Our assessment after interpreting the scenario analysis results is that the portfolio's exposure to fossil fuel extraction and electricity production is in line with SDS (Sustainable Development Scenario), that is, a restriction of the temperature increase in accordance with the Paris Agreement. We have an exclusion criterion on extraction of fossil fuels; hence this reduces our exposure to these climate-related risks in the scenario analysis.
One conclusion is that the automotive industry in general has a major transformation ahead and that current investments in the production of electric and hybrid cars do not meet what would be required to achieve the Paris Agreement. In general, we have a rather limited exposure to the automotive sector, but the exposure we have is not in line with SDS.
However, measuring this with the help of a scenario analysis also comes with certain limitations. For example, earnings are based on estimates of future investments and production. It is also based on a limited number of sectors and hence it does not give a comprehensive view.
We intend to evaluate and develop the method for calculating climate risks in the future. To date, PACTA is a good first step for estimating and assessing the risks and opportunities in our portfolio.