I recently went to visit the new London Business School building on Euston road in central London. It’s an impressive, (and listed) building, where the architects have combined the new and traditional elegantly.
I caught up with Ioannis Ioannou there over coffee. If you don’t know Ioannis’s work, I commend it to you. He is one of a small group of business school academics who have helped really ‘mainstream’ sustainability into business school research.
Ioannis suggested I look into the work being done over at Nordea, the Nordic financial services group operating in Northern Europe. In particular the work being done by Sasja Beslik, head of group sustainable finance there.
So I had a look, and sure enough, Sasja is doing some important and I would hope, catalytic work in sustainable finance.
He kindly agreed to answer a few questions from me via email. So I sent him six questions, and his replies are below.
TW: How big is Nordea, for those readers less familiar with your business, and what are your areas of focus in sustainability?
SB: Nordea is the largest Nordic private bank, life & pensions provider and asset manager and one of the biggest banks in Europe. As a full service bank with 330 EURbn AuM Nordea serves 9.6 million private customers and 580,000 corporates and institutions. The institution is pan Nordic with the home market in the Nordics and is represented in 20 countries.
TW: Why are you so concerned about Anti-Microbial resistance? (Nordea funded this recent report)
SB: Antimicrobial resistance (AMR) is a major global health threat associated with pharmaceutical pollution. The problems with AMR are both social and environmental, the water is extremely polluted and it causes problems to humans, the farming industry and the environment.
The UK’s Independent Review on AMR projects a death toll of 10 million people per annum by 2050 if resistance is left unchecked, with a cost of up to $100 trillion. This is a conservative estimate, which only takes into account part of the impact of AMR.
Nordea is engaging with the pharmaceutical industry in India where antimicrobial resistance (AMR) is a big issue in the water due to pollution from the pharma companies having poor wastewater management.
It puts sustainable development at a huge risk and we address these issues to the companies that operate in that area to impact the whole industry.
The feedback from companies and Pharmaceutical Supply Chain Initiative (PSCI) has been positive and constructive. A number of corporate and industry actions have been initiated to address the water waste situation in India and Nordea’s concerns.
Apart from our engagement Nordea is also involved in a number of initiatives on AMR. As a result of the last investigation in Hyderabad India 2017 that we commissioned, we found in addition to the big issue on AMR, heavy metals in the water that are really dangerous.
While we still engage with the companies to impact the industry we are addressing the issues transparent and our latest commissioned report by Changing Markets Foundation was recognized by Wall Street Journal now in 2018.
TW: How exactly can investors such as Nordea help companies turn sustainability risk to opportunity?
SB: At Nordea we engage with companies to make a difference for a sustainable future. By having a dialogue with a company we can share knowledge, engage and work towards the same goals that are sustainable. For example within the core of sustainable finance the time horizon is long-term.
If we are able to turn a sustainability risk at a company around, that could mean that we are able to enhance their future time horizon for that business and help them to mitigate their risks in terms of business risks, reputational risks etc.
By addressing the risks to the company we can also make it possible for them to be proactive about future development and inspire others. All these things mentioned and much more constitutes opportunity.
TW: Most people in finance have no idea what the end of the supply chain looks like. Do you agree, and how do we fix that?
SB: In order to engage and adapt to solutions for the future the financial sector and investors need to see the risks, know what to prioritize and then monitor the risks.
We have been strong on these issues in Nordea for more than ten years from when we as pioneers signed the UN PRI (Principles for Responsible Investment) in 2007.
Apart from having strong resources on research and a solid governance structure, what makes the real difference is to really go out to the field and visit the companies and their supply chains to make sure to understand their business properly and discover the risks on site with your own eyes.
TW: I’ve been hearing about sustainable finance since I started working in this field back in 2001. YET in all our work on sustainable supply chains, risks, opportunities and implementation of targets, banks are notoriously absent. Why is it we cannot get them engaged in discussions around these areas, even off the record, when every other large player, including even Government, are coming to the table?
SB: Banks and financial institutions in general have been, for years, viewed as intermediators and not as key players in relation to transition to sustainable future. As such very few stakeholders in the game, governments, academics and practitioners have identified banks and financial institutions in general as the key enablers of change in relation to sustainable future.
Without them on board we can forget Paris Agreement and all other climate or sustainability related goals. Banks and financial institutions have moved from “ silent and anonymous” passenger seat to far more active driver of change. Why? Because we have no choice, in that sense we are laggards but, laggards with very, very big potential to make capital difference for sustainable world.
TW: You’ve said that: “One of the biggest challenges isn’t to find the new money but to reshuffle and reallocate or reshape investment strategies.” What does this really mean, and where is it happening today?
Yes, and I still agree with that. It is as simple as we have a certain amount of resources and we have the market today. In order to be able to develop businesses, the financial system and meet parameters such as a growing population etc. we need to mobilize finance to sustainable solutions.
The sustainable solutions are solutions that adapt to the future and that is what the financial investors are going to look for and what is needed for us to be able to live on this planet in the future. Hence the reallocation is key to enable the growth of sustainable solutions. See my recent article for the World Economic Forum.
Other relevant analysis from Innovation Forum:
Litigation risk focuses minds on modern slavery: While some existing laws are changing, new legal risks are emerging for companies on forced labour and human rights
Are responsible investors taking palm oil more seriously in 2018?
While investors recognise the risks in the palm oil sector, there are some key things they can do to engage with the industry more effectively
Lots more of this kind of thing, all independent, all original, is at: https://innovation-forum.co.uk
Our forthcoming events
- How business can tackle modern slavery and forced labour – 7-8 March 2018 – London
- How business can make smallholder supply chains resilient – 13-14 March 2018 – London
- Can innovation and technology make agriculture sustainable? – 5-6 April 2018 – Washington DC
- How business can tackle deforestation – 18-19 April 2018 – Washington DC
- Sustainable apparel: How brands can transform supply chains – 24-25 April 2018 – Amsterdam
- How business can tackle forced labour and modern slavery – 12-13 June 2018 – New York
- How business can measure sustainability performance, impact and apply science to targets – 19-20 June – London