Climate and Nature report 2023 1
Climate and Nature report 2023 CONTENTS
Climate and Nature report 2023 Foreword by the CEO
Climate and Nature report 2023 We are committed to
Net Zero
Climate and Nature report 2023 Governance
Climate and Nature report 2023 Strategy
Climate and Nature report 2023 Risk management
HANDELSBANKEN FONDER – RISK MANAGEMENT 11 CONTENT
S Foreword by the CEO We are committed to Net Zero Governance Strategy Risk management Metrics and targets Nature Glossary Monitoring portfolio emissions As part of our assessment of climate-related risks, we actively monitor the greenhouse gas emissions of our investment portfolios. This monitoring process is closely tied to our goal of portfolio decarbonisation, and the current level of emissions for each fund is presented on a quarterly basis in the format of the European ESG Template (EET), available at Follow our work, and on a yearly basis as a part of periodic disclosure available at Handelsbanken’s Funds. By tracking and analysing the emissions data of the companies in our portfolios, we can identify high-emitting sectors and individual holdings that may be exposed to greater transition risks. This information enables us to engage with companies to encourage the adoption of emission reduction strategies and to make informed investment decisions that align with our decarbonisation goal. This ongoing monitoring and management of portfolio emissions are essential components of our overall approach to assessing and mitigating climate-related risks in our investments. 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. Note that a fund with risk level 5-7 as stated in the fund’s key information investment document (KIID) can vary greatly in value due to the fund’s composition and management methodology. A summary of investors’ rights as well as a prospectus, fund rules and KIID are available for each fund at handelsbanken.se/fonder. Physical climate risks Physical climate risks are identified and assessed for the total corporate investment portfolio using a tool by ISS ESG. The tool measures current and future risk exposure for six of the most costly physical climate hazards: 1. Coastal floods 2. Droughts 3. Heat stress 4. River floods 5. Tropical cyclones 6. Wildfires Future risk exposure extends to 2050 and is assessed for both a likely scenario (Representative Concentration Pathway (RCP) 4.5, corresponding to a 1.7-3.2°C temperature rise by 2100) and a worst-case scenario (RCP 8.5, corresponding to a 3.2-5.4°C temperature rise by 2100), based on two scenarios from the IPCC 5th Assessment Report (AR5). The potential effects of the climate hazards in each scenario are simulated using state-of-the-art scientific climate models. The risks are then assessed with regards to company-specific geographical exposure of both revenue streams and assets. This is quantified in terms of: 1. Operational risks (e.g., business interruptions and repair costs) 2. Market risks The financial risk stemming from the operational and market risks is used in a forward-looking valuation of the company to derive the company’s Physical Value at Risk (PVaR). PVaR estimates the change in share price resulting from the impact of climate hazards. This estimate does however not capture all important climate-related physical risks, and the true worst case scenario would most likely have a greater impact on our portfolios than what is estimated. As a complementary result, the exposure to each specific climate hazard is scored from 0-100 based on companies’ relative risks compared to industry peers. A lower score indicates a large increase in financial risk in the likely scenario, with a score of 50 corresponding to the industry median and a score of 1 corresponding to the top 99th percentile of highest financial risk increase.
Climate and Nature report 2023 Metrics and targets
Climate and Nature report 2023 Nature
Climate and Nature report 2023 Glossary