Nordea On Your Mind: ESG and the bottom line

ESG is not just about ethics. It's about profitability. Having a proper sustainability strategy in place could be key to the future of your business.

Download: ESG and the bottom line

Sustainability is a must

We’ve examined the ethical issues on ESG before, but there are compelling commercial drivers for corporates to ensure sustainability is top of their agenda. The focus on economic responsibility in an ever-more complex regulatory framework is sharpening and reputational headwinds could pose a significant threat to the long-term viability of their business.

The costs of failure

In the last 15 months alone, there’s been a EUR 1.3bn spike in ESG-related penalties. If that’s not incentive enough, the EU Commission’s action plan for sustainable growth should catalyze further ESG focus. Standardisation is the buzzword. And the bar is moving ever higher.

Taking stock

Our new ESG-themed report from Nordea Research’s Quant team shows the top ESG-scoring listed Nordic companies have outperformed the weakest by over 50% since 2012. They also have 25% lower share price volatility and 50% lower volatility in return on capital, but they do not have higher valuations. Opportunity beckons. Once the true value of sustainability is realised, premiums should follow.

The economics of a hotter world

In an additional ESG-themed report from Nordea’s Macro Research team, we explore how sustainability is critical for the whole world economy. Climate change could reduce long term GDP growth, make it more difficult for central banks to manage inflation targets, and potentially leave stranded assets losing over USD 1 trillion in value in the fossil fuel sector, which would represent a value shock of similar magnitude to the global financial crisis in 2008.

Helicopter view

We see a very clear trend of increasing investor engagement with management and boards on ESG issues in interviews with Kinnevik CEO Georgi Ganev, Carlsberg CEO Cees ‘t Hart, FL Schmidt CEO Thomas Schulz, Hempel CEO Henrik Andersen and Nordea CEO Casper von Koskull.

 

Watch the recorded webinar

 

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Analysts
Johan Trocmé | Director, Thematic Research | +46 101 56 34 22 | Analyst info
Ellen Benktander | Analyst, Thematic Research | +46 101 57 28 87 | Analyst info
Hemming Svensson | Analyst | +46 101 570 966 | Analyst info

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