SpareBank 1 Sør-Norge's transition plan
SpareBank 1 Sør-Norge's ambition is to be the customer's ally and contribute to financing the transition
SpareBank 1 Sør-Norge's ambition is to be the customer's ally in the sustainability transition, and at the same time our goal is to achieve net-zero emissions from our loan portfolio by 2050.
lt is not enough to just set goals and targets for ourselves. Our tansition plan will guide us and show us whether we are on track or not. That being said; We know that the path will change as we gain more knowledge and data quality improve. A good and credible transition plan will ensure that SpareBank 1 Sør-Norge has a business model that stands strong both today and in the future.
We need to reduce emissions as quickly as possible and restructure society to limit climate change. By the end of 2050, emissions must be reduced by 90-95% compared with the emissions in 1990. Some industries will find it impossible to reduce emissions by that much. This means that many industries need to get down to zero or must ensure a net sequestration of atmospheric CO2 if we are to reach our overall goals.
The transition that society and our customers will have to undergo over the next few decades will certainly be demanding, although it will also offer several opportunities. In this first version of our transition plan, the most material industries are included: Commercial Property, Shipping, Oil and Gas, Residential real estate and Agriculture.
The path to a zero-emissions society will change in the years to come. The plan will be further developed and expanded to encompass an increasingly large part of the loan portfolio. The important thing now, though, both for SpareBank 1 Sør-Norge and our customers, is the direction we are now presenting in our transition plan.
We as a bank cannot implement this transition alone. We will be dependent on several external factors, whether that be technological developments, policies, regulations or market changes.
SpareBank 1 Sør-Norge will support all customers with the transition by providing good advice and offering financing.
Commercial Property
Commercial property accounts for about 13% of the total loan portfolio and is the largest industry with respect to our lending in the corporate market. Emissions related to energy consumption (Scope 2) accounts for only 0.5% of emissions in the portfolio.
While Norway's buildings largely consume renewable energy, and therefore generate relatively low emissions, it is important from a climate perspective to reduce such consumption in order to free up energy for the decarbonization of other sectors.
The target trajectory is stated in kgCO2e per m2 and is based on the Carbon Risk Real Estate Monitor (CREEM), an EU funded project that has set target trajectories for different categories of buildings in each country. The figure shows the target trajectory for office buildings as an example, where emissions per m2
must be reduced by 44% from the 2020 level by 2030. This will be done by consuming less energy and decarbonising the power system.
Shipping
Shipping accounts for about 80% of the transport used in global trade and is the most efficient transport method for greater distances. For SpareBank 1 SR-Bank, shipping includes ferries and offshore vessels and accounts for about 2.5 % of lending while also accounting for nearly 25% of total emissions in the portfolio. Shipping is an emission-intensive industry that needs to transition to meet the global emissions targets.
The shipping target pathway is based on the Poseidon Principles, which SpareBank 1 SR-Bank signed in 2020 and has reported in line with since 2021. The Poseidon Principles is a global collaboration between banks designed to measure and disclose emissions from financed shipping portfolios. Fuel consumption and distance sailed are reported annually for each vessel. These are used to calculate the vessels' CO2 emissions per nautical mile that are to be reduced in line with the pathway.
Oil and gas
The oil-and gas industry is important in the global energy system as it accounts for around 50% of the world's energy consumption.
Oil and gas combustion is one of the largest drivers of CO2 emissions to the atmosphere and the resulting global warming. Although the highest emissions come from combustion, production and extraction on the Norwegian continental shelf also generate significant emissions.
The target trajectory is based on the goals for the Norwegian continental shelf set by Offshore Norway and the Norwegian Government, with a reduction of 50% by 2030 and a further 90-95% by 2050, again with 2005 as the benchmark. SpareBank 1 SR-Bank support these targets.
Agriculture
Agriculture is greenhouse gas intensive and is one of the industries with the highest emissions in Norway at 7.2 million tCO2e. The industry has signed a climate agreement with the government on reducing greenhouse gas emissions. The agreed reduction for the agriculture industry combined is 5 million tCO2e between 2021 and 2030. This entails an 11,5% reduction between 2020 and 2030.
For SpareBank 1 SR-Bank, loans to agricultural customers accounts for around 2.5 % of total lending and 22 % of total emissions in the portfolio.
Residential property
Residential property accounts for approximately 60% of the total loan portfolio at Sparebank 1 SR-Bank. Emissions related to energy consumption (scop 2) accounts for only 1.5% of emissions in the portfolio.
While Norway's buildings largely consume renewable energy and therefore generate relatively low emissions, it is important, from a climate perspective, to reduce such consumption in order to free up energy for the decarbonization of other sectors.
Norwegian households account for 20-30% of electricity consumption in Norway. The Norwegian Water Resources and Energy Directorate (NVE) estimates that the efficiency potential is 3 TWh for houses and 1 TWh for apartments.
The target pathway is given in kg CO2 per m2. It is based on the Carbon Risk Real Estate Monitor, an EU-funded project that has developed target paths for different building categories for each country. The figure shows the target path for detached houses, where emissions are to be reduced by 48% from the 2020 level by 2030. This is due to lower energy consumption and the decarbonization of the power system.
Own operations
SR-Bank follows a holistic approach to achieving net-zero emissions. This covers emissions from its own operations (Scope 1 and 2), the supply chain (Scope 3, categories 1-14), and emissions arising from financing customers' transition to net-zero emissions (Scope 3, category 15).
To be a credible partner in our customers' transition to net-zero emissions, we aim to lead by example. We have set targets for 2030 to reduce the carbon footprint of our own operations (Scope 1 and 2). SpareBank 1 SR-Bank will actively manage carbon emissions across our supply chain and will work on setting targets for Scope 3 (categories 1-14) over the next year.
The target pathway for buildings is given in kg CO2 per m2. It is based on the Carbon Risk Real Estate Monitor, an EU-funded project that has developed target paths for different building categories for each country. This is due to lower energy consumption and the decarbonization of the power system.