They Manage $310 Billion, and They Want New Carbon Pricing Rules

(Bloomberg) -- Three of the biggest asset managers in Sweden have started a campaign to force listed companies to back up their carbon-emissions claims with a lot more data.

Alecta, Folksam and Robur Asset Management, which together oversee about $310 billion, want Nasdaq OMX Nordic to set new rules for the companies that trade on the exchange. Firms should be forced to show how they calculate the future cost of carbon emissions, they argue, pointing to significant inconsistencies in current methods that make it virtually impossible for investors to know what they’re buying.

“We think we have come far enough that Nasdaq OMX should consider making this a part of the listing requirements,” Alecta’s chief executive officer Magnus Billing said in an interview.

Nasdaq says it already “encourages” the companies that trade on its Nordic exchange to provide transparent reporting, for which it offers training.

“Our experience is, however, that true development on sustainability is driven by demand, rather than regulatory intervention,” Lauri Rosendahl, the president of Nasdaq Stockholm and head of European equities and post trade, said by email.

Nordic companies do more than their peers elsewhere, “both in quantity and in quality,” when it comes to transparency around ethical conduct, Rosendahl said. “At this point, we do not see reason to create additional layers of regulation,” he added.

Institutional investors in the Nordic region are desperate for assets that live up to environmental, social and governance standards as they try to use their clout to bring about ethical change. But they face a landscape riddled with reporting gaps.

In Norway, the $1.1 trillion sovereign wealth fund recently revealed it’s stepping up pressure on the firms it holds and forcing them to explain their ESG credentials. It has held meetings with some of the biggest companies in the world to underline its point, including Microsoft Inc., Volkswagen AG and Toyota Motor Corp.

Alecta and Folksam are both members of the Net-Zero Asset Owner Alliance, which represents nearly $4 trillion of assets under management. The funds behind the alliance have pledged to transform their portfolios to net-zero green-house gas emissions by 2050.

Billing at Alecta says it’s currently not at all clear how carbon emissions are priced, with assumptions per ton of emissions varying by hundreds of dollars, depending on who does the calculation.

Alecta acknowledges it won’t be easy for companies to publish figures on an area characterized by such uncertainty, especially given the potential legal ramifications of guiding imprecisely. Companies may also want to treat their calculations as business secrets.

But, according to Billing, “That is why the market place has an important function, as it can help set out the framework and handle legal aspects regarding forward looking statements.”

To contact the reporter on this story: Love Liman in Stockholm at jliman1@bloomberg.net

To contact the editors responsible for this story: Tasneem Hanfi Brögger at tbrogger@bloomberg.net, Charles Daly

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