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KLP

PRI reporting framework 2020

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ESG issues in asset allocation

SG 13. ESG issues in strategic asset allocation

13.1. Indicate whether the organisation carries out scenario analysis and/or modelling, and if it does, provide a description of the scenario analysis (by asset class, sector, strategic asset allocation, etc.).

13.3. Additional information. [OPTIONAL]

Each time an asset class is evaluated, ESG issues are taken into consideration.

Furthermore, KLP considers ESG issues in strategic asset allocation in relation to specific impact investments: 1) co-investments with Norfund in renewable energy in developing countries through KNI, and 2) investments in the Norwegian Microfinance Initiative (NMI). See https://www.klp.no/om-klp/samfunnsansvar/ansvarlige-investeringer/investeringer-for-b-rekraftig-utvikling (Norwegian) and http://english.klp.no/about-klp/corporate-responsibility#http://english.klp.no/about-klp/corporate-responsibility/society-and-environment (brief English summary).


SG 13 CC.


SG 14. Long term investment risks and opportunity

14.1. Some investment risks and opportunities arise as a result of long term trends. Indicate which of the following are considered.

14.2. Indicate which of the following activities you have undertaken to respond to climate change risk and opportunity

Specify the AUM invested in low carbon and climate resilient portfolios, funds, strategies or asset classes.

Total AUM
trillions billions millions thousands hundreds
Currency
Assets in USD
trillions billions millions thousands hundreds

Specify the framework or taxonomy used.

This figure is KLP's investments in renewable energy, green buildings, green bonds.

In addition, KLP has invested in an eco-labelled equity fund (the Nordic Svanen label).

other description

          KLP is active in enhancing climate change related knowledge and competence in the market place.
        

14.3. Indicate which of the following tools the organisation uses to manage climate-related risks and opportunities.

other description

          KLP also conduct climate change related alignment tests of parts of its portfolio, as provided by the 2-degree investment initiative.
        

14.5. Additional information [Optional]


SG 14 CC.

14.6 CC. Provide further details on the key metric(s) used to assess climate-related risks and opportunities.

Metric Type
Coverage
Purpose
Metric Unit
Metric Methodology
Weighted average carbon intensity
          Information
        
          tonnes CO2e/mNok revenue
        
          A company's emission relative to revenue is allocated on the basis of portfolio weights (current value of investment relative to current portfolio value) for the entire portfolio. Methodology aligned with the TCFD annex D "supplemental guidance for the finance sector
        
Carbon footprint (scope 1 and 2)
          Information
        
          tonnes CO2e/mNok invested
        
          Absolute carbon emission (scope 1 and 2) for the portfolio is calculated using a equity ownership approach for each company. The sum of emission in tCO2e. is divided  by the market value of the portfolio. Methodology aligned with the TCFD annex D "supplemental guidance for the finance sector
        
Total carbon emissions
          Information
        
          tonnes CO2e
        
          Calculation of all emissions from operations, such as energy use and waste. All buildings where KLP itself is responsible for operations, as well as buildings where data on tenants' electricity use is available, are included in the calculations
        
Carbon intensity
          Information
        
          tonnes CO2e/mNok revenue
        
          Calculation of all emissions from operations, such as energy use and waste. All buildings where KLP itself is responsible for operations, as well as buildings where data on tenants' electricity use is available, are included in the calculations. 
Absolute emission (Scope 1 and 2) is calculated using an equity ownership approach for each company and divided on the company's revenue, where the revenue is also calculated using an equity ownership approach,   for all companies in the portfolio. Methodology aligned with the TCFD annex D "supplemental guidance for the finance sector
        
Exposure to carbon-related assets
          Information
        
          market value of carbon-related assets as a percentage of AUM
        
          The percentage of of carbon-related assets (defined as fossil energy companies) in the portfolio relative to current portfolio value
        

14.8 CC. Indicate whether climate-related risks are integrated into overall risk management and explain the risk management processes used for identifying, assessing and managing climate-related risks.

Please describe

 

KLP has initiated a broad organization wide process to develop and enhance its competence concerning climate risks, considering all key business areas as well as asset classes. The process identifies climate risk factors, and along the way, develop competence, and set direction for continuous improvement in this space. The aim that climate risk shall be fully integrated in the company risk management process. The next step in 2019 is to develop scenarios and integrate climate risk on our ORSA report. A full integration in KLP's risk management processes is challenging, considering the vast uncertainty and complexity in conducting valid climate risk assessment for a global and diversified investment portfolio.

14.9 CC. Indicate whether your organisation, and/or external investment manager or service providers acting on your behalf, undertake active ownership activities to encourage TCFD adoption.

Please describe

KLP has, in collaboration with other key institutional investors, already initiated a dialogue on climate risks and TCFD reporting, with the key companies on Oslo stock exchange that are relevant in the consideration of their climate risk exposure. These meetings was initiated in 2018 and will continue in 2019 and onwards. KLP also take an active role in the contribution of competence development considering practical approaches to climate risks towards the finance industry, companies, politicians and other companies, i.a. by arranging seminars and publishing reports.


SG 15. Allocation of assets to environmental and social themed areas

15.1. Indicate if your organisation allocates assets to, or manages, funds based on specific environmental and social themed areas.

15.2. Indicate the percentage of your total AUM invested in environmental and social themed areas.

0.04 %

15.3. Specify which thematic area(s) you invest in, indicate the percentage of your AUM in the particular asset class and provide a brief description.

Area

Asset class invested

0.22 Percentage of AUM (+/-5%) per asset class invested in the area

Brief description and measures of investment

Measures: investment value + production capacity

Description: These investments are in renewable energy projects, ie. new projects increasing the production capacity. Investements are made through fund structures and partnerships.

Asset class invested

10 Percentage of AUM (+/-5%) per asset class invested in the area

Brief description and measures of investment

Measures: Market value of investments

Description: KLP is both investing and operating its own property portfolio. We report on the share of green buildings in our portfolio, see sustainability reporting at http://english.klp.no/polopoly_fs/1.39998.1521710121!/menu/standard/file/KLP_Annualreport_2017.pdf

 

Asset class invested

0.08 Percentage of AUM (+/-5%) per asset class invested in the area

Brief description and measures of investment

Measures: market value of investments

Description: Investments in the Nordic Microfinance Initiative (NMI).

          Financial sector in developing countries
        

Asset class invested

0.08 Percentage of AUM (+/-5%) per asset class invested in the area

Brief description and measures of investment

Measures: market value of investments

Description: Investments in banks in Africa, through the investment company Arise, in collaboration with Norfund.

15.4. Please attach any supporting information you wish to include. [OPTIONAL]



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