In 2019, VBV has conducted a heat map scenario analysis of climate-related risks and opportunities for our invested securities with assistance from pwc Germany. The scenario analysis tested the resilience of our equity portfolio against a climate-related scenario of 2° Celsius or lower. The 2° Celsius scenario has been based on International Energy Agency with the time horizons 2025 and 2030. The result of the analysis for the time horizon 2025 showed that overall, under a 2° C pathway, the portfolio would be mostly resilient regarding transition risks. Until 2030, the portfolio might become less resilient and the geographic differences more profound. A deep dive into sectors showed that some sectors and sub sectors are more exposed to transition risks. For instance, North American and European food and agriculture companies may be more strongly affected by water stress, CO2 prices and demand changes. On the other hand, there is a strong development of Asian Pacific companies in the financial sector mainly mirroring developments in the real estate sector and low CO2 prices.
VBV has already been working on factoring in transition risks and opportunities into our investment strategy and products:
- VBV has decided to exclude all companies that realise at least 5% of their sales revenue or trading from coal from its investment universe.
- We measure the carbon footprint of our equity portfolios at least once a year. Our target is to produce one third fewer emissions than our benchmark (MSCI World Index) every year.
- We invest in the renewable energy sector, mainly in solar and wind, to follow governments´shift from non-renewables to renewables source of energy.
- We monitor our positions in fossil fuels and are gradually reducing our exposure. We are also discussing with our Ethics Committee to sell all our positions in fossil fuels, as fossil fuels are highly exposed to climate risks.