Two years ago, in September 2019, SEB signed the Principles for Responsible Banking. Allan Parik, CEO of SEB Estonia, and Evelin Allas, Sustainability Officer at SEB Pank, talked about why this was done and what it will change.
Why is sustainable banking important and why do we need to talk about it?
Allan:‘Changes in climate are obvious. The global average temperature has risen by nearly 1.5 degrees Celsius over the past 150 years as a result of human activity. We hear more and more about extreme climate circumstances and disasters around the world (forest fires, floods, heat waves, etc.). Banks are a vital part of the economy’s circulatory system and a crucial part of society, and through their lending and borrowing policies they can make or break progress in reducing our carbon footprint.’
Evelin: ‘We need to look for smart, sustainable ways and technologies to reduce our carbon footprint. How and from what raw materials do we manufacture, where and how do we grow, what do we move with? What do we produce electricity from? How do we heat and cool our living and working space? People can decide on their own lifestyles and activities, but banks are able to guide businesses through financing and investment.’
How do climate and other related risks affect the bank’s activities?
Evelin: ‘They directly impact which projects we finance and, for example, which funds we put our clients’ pension money into. Risk impact analysis, as well as legislation concerning sustainable management. Our investors and clients are the key assessors of our performance in this regard.’
Allan: ‘One example. In SEB’s group, we have decided that we will no longer finance new fossil fuel based power generation projects and, at the same time, we are very active in funding wind and solar energy projects.
What is the role and impact of the bank in the context of the green transition?
Evelin: ‘Direct impacts definitely are a reduction in the footprint of our daily activities: paper, electricity, water, transport to work, and business trips. The same applies to how we reuse second-hand office furniture, uniforms worn by consultants and equipment. Over the past few years, we have supported many children in shelters and orphanages with IT technology. As well as schools across Estonia, by opening computer labs and equipping them with laptops in order to give children a better chance to continue their studies at home during the corona crisis.
Plus, our products and services:
Paperless service, i.e. service without a single piece of paper, just digital signatures. In 2020, that amounted to 167 km (if you line up the paper packs), or a paper saving of about the weight of a 3 tonne car.
- The biodegradable bank card Maisic, which is made of compressed feed corn, not plastic.
- The green loan for large companies, which has supported the construction of several solar parks in Estonia.
- Green leasing for electric cars, etc.
Allan: ‘Most definitely, SEB’s Green Loan products. The SEB Group has been a pioneer in this regard – green bonds, green leasing, green loans to clients who are businesses. In addition, we were the first to launch a video consultation option, which saves time, saves on transport, is a convenient service to use, and also contributes to a smaller carbon footprint. But it is not just the banks that have to do this, we need the whole of society to participate, including the state. Legislation needs to be updated in a number of areas to allow for greater introduction of new and more sustainable technologies as well as green energy.’
Evelin: ‘We are glad to see that the feedback shows that we are at the forefront of sustainable initiatives in Estonia – the way we provide advice to our clients and the way we offer products and services to our clients. SEB is the only bank operating in Estonia to have been awarded the Gold Label of Responsible Business Index. It is a strategic and conscious move towards environmental sustainability through the bank’s advice and products and services.’
What specific activities have you carried out in the context of the green transition?
Evelin ‘At this point, I would like to say that responsible banking is much more than a green transition. We very clearly recognise our responsibilities in society at large:
- It is important to be a financial partner for our clients, to advise them on their investments, but we cannot overlook how active we really are in the social sphere:
- The latest project in which SEB is involved is Kood/Jõhvi (with 3300 candidates, and 217 students from 16 countries accepted), where we are a supporting partner.
- I would also like to highlight the annual and much-anticipated financial literacy courses in schools across Estonia.
- In addition, SEB has had the non-profit association SEB Heategevusfond for more than 15 years, through which we currently help 1000 children in Estonia who are living in shelters or foster homes.
Allan: ‘We are active supporters of entrepreneurship and innovation. Examples include Junior Achievement, Ajujaht, Growth Program, eAcademy, and Innovation Centres in Tallinn and Tartu. Also, the Growth Program for SMEs and the Master Card Lighthouse cooperation project.
Evelin: ‘We must also not forget our greatest resource – our people. Employee satisfaction surveys have confirmed that it is important for employees that the company is responsible and sustainable, and that it supports nature and communities through its activities. Employees themselves often come up with ideas on what could be made better or greener in our daily work to be more environmentally friendly – Maisic, the biodegradable bank card mentioned earlier, is also a good example of an idea that turned into a real product.’
Allan: ‘In today’s competitive environment, where the battle for talent is extremely fierce, offering a competitive incentive package is not insignificant. We are one of the few companies in Estonia to provide our employees with the opportunity to join an occupational pension scheme. More than 90% of our employees have joined this scheme.
What exactly does an employee engaged in sustainability do on a daily basis?
Evelin: ‘At the moment, we are focusing on mapping out all the legislation related to sustainability in order to prepare ourselves and advise clients in the light of the new legislation. We are also reviewing our policies in the banking sector to keep them in line with expectations and, perhaps what is less bureaucratic, is the range of new products and services we increasingly want to offer to our private and business clients.
SEB’s group has been working on sustainability for a very long time. The topic has been embedded in the company’s banking strategy and it supports the business in a very broad way. The key questions include, for example, which funds are we investing in, whether they are ethical, green or not so green funds; whether we offer environmentally sustainable banking products to our clients; what our lending policy is; whether it supports the environment; risk assessment, including climate risks.’
Where is the area of sustainability heading and what can we expect in 5–10 years?
Evelin: ‘This is a rapidly growing area and banks have a big role to play, both as an indicator of direction and as a coordinator and supporter.’
Allan: ‘As a whole, it is critical to first get a grip and then start to gradually reduce the amount of greenhouse gases released into the environment. As has been said, this cannot happen overnight, but steps need to be taken today. The key is green energy because it is the basic input for everything else.’
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