Ingenious individuals and the creative collaboration of interdisciplinary teams in science and corporate communities play a key role in finding solutions to specific problems in the society. Another instrumental driver behind innovation, and particularly its later widespread influence, is financing. In his book ”The Innovators” Walter Isaacson states that what was destined to be almost as important to the digital age as the microchip, was venture capital. All innovations need capital, from different sources in different development phases. The capital market – investors, institutions and banks – plays a significant role in channeling capital into those investments and technologies for which there is demand and need in the society, and which are building a sustainable future.
The energy challenge has been widely recognized in the financial industry. In connection to the Paris Climate Summit at the end of last year, several financial institutions published statements to reduce their support for fossil fuels, or expressed growth targets for renewable energy financing in the near term. SEB has similarly revised its Climate Change Position Statement. From now on, SEB will not enter into new business relations with companies with major business in coal mining, nor provide finance for new coal power plants, unless they use special technologies which substantially reduce greenhouse gas emissions.
“Companies including sustainability in their operations are more successful and less risky.”
Energy related challenges are today acknowledged by ordinary citizens and companies, which increases the pressure among the institutions investing private and pension capital, to channel their investments to targets that support the energy solution. Demand begins to create supply. An increasing number of institutional investors have committed to UN’s Principles of Responsible Investing. Yet, according to Nasdaq OMX, only a fraction of the international investor community has integrated responsibility principles into their investment strategies. When this number increases, further capital may be allocated to industries which create sustainable innovations.
Finland is committed to the goals of the recently signed Paris Climate Agreement. The objective of the national energy and climate strategy is to increase the share of renewable energy consumption. SEB supports the local industries in Finland by financing renewable energy production. As one of the largest in wind power financing in Finland, SEB collaborates with several wind power producers in almost 20 different wind parks. Furthermore, SEB has financed Vantaa Energy’s recently built waste-to-energy plant and the bio fuel plant of Kerava Energy, which both reduce Helsinki regions’ dependence on fossil fuels.
The financial industry increasingly shares the view that companies that include sustainability in their operations are more successful and less risky in the long term. Climate change brings new growth opportunities for example in green tech applications, but forces companies to develop their business in order to avoid detrimental operations and assets becoming a loss for owners and investors.
Veera Hoffmeister works in Business Development at SEB in Finland and is responsible for Marketing & Communication and Corporate Sustainability. SEB is Technology Academy Finland’s partner.