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Laszlo Sajtos, George Marbuah, Aaron Maltais
Policy brief
Climate policy, Climate targets, Economy, Finance, Sustainable finance

Aligning financial flows under the Paris Agreement: the case of banks in Sweden

A recent study by SEI, SSFC and Misum at the Stockholm School of Economics has mapped the combined financial flows issued by the five biggest banks in Sweden.

The report has been created for the Swedish EPA and the results suggest a limited alignment with the Paris Agreement, which contains guidance on financial investment and other activities to prevent average global warming above 2°C and preferably below 1.5°C.

This policy brief is based on the report Financial Flows of Five Leading Banks in Sweden Since the Paris Agreement. The study analyzed the available data on the domestic and international capital flows from the five largest lenders in Sweden and their alignment with the Paris Agreement. Between 2010 and 2020, the five largest banks in Sweden – Svenska Handelsbanken, Skandinaviska Enskilda Banken (SEB), Swedbank, Danske Bank and Nordea – gradually increased the volume of their investments to highly emitting sectors, such as oil and gas exploration and production. The sampled banks have facilitated about USD 150 billion to these sectors since the Paris Agreement entered into force at the end of 2016, mainly through syndicated loans (USD 104.4 bn) and bond issuance underwritings (USD 36.3 bn).

Placing financial flows on a “Paris-compliant” trajectory requires understanding the driving forces behind these numbers. By engaging with relevant stakeholders and providing regulatory guidance on what and how to report relevant financial activities, proper data and analyses will assist in the transition of climate-relevant sectors and the whole economy, by informing policy and future investments.