight
Emissions
Scope 1&2
(tCO2e)
Emission
Exposure (tCO2e/
EUR 1m)
Contribution to
total Emission
Exposure
1. NORDEA BANK AB 14.52% 10,911 0.0 0.02%
2. SAMPO OYJ-A SHS 9.11% 1,243 0.0 0.00%
3. KONE OYJ-B 8.38% 141,600 0.5 0.25%
4. NOKIA OYJ 8.07% 674,100 2.4 1.20%
5. TELIA CO AB 5.72% 287,000 1.0 0.51%
6. FORTUM OYJ 5.20% 18,895,500 67.1 33.75%
7. UPM-KYMMENE OYJ 4.91% 7,091,000 25.2 12.67%
8. NESTE OYJ 4.86% 3,433,359 12.2 6.13%
9. STORA ENSO OYJ-R 3.70% 3,390,000 12.0 6.06%
10. WARTSILA OYJ ABP 3.68% 117,052 0.4 0.21%
Four of the 10 highest weighted companies
account for almost 60% of emissions..

15. 15
…the 10 largest contributors account for over 90%
of emissions
Company
% of Total
Emissions
tCO2e/
1mEUR
in portfolio
Weight in
Portfolio
Source
1. FORTUM OYJ 33.75% 67.1 5.20% CSR
2. SSAB AB-A SHARES 18.44% 36.7 1.45% CDP
3. UPM-KYMMENE OYJ 12.67% 25.2 4.91% CDP
4. NESTE OYJ 6.13% 12.2 4.86% CDP
5. STORA ENSO OYJ-R 6.06% 12.0 3.70% CSR
6. FINNAIR OYJ 5.28% 10.5 0.58% CDP
7. OUTOKUMPU OYJ 3.78% 7.5 1.14% CDP
8. KEMIRA OYJ 1.66% 3.3 0.63% CDP
9. HUHTAMAKI OYJ 1.45% 2.9 1.34% CSR
10. VIKING LINE ABP 1.36% 2.7 0.06% APPROX

16. 16
31% of Nasdaq Helsinki constituents report
GHG emissions (33% in 2016 and 34% in 2015)

17. 17
Climate impact assessment of the
Nasdaq Helsinki

18. 18
5% Utility exposure accounts for 34% of
emissions, but energy can be green or brown

19. 20
Contribution to the international Climate Goal

20. 21
Norm Based Research

21. 22
Norm Based
Research
ranking split
Assessment Signal Score
Description of Assessment Report
Categories
RED 10 Verified failure to respect established norms
AMBER
9 Imminent failure to respect established norms
8 Alleged failure to respect established norms
7
Verified failure to respect established norms,
undergoing remediation
6 Fragmentary information
GREEN
5 Under observation
4 Undergoing remediation
3 Involvement beyond scope
2 Past involvement
1 (No allegation)

22. 23
Overall NBR score and rating

23. 24
What’s next

24. 25
Free tool for Screening your own Finland Portfolio

25. Be decision confident
in support of your
investment strategy.
Thank You
Dr. Maximilian Horster
Maximilian.horster@issethix.com
Managing Director, ISS-Ethix Climate Solutions
Hampus Hårdeman
hampus.hardeman@issethix.com
Associate Director - Institutional Sales