Reaching the goals of the Paris Agreement requires a substantial increase in climate investment on a global scale. The report states that the Swedish export finance system has only a limited impact on the global emissions of greenhouse gases. Therefore, a prerequisite to make a larger contribution to climate transition, is that the measures adopted in Sweden generate leverage, partly by influencing other governmental export credit agencies and international regulations, and partly by influencing the financial market toward transition.
“We shall seize the opportunity to influence other actors through active encouragement and facilitation of export transactions, to advance global climate transition and avoid contributing to long-term lock-in effects in regard to reliance on fossil fuels. Climate awareness is rapidly increasing in the financial markets and the export finance system strives to be a positive force in the transition,” says Anna-Karin Jatko, Director General, EKN.
The Swedish Government has decided that state-backed loans and export credit guarantees for exports aimed at the extraction and exploration of fossil fuels will cease after 2022. As a milestone in the phase-out, EKN and SEK will cease to finance transactions pertaining to the extraction and transportation of coal at the end of 2020.
“An increasing number of countries are rejecting business transactions with major negative climate impact and encouraging transactions that contribute to transition. In time this will lead to higher risk premiums for operations with negative climate impacts and lower premiums for measures that contribute to the transition,” says Catrin Fransson, CEO of SEK.
Eight proposals for an export finance system that contributes to climate transition:
- For transactions related to projects with high GHG emissions, EKN and SEK will place more importance on the Paris Agreement’s 1.5 °C goal, considering lock-in effects as well as transition opportunities.
- Customised products from EKN and SEK for exports that contribute to climate transition.
- EKN will examine the possibility of providing guarantees to environmental and climate investments in Sweden that can contribute to the climate transition, in cases where there is a connection to Swedish exports.
- EKN will, primarily in collaboration with the Swedish Energy Agency and Almi, develop information for Swedish SMEs whose products and services have high export potential and can contribute to the global climate transition.
- As of 2022 at the latest, EKN and SEK will report climate-related risks and opportunities in line with the recommendations of the TCFD.
- EKN and SEK have commenced efforts to further increase the transparency of the Swedish export credit system with due consideration to the bank confidentiality legislation.
- A proposal to the government to give EKN and the Swedish International Development Cooperation Agency a joint assignment to develop synergies between the export credit system and the Swedish development collaboration.
- EKN and SEK will establish a joint climate council with expertise in, for example, climate research and the development of international regulations.
About the report:
On 6th March 2020, EKN and SEK were asked by the Swedish Government to review how Swedish and international export credit systems can contribute, in alignment with the Paris Agreement, to climate transition and a significant decrease in greenhouse gas emissions. The report is based on data from companies, authorities, climate research and NGO’s as well as on an overview of other countries’ initiatives in this field.
Malin Alm Gerentz