Climate & Finance #1: How Your Savings Impact Climate Change

Produced by Camille Duran / Published by Eleen Murphy / Senior Editors Eleen Murphy & Camille Duran / Transcribed by Oanh Nguyen / Music Credits: License by Ins. Green White Space. Photo by Rafael Matsunaga/CC BY

In most countries in the Western world—and definitely in the Nordics—much of the money that is sitting at the bank, in other words “our savings,” is used every day to invest in global financial markets. Most people ignore what is really happening backstage with their investments, life insurance, pension scheme, etc.

In this episode, we analyse the connection between finance & climate change, conclude on the Paris COP21 and talk to Magnus Emfel, Senior Advisor for Green Finance at WWF International to decrypt these issues and answer one question: Who makes the decisions that lead us to investing in the problem?


wwf WWF's mission is to stop the degradation of the planet's natural environment and to build a future in which humans live in harmony with nature.
Back to series page

Next episode

Transcript from the Episode



CAMILLE DURAN (CD): Today we talk about climate change under a little bit of a different angle than usually.



CD: Hello This is Camille Duran. I’m calling from Malmö.
VOICE 1: Yes hello hello. I was talking to my colleague and she was saying that you need the help with some funds or something like that with your saving? Is that correct?
CD: Yes I have a few questions.
VOICE 1: Yes.
CD: I am currently evaluating alternatives for investing a couple of millions in a fund but I’m very concerned with the carbon footprints created by my investments, if you see what I mean. And I would like to find an investment option that takes this in consideration. So I’m wondering if you provide investment opportunities specifically in energy efficiency or renewable energies, and if you track these estimated carbon footprints of the investment in anyway?
VOICE 1: Well, I think I’m not right person to handle it.

VOICE 2: “No, I don’t do that.”
VOICE: 3 “I’m not sure who I’m going to talk about them, I going to call this person to talk about this… because it’s important… of course but I can not discuss these questions.”

CD: Most people ignore what is really happening backstage with their investments, life insurance, pension scheme, etc. Today we’re answering those questions.

You’re listening to The Green Exchange. It’s 2016, best wishes to you and your loved ones, may this year be resourceful and inspiring for you and your team.



Savings, capital, banking, insurance, pension schemes, financial markets,
Why are we talking about this on The Green Exchange? Well… because we are all ‘shareholders’ in activities that contribute to climate change, because of the way our money is used.
Yep, that’s right. We will find out today that chances are that your savings at the bank create MORE carbon emissions per year than your lifestyle – counting the footprint of your food, transportation, housing, etc.

Now imagine what it means for businesses, for municipalities and other organisations with substantial active investments? How big is the ‘invisible’ carbon footprint in your organization?

There is one place where we talked a lot about carbon footprint lately.

We were in Paris for the COP 21 in December so I wanted to start by touching on a few conclusions from the negotiations that are going to help us with today’s topic.

[Voice] “The eyes of the World are on Paris for unprecedented global summit aimed at tackling climate change.”

[Voice] “This is the 21st meeting of the UN framework convention on climate change, a meeting known to most as COP 21.”

2 main texts were adopted, they have different legal status and we won’t get into details here but the first one – what people refer to as ‘the Paris agreement’ is quite something.


CD: It’s the first time that the 195 member States signed an agreement on climate change, it’s also the first time that all countries on Earth set goals on climate change, and showed up at the conference actually prepared – which was not the case how it happened in Copenhagen as I am sure you remember…

Let me tell you, if this agreement translates into actions, it means that we let go off fossil fuels by 2050, this means – that we need to rapidly shift our energy production and consumption systems. We have 35 years. Even more because now – and I don’t know what they had been drinking in Paris – but we are not targeting 2 degrees anymore.

We are seeking to, and I quote, “Hold the increase in the global average temperature to well below 2°C above pre-industrial levels AND pursuing efforts to limit the temperature increase to 1.5 °C.”

Pursuing efforts to limit the temperature increase to 1.5 °C? Finally something a little bit ambitious.

So yes, it’s true that what we take home is an agreement on principles and a vision which is the starting point for coordinated and reinforced actions from all 195 states, and we should not underestimate how hard it was to pull off in today’s context.

Now, if you were there or followed the negotiations from a little bit closer, you may have heard things like…

[Voice] “The success of the agreement depends entirely on political will, and each country is setting its own goals and even deciding whether to sign up to a five year check-up on what progress is making”.

[Voice] “It’s just worthless words. There is no action, just promises as long as fossil fuel is prepared to be the cheapest out there, there continues to be burned.”

[Voice] “The political will is here but there are still hundreds of legal decisions that have to be translated into across six languages and they have to do with some of the most contentious issues on Earth. Those still need to be resolved.”

CD: No one is saying how we are going to do it, no constraints.

We are seriously lacking the mechanisms that are going to make the dream come true, practical steps, what are the actual constraints to all member states legally?

Also, the agreement doesn’t exclude the ‘fake solutions to climate change’, the ‘scams’, the green washing – like nuclear energy, carbon sequestration yet capital intensive activities, carbon trading.

The debate stays open on the main points like: the financing of all this, how is the money going to be allocated, where will it come from, how much do we actually need?

Long story short, let’s say that we have a frame, but we don’t have an action plan. This agreement that will come into effect in 2020 sets an ambition, but it doesn’t say how we are going to achieve it.

What I am asking you to keep in mind for today’s chapter is this 1.5 Celsius degrees target.
Because when it comes to the policies governments have in place today, we are heading to a warming of 3.6 Celsius degrees which is like…chaos.

We’ll feature a few resources on the episode page so you can check this for yourself.
Part of this is the way we do finance in 2016, it’s also leading to chaos and your own money is in the game, right now, while we’re talking.

CD: Martin & Jenny live in Sweden. They believe in the green lifestyle. They both go to work by biking, their car is a hybrid, they buy organic food as much as possible and try to stay informed on ways they can reduce their carbon footprint. They just got their first child and since they have bit of money to invest, they want to start planning for the future.
So they take a meeting at the bank to learn about various investment options – After spending some time with an adviser, they settle for a life insurance, and selected a couple of low-risk funds that were recommended to them.

It’s at that point that their money starts moving to…the dark side of the force!

So let me explain:
9% of the total Swedish investment capital is in the energy sector. That’s around 50,000 Swedish kronor per Swede (roughly 5,400 euros). Now, if we break down investments in energy markets, we find out that:

· The far majority of those investments goes to funding fossil fuel industries
· Then, some goes to distribution and only 15% are invested in renewable energy.

So that’s in Sweden, but it’s not too different in other Nordic countries.

There is one number that is going to blow your mind, and it may change the way you look at your money forever – Well, we hope at least. Umm…okay, let’s take it easy.

If you live in Sweden – but again it’s not too different in Denmark or in the rest of Scandinavia – you basically put 11 tons of carbon into the atmosphere, just by moving around, eating, wearing clothes and having a place where to sleep at night. 11 tons per person per year.

Now if we add up the amount of coal, oil and gas production coming from Swedish investments on the world’s stock markets, you can add 8 tons per year to the 11 you had initially. That’s what is actually produced every year with Swedish money.

It’s not over! Because if we want to be fair, we need to count our shares from future emissions coming from fossil fuel reserve. Because you and I own those shares today, via our investments, via the national pension fund, etc. That’s another 12 tons per year per active person – calculated from the average age you start working in Sweden and the average life span.

So roughly, 8+12 tons per year, that makes 20 tons of CO2 per year coming just from my private savings and pension deposits made by my employer. So, each one of us owns around 20 tons of C02 emissions without knowing it. Almost twice the yearly carbon footprint of our lifestyle.

How come no one told us? How come no one told Martin & Jenny?

Because even when you ask for clean investments, it’s hard to get an answer.


VOICE 1: Well, I think I’m not right person to handle it.

VOICE 2: “No, I don’t do that.”

VOICE 3: “I’m not sure who I’m going to talk about them, I going to call…I can not discuss these questions.”

CD: But there is someone who is seriously spreading the word. It’s WWF. You know their logo with the cute black and white panda kindly asking you to stop messing the planet? Well, WWF commissioned a report to PWC in 2014 called “Own-It”, which details the numbers that we are talking about today. We’ll link it up on the episode page. And they are ALSO making this episode possible. Thank you guys for the support.




CD: This episode is what we call a ‘briefing’ – it means that it is designed to give you an update, to raise awareness and to inspire. But we’re going to dig much deeper than this in this topic- with The Green Exchange ‘special edition’ – because we want to advance the discussion, to debate, talk to experts and outline an action plan. So stay tuned, there will be 2 more episodes coming on this topic.

Okay, back to the show.

We want to understand: Who makes the decisions that lead us to investing in the problem?

MAGNUS EMFEL (ME): Hi Camille,

CD: Hi Magnus, how are you?

ME: I’m all right!

CD: We’re talking to Magnus Emfel – Senior Adviser for Green Finance at WWF International.

CD: Good to have you on the show, Magnus, you and your team have produced great materials on this topic. Thank you so much for opening our eyes on this very important issue. Let’s zoom in together for a minute.

So, it’s pretty clear that people are not aware, and many cases not even interested, in how their money is invested on the markets. If you actually ask for details, what kind of answer do you think we get, say, at a general bank, fund or insurance company?

ME: Well, if you ask for taking an environmental concern, sustainability or social responsibility, you would probably be getting responses about references to a policy that the banks or the funds have signed up to different kinds of principals or declarations that they’re following this. That would be from the person who you are confronted with or meeting at the bank office or when you call them up who are at the front line of providing services or advice. They have quite limited information, or limited ability to describe rather how the capital is used and how my savings are actually distributed and used when it comes to these issues around to the sustainability.

CD: Well, that’s exactly what happened to us. Well done.

CD: Most often, banks, funds, insurance companies will refer to the “ownership policy”, which states: the company’s obligations, according to the external rules, owner’s vision and ethical principles. They don’t really like to compromise on returns and when you look at it in detail, what is presented as a normal, progressive policy still includes grey areas. Very grey areas.

We listen…


VOICE: Because it talks like this: Funds that are covered by [bleeped] policy of responsible investment so the funds are also subject to specific ethical criteria which are international norms and guidelines for environmental, social and governmental factors into account in investment policy. Fund managers further avoid investing in companies in which more than five percent of company’s sale are focused on production or salves of goods and services in the category of weapons, tobacco, alcohol gambling and pornography.

CD: Wait, What? 5%.


CD: How about those 5%? Is that okay?!

VOICE: And also that’s something…the source of our website.

CD: Well, I could not believe it so I went and checked on the website and yeah…we won’t name the bank but it’s one of the ones you know very well.

Long story short, even if there are efforts under way, the fact is we lose control. We are the asset owners but really, we are not. The minute you put the money in this fund, or life insurance or pension scheme, it changes hands and it’s on financial markets.

What we now call the asset owner is the bank or the insurance company or the organizations that they explain with money on the market.

Back to our interview.

CD: So, Magnus, how much can we expect from the asset manager this time?

ME: You may be able to find asset manager who would say “I can not do more than I’m mandated to do by that donor, so I have my restrictions for what I can and I can not do. And that could be an excuse, but it can also be partly an actual fact. Because once you come down to it, the asset managers have their assignments and their mandate, and they have a bulk of money to manage. Then, it is sort of the rules are set for what they can and should do.

There are nothing stopping them from over-performing when it comes to sustainability, but if they don’t have knowledge and if it takes extra work, it’s very unlikely that they will over-perform in that way. So they more try to be efficient and do the job as good as possible but within the guidance or direction which are set. That’s why it’s quite important. What is asset in their ownership policy? What is set and expected by their asset owners?

CD: So who is involved in defining the ownership policy and setting the framework for asset managers?

ME: So, in the private sector, it would be that you have a board which are representing the actual owners. If it is in a bank or in a fund, it could be people representing owners of capital which are big owners, who have a lot of money. But it can also be people from a labour union or who is representing a large number of asset owners, or beneficiaries you could call them in that context.

So it will be different people who are representing the asset owners. But it would also, as in any board, it would also recruit people who are professional with a high competence in a field which are said to be managing with the board. So it will be people who have financial expertise who don’t represent a particular asset owner or a particular capital owner but they will be experts. And they will then have the job to give the instructions and the target the overarching target and what risks that the asset management organisation is allowed to take, and not…high or low or, and so on. So they will be setting these kinds of strategic decisions to the guidelines, which then are carried out by the operational organization which includes the CEO and below.

CD: Okay, interesting, yes. And my personal comment is that those people up the food chain, they may – I don’t know – but they may be subject to sophisticated lobbying by the oil and gas industry…just a thought….

Now we talk a lot about the responsibility from individuals like you and me, but imagine now investments made by businesses and organisations because they invest money too!

And I want to make a quick comment about local governments because a good part of our audience works at a municipality with climate strategy or sustainability projects.
Most municipalities in the region are doing a good job with sustainable purchasing and investing into green infrastructure, in funding strategies for transition within the city.
But we haven’t seen much discussion about how municipalities manage their funds.

ME: It’s quite a similar kind of question because it might not have been apparent to the financial director of the municipality that their funds have an impact when they’re sitting in the bank, or sitting in an account somewhere. But those who are active in developing climate smart cities have also started to realize that they can not only do this by investing in their own city but keep their funds being invested in somewhere else, which is completely contradictory to what they’re trying to achieve. So they try to make these two ends meet and align both their own city plans with their own investment policies.

CD: So I am asking you all who work for local authorities, go find the financial director at the coffee break and kindly ask:
“Do we have an investment policy that is in line with our green agenda?”, or:
“Are we indirectly investing public money in fossil fuels without knowing it?”

If he or she feels confused or uncomfortable – just smile and share the link to the episode.
It would be interesting to check if most ambitious municipalities in the region took into account the carbon footprint from their investments into their carbon emission reduction targets. We will be following up on this.


CD: In this episode we talk about the problem, we are not pointing fingers. No, we are just investigating who owns this problem, who is responsible. But in episode two we will talk about what our investments and financing markets should look like if we want to stay under 2-degree global warming.

And in episode 3, we’ll do some back-casting and discuss how do we get there.

But let’s finish this episode with a big party!




{Interview continued]
CD: So Magnus, if I wanted to solve this problem and I had a big house where I can invite all the decision makers or strategic players that I want, the one we should influence. And we throw a big party with good wine and good music – but then of course we would lock the doors and not let anyone out before we have a strategy that keeps us well under two degrees. Who should we invite?

ME: It would be interesting in that house of yours to discuss with a number of people sitting on the boards of banks, pension funds or insurance companies who are representing you and me – because we are the actual asset owners because it is our money – but then we hand it over and assign an account in a bank or a fund where we hand it over to someone who is acting as the asset owner for you and me. And primarily those who are responsible for that asset management would be the board members, the actual owners of the company, and to understand what their competences are, and how well they have understood the relationship between sustainability and the well-being also for society as a markets and financial kind of the financial sector.

CD: OK, interesting, yes.

ME: I mean this house where we all meet, it would be good for also have people from both from governments and ministries who are setting the rules, or supposedly, set the rules for the markets, and also related organizations, the SCC of Sweden for instance, or those who are looking into financial stability and security and the rules of the financial markets. Because often from financial sector it is said that the climate or sustainability is a policy issue; it’s a matter for the politicians and the governments to set the rules and make sure that the rules for the market are the same for everyone, and that if there is a risk in for environment or something, then the government should include that sort of price or a tax or something which makes that risk be priced correctly.

And thereby, both private both companies but also private financial institutions tend to sort of separate their responsibility from the policy makers’ responsibility. And there it seems like the risk, which is a risk for us all, but also a risk for the financial sector themselves, is, sort of, left between the chairs – is that what you say in English?

CD: Interesting, yes.

ME: They’re pointing to each other because policymakers also might want banks and investors to take more responsibility and to be more transparent about what they do, and they should sign up to this kind of declarations, or so on. But it seems like they have different views of who should do what and who should do more than the other.


CD: Yes, we haven’t talked about national pension funds which account for 21% of Swedish invested capital. Who is regulating the way this money is used and invested?

ME: That’s a very interesting relationship as well because the national pension funds, the AP funds, they are quite independent currently, so they are governed by law and the Minister of Finance, which is the minister of the current government. They don’t have the full power to do anything they want to with the AP funds because it’s actually the Parliament who is responsible, who have the power to set new rules or decide what the funds should do or not do. The government or the Minister of Finance always have to have the support in the parliament if they would do something.

So in that house in the meeting, I would also like to have a couple of people from the Parliament because when we discuss the financial sector as a whole, but in particular when it comes to the AP funds, it’s very much the discussion around how the government pension funds should provide pension benefits to us so that the money will be enough for all of us when we retire. So it’s more about a return question, more about social security question. High return is often and still seems like the number one key driver or key priority. It’s not a contradiction to have a long term sustainability and financial return, rather it’s a prerequisite. If you want to have long term sustainability, and longer term return from your pension funds, you need to make these investments more sustainable and climate smart and so on. But it’s often discussed as if you need to sacrifice the return if we do more sustainability in the pension funds.

CD: Yeah. Okay so at this big come-together in my big house, we would like to invite the board members and owners of the banks, insurance companies and various funds out there who are responsible for the ownership policies, capital allocation and investment strategies. We want to have also a few people from the government and ministries who are setting the rules for the market. And also the related authorities who ensure financial stability of the markets.

We said a few people from the Parliament. And should we involve all the people, the actual asset owners like you and me? What are your thoughts on this? Am I responsible for tracking my footprints, or getting transparency? what are the actual levers that I can use as a consumer or as an asset owner?

ME: It’s difficult to expect the individual client to have a full overview of the impacts of my funds as they travel along the financial value chain, and the different options I could take, and different impacts or the consequences I might take if I save in this fund or that fund or in this region or that region. It’s obvious that it’s too complex to expect that financial decision making could be something which is guided by consumer people-power; that people all of a sudden go up and demand that their funds should be directed differently, and then the financial flows over the world will be looking and going differently.

CD: I understand.




CD: So in conclusion, the Paris agreement tells us that in 2050 we should have 80% of the fossil fuel reserves kept in the ground. And as of today our finance is going the opposite direction and much of the investment money comes from your savings. So keep asking, keep being interested in where your money is going.

CD: Magnus, thank you so much for contributing all those insights to the show. we’ll see you soon and we have more work together.

ME: Thanks. It’s my pleasure.

CD: We have a new website, and we’re also launching a Facebook profile and that links to the Twitter that you already know. So make sure you check it out. You will find all the details about our new subscription plans 2016. You’ll see that we are keeping all our briefings free to access to everyone and that our special editions are moved to a ‘subscriber only’ space, so get your access, our Team is here to help you.

We’ll be back very soon with episode two and three of this series about Climate & Finance, keep up the good work, in the meantime!


Leave a Reply

1 Comment on "Climate & Finance #1: How Your Savings Impact Climate Change"

newest oldest most voted
Notify of

[…] is the second episode of our series about Climate & Finance. Did you miss the first chapter? Here it […]