What's takeaway 1 on Nordea continues to win top rankings in sustainable finance?

Nordea's recognition in sustainable finance speaks to its strong market position and operational success.

What's takeaway 2 on Nordea continues to win top rankings in sustainable finance?

The integration of sustainability within financial institutions is increasingly seen as a pathway to enhancing profitability.

What are the market implications for Nordea continues to win top rankings in sustainable finance?

Traders should closely monitor the EUR/NOK pair for potential valuation shifts, particularly in light of Nordea's sustainability achievements. Key levels to watch would be around 1.075, which aligns with our consensus outlook, as market sentiment evolves towards favoring sustainable finance prospects.

What are the risks to this view on Nordea continues to win top rankings in sustainable finance?

A significant deterrent could include any adverse regulatory changes in the Nordic region that thwart sustainability initiatives or a downturn in global demand for sustainable loans. Should Nordea face challenges in maintaining its sustainability leadership, this may prompt a reevaluation of its currency outlook.

Nordea continues to win top rankings in sustainable finance

What the desk is arguing

The desk posits that Nordea's recent accolades in sustainable finance could enhance the appeal of the Nordic currencies in global forex markets. With record financial results despite economic turbulence, Nordea’s commitment to sustainable practices underscores the viability of integrating ESG principles within traditional banking operations. Per the full note, the bank was awarded top rankings in Denmark, Finland, and Norway, alongside a prominent recognition across Western Europe.

Such recognition positions Nordea as a pivotal player in driving the transition to a more sustainable economy. Overall, the sustainable finance landscape is evolving, and Nordea's focus exemplifies how banks can align profitability with sustainability initiatives, further solidifying their market position.

Where it sits in our coverage

Our consensus target for the Nordic currency pairs reflects a robust optimism, pegged at 1.075 for the EUR/NOK pair, with estimates ranging between 1.04 and 1.12. Relevant firms and their targets include: - jpmorgan: 1.10 (Mar26) - bofa: 1.04 (Mar26)

This view aligns closely with jpmorgan, whose target sits at the upper end of our established range, while bofa represents a contrarian strategy at the lower bound.

How other firms see it

Banks like jpmorgan and others align in their outlook towards long positions in Nordic currencies, bolstering the view that sustainability efforts can translate to financial stability and attractiveness. In contrast, bofa takes a more conservative approach, reflecting skepticism over sustainable finance impacts.

Key indicators to observe include shifts in the EUR/NOK trade dwell as driven by the evolving sustainable finance discourse and monetary policy responses from regional central banks, particularly the Norges Bank, which influences NOK valuations and could reflect broader economic sentiment surrounding sustainability.

Sustainable finance Nordea continues to win top rankings in sustainable finance 29-06-2023 Global Finance has once again recognised Nordea's sustainability leadership in its 2023 Sustainable Finance Awards. In addition to country wins for Denmark, Finland and Norway, Nordea was also named top bank for transition/sustainability-linked loans in all of Western Europe. Nordea's Isabella Frenning Willis (left) and Juho Maalahti (center) with Global Finance Founder and Editorial Director Joseph Giarraputo (right) At Nordea, we aspire to be the #1 sustainable finance bank in the Nordics and a driver of the transition to a more sustainable economy.

As the largest wholesale bank in the region, we have an important opportunity and responsibility to accelerate the transition with real world impact, including through our corporate customers. In recognition of that commitment and effort, Global Finance has named Nordea the winner of its 2023 Sustainable Finance Awards in Finland, Denmark and Norway. In addition to the country awards, Nordea also won the regional award for Western Europe for outstanding leadership in transition/sustainability-linked loans. “In the past year, despite market turbulence and the energy shock, we have delivered record financial results, while at the same time continued to raise the bar in sustainability.

It’s gratifying to have our sustainable finance leadership recognised by Global Finance, particularly as the only Nordic bank awarded a regional prize. Sustainability and profitability go hand in hand,” says Martin Persson , Head of Large Corporates & Institutions at Nordea. In the past year, despite market turbulence and the energy shock, we have delivered record financial results, while at the same time continued to raise the bar in sustainability.

Martin Persson, Head of Large Corporates & Institutions, Nordea The Global Finance awards acknowledge the financial institutions that have “initiated, maintained and grown their sustainable finance offerings and financing throughout 2022,” according to the publisher’s press release. Criteria for evaluation included governance policies and goals, as well as measurable achievements in environmental and social sustainability financing, focusing on activities in 2022. Nordea’s sustainability ambitions are evident in our targets.

We were not just the first Nordic bank to set 2030 emission reduction targets, but also one of very few banks to set one covering the entire portfolio. This sets us apart from peers who have chosen to focus on sector targets. “We have made significant progress already. LC&I has already cut emissions in its lending book by more than 35%.

Nordea has also set ambitious targets for Shipping, Oil & Gas, Offshore, Mining and Residential Real Estate,” says Anne S. Ulriksen , Head of ESG in LC&I. A EUR 200 billion sustainable financing goal Sustainability is at the core of Nordea’s strategy as we aim to be the Nordic leader in sustainable products and services.

We have set the target of facilitating EUR 200 billion in sustainable financing, across bonds and loans, between 2022 and 2025. We’re on track to meet that target, having facilitated EUR 58 billion in sustainable financing in 2022 alone. Nordea ranked first for Nordic sustainable bonds overall in 2022 and was the #1 arranger of Nordic sustainable loans.

Last year, Nordea also launched the Sustainability-linked Loan Funding Framework , an innovative new bond format that allows investors to support corporate borrowers that have set ambitious sustainability goals as part of their financing. Sustainable finance highlights at Nordea Innovation: Nordea’s Sustainability-linked Loan Funding Framework In 2022, Nordea launched its Sustainability-linked Loan Funding Framework , intended to provide a new financing structure for financial institutions with loans in their asset portfolio. Nordea has raised EUR 400 million from a bond issued under the framework to support its sustainability-linked loan financing activity.

Commitment: reduce carbon emissions by 40-50% across lending and investment portfolios by 2030 Nordea has set an interim target for 2030 , with the goal of cutting carbon emissions by 40-50% across our lending and investment portfolios. We are one of very few banks to set an emissions reduction target that covers the entire portfolio. LC&I alone has already reduced emissions in its lending book by more than 35%.

We have also set sector-specific climate targets for climate-vulnerable sectors and have started mapping the transition plans of our large corporate customer base. More than 58% of our exposure to climate-vulnerable sectors is covered by transition plans. We have a goal of ensuring that 90% of our exposure to large corporate customers in climate-vulnerable sectors is covered by transition plans by the end of 2025.

Advisory: sole green structuring advisor to Kingdom of Denmark’s inaugural green bond Nordea acted as sole green structuring advisor to the Kingdom of Denmark in its inaugural green bond issued in January 2022. The framework included detailed EU Taxonomy alignment and received the highest possible shading of “dark green” from CICERO. Sustainable finance going strong in the Nordics While the global market for sustainable bonds declined slightly last year, that decrease should be viewed in the context of the uncertainty caused by Russia’s invasion of Ukraine and the anti-ESG movement in the US, says Isabella Frenning Willis , Nordea’s Sustainable Finance Advisory Country Lead in Denmark. “Looking at the Nordic issuances in isolation, the market actually slightly increased in 2022,” she says.

She notes that green bonds are still the preferred format, but sustainability-linked bonds are increasing in popularity. And while sustainability-linked loans were also affected by the market uncertainty in 2022, they still account for close to 25% of Nordic corporate loans – a significantly higher proportion than in the rest of Europe and especially the US. Juho Maalahti , Nordea’s Sustainable Finance Advisory Country Lead for Finland, notes that we’ve long moved past the “introduction phase” where the general understanding of ESG and sustainability was low in the market.

Companies now expect their bank to serve in an advisory role on the subject. “Clients expect us to deliver tailor-made and thought-through proposals, for example, on sustainable finance transition structures, identifying green expenditures as well as KPI considerations from selection and calculation to target-setting and reporting,” he says. In Finland alone, the sustainability-labelled volume of the corporate bond market has steadily climbed from 2% of total volume in 2018 to 53% in 2022, and around 60% year-to-date in 2023. In the loan market, green and sustainability-linked structures continue to thrive. “We continue to see companies having sustainability high on their agenda, also when it comes to bank financing,” he says.

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