As a long-term asset manager, Industrivärden’s largest carbon footprint is made through its ownership in the portfolio companies. Greenhouse gas emissions (CO2e) from its own operations and from the equities portfolio have been measured since 2010, when Industrivärden also began reporting its carbon footprint to the CDP (formerly Carbon Disclosure Project).
Emissions from equities portfolio
The chart below shows the equities portfolio’s yearly emissions over a three-year period. Data has been obtained from the portfolio companies’ own disclosures of greenhouse gas emissions (GHG Protocol, market-based method), in proportion to Industrivärden’s share of ownership (equity share approach). The portfolio’s emissions are reported in Industrivärdens Scope 3 emissions (the GRI Index only includes Industrivärden’s own operation) and reflect the portfolio companies’ Scope 1 and 2 emissions, based on Industrivärden’s share of ownership (share of votes, which in Industrivärden’s case corresponds to higher emissions owing to larger shares of votes than equity in several portfolio companies).
Integrated sustainability analysis
Sustainability issues, such as climate-related risks in the portfolio companies, are handled like other strategic matters within the framework of Industrivärden’s active ownership process. The analysis is based on Industrivärden’s sustainability analysis framework and is part of the so-called fundamental analysis. The sustainability analysis covers the portfolio companies’ organizations, structures, risk management, utilization of value-creating opportunities and communication. Influence in strategic sustainability matters is exercised where needed within the framework of Industrivärden’s business model.
Focus of climate issues
Achieving a reduced carbon footprint is a prerequisite for sustainable value creation and, by extension, a healthy planet. The portfolio companies shall have high ambitions in the climate area, with clear goals and prominent positions regarding minimizing carbon emissions in their own production and value chains. All of the portfolio companies have clear ambitions to reduce their carbon footprints and have set goals for reducing their greenhouse gas emissions. This contributes to competitive companies, enables long-term growth and promote sustainable development of society.
Science Based Target initiative
As per December 31, 2020, five of Industrivärden’s eight portfolio companies had committed themselves to adopting science-based climate targets as part of their work on reducing their greenhouse gas emissions in accordance with the Science Based Target initiative (SBTi). This means that science-based calculation methods are used to set targets that are in line with the Paris Agreement’s targets with respect to global warming. Essity, Ericsson and SSAB have had their targets validated and approved by SBTi, while Volvo and Skanska have undertaken to set targets in the coming year.
Skanska and Volvo Construction Equipment – partnership for reduced emissions
Industrivärden’s portfolio companies Skanska and Volvo (via Volvo Construction Equipment, part of the Volvo Group) have partnered in an innovative collaboration to reduce and eliminate carbon dioxide emissions in quarrying operations. The construction sector accounts for approximately 40% of the world’s energy-related carbon emissions; no other individual sector has a greater impact on emission volumes. The collaboration, dubbed Electric Site, is a Swedish R&D project aimed at making quarrying more efficient, more environment-friendly, and safer. The project is developing new machines and changed work methods along with control systems for quarrying operations. During the test period the project showed a 98% reduction in carbon emissions, a 70% reduction in energy cost and a 40% reduction in operator cost.
Essity – Sustainable circular solutions
As part of its Science Based Climate targets, Essity has committed itself not only to reducing its own emissions, but also to reducing emissions across the entire value chain. To help customers reduce their carbon footprints, Essity is investing in sustainable and circular solutions. Essity’s innovative “Tork PaperCircle” both reduces the use of paper towels and recycles them. For its tissue manufacturing, Essity is investing in alternative fiber technology in Germany. The goal is to increase resource efficiency by making paper from plant-based agricultural by-products.
SSAB – HYBRIT: fossil-free steel production
Since 2016 the portfolio company SSAB has been working together with LKAB and Vattenfall on development of HYBRIT, an initiative that endeavors to revolutionize steelmaking. HYBRIT aims to replace coking coal with hydrogen to achieve the world’s first steel made with fossil-free technology. Success of the HYBRIT project will result in a 10% reduction in Sweden’s total carbon emissions and 7% reduction in Finland’s. In October 2020 SSAB had its science based climate targets approved by SBTi, where it committed itself to reducing its greenhouse gas emissions by 35% by 2032 (with 2018 as the base year). SSAB’s overall goal is to be fossil-free by 2045, which can be made possible with this new technology.
Industrivärden’s own emissions
Industrivärden has calculated the carbon footprint from its own operations during the last ten years. Emissions come mainly from electricity and district heating consumption in the Company’s office building and from business travel. During 2020 travel-related emissions were very low due to the Covid-19 pandemic. To reduce greenhouse gas emissions, environmentally certified electricity from wind and hydro power is purchased, and the remainder is compensated through offsets.
Task Force on Climate-related Financial Disclosures (TCFD)
The Task Force on Climate-related Financial Disclosures (TCFD) was launched in 2017, which provides guidance to companies on how to better identify and report climate-related financial risks and opportunities. Industrivärden has reported climate-related information to the CDP since 2010. Today the TCFD’s recommendations are integrated in the CDP’s questionnaire on climate change. In 2020 Industrivärden began implementing the TCFD’s recommendations on reporting climate-related risks, but currently is not reporting entirely in accordance with the framework.