Sustainability and Corporate Governance Report 202
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HOW WE TAKE ACTION TO REDUCE CLIMATE IMPACT – HAN
DELSBANKEN FONDER THE PATH TO A CIRCULAR ECONOMY CIRCULAR ECONOMY REGULATIONS 3 2 1. CIRCULAR DESIGN Companies already need to think about what their products’ life cycle looks like in the design phase, as well as how waste should be managed and materials and raw materials reused in new goods and services. 2. CIRCULAR USE If we are to succeed in transitioning to a circular economy, we need to shift away from today’s throwaway mentality to sustainable consumption patterns that extend the life of products and materials. One example is the sharing economy, which enables us to rent and borrow things instead of owning them ourselves. 3. CIRCULAR ECOSYSTEMS Through better care of our resources, we can reduce climate impact, strengthen ecosystems and contribute positively to biodiversity. In order to conserve and strengthen ecosystems, we need to take steps like reviewing material use. As much as 50 per cent of global climate emissions are estimated to occur as a result of the current linear management of material flows. HOW DO WE MAKE AN IMPACT? We redistribute capital by investing in companies with circular business models and in companies that we believe are taking positive steps in the transition to improving circularity. We drive dialogue with companies to increase the degree of circularity in their business. We conduct engagement ourselves through both direct contact with companies and pooled engagement. We also participate in investor networks and global alliances with other capital owners, such as Climate Action 100+ and PRI. We highlight issues and challenges related to increased circularity in the financial sector. Through these actions, we hope, together with other players and capital owners, to drive the transition of the economy. 1 Within Sweden and the EU, action plans have been put in place to accelerate development of the circular economy. Focus areas include sustainable production and design, sustainable ways of consuming and using materials, securing circular cycles and promoting circular business models. The regulations are cross-sectoral, laying the groundwork to achieve major impact. Demands on companies are expected to increase in the future as more and more initiatives and regulations are announced. SUSTAINABLE BONDS FOR A MORE CIRCULAR ECONOMY In 2020 we started to see more and more of a new form of sustainable bond known as a sustainabilitylinked bond, or SLB. Unlike bonds linked to specific projects, sustainability-linked bonds are linked to companies’ overall transitions and sustainability targets. On the fixed income side, for example, Karin Göransson, manager of the bond fund Handelsbanken Hållbar Global Obligation, has invested in some of these sustainability-linked bonds. One of these is issued by H&M, with one of the targets being for the company to increase the proportion of recycled material in production, from a few per cent to 30 per cent by 2025. Increasing the proportion of recycled materials in the fashion industry is crucial for reducing environmental and climate impact, especially in fast fashion where many of the garments are discarded shortly after use. Another investment made by the fund in a sustainability-linked bond is linked to Ahold Delhaize. The company is one of the world’s largest global grocery retailers. One of the targets linked to the bond is a 50 per cent reduction in the company’s food waste by 2030. In addition to optimising its packaging and routines for donating leftover food, the company has taken several measures to reduce food waste. Among other measures, they have developed an algorithm to map food consumption based on a variety of circumstances. In this way, they can minimise waste by doing things like discounting items that are close to their sell-by date. Information about risk Past performance does not predict future returns. The value of the money invested in the fund can increase or decrease and there is no guarantee that all of your invested capital can be redeemed. The fund’s prospectus (“Informations broschyr”), fund rules and KIID are available at handelsbanken.se/funds. 31