Storebrand Group: Sustainable Investment Leadership and Renewable Energy Focus

First of all, The Storebrand Group is a leading player in the Nordic market for longterm savings and insurance, with Storebrand Asset Management being a leading asset manager in the Nordic region, providing cutting-edge sustainable investment solutions.

Could you give us a short update on Storebrand’s profile, sustainable investment beliefs and performance?

Having come into the company in 2006, I have seen and experienced how ingrained sustainability has become within the company. Although our track record dates back before ESG was coined as a term – to the mid 90s – it has grown to become a core offering. Today I believe the strength comes from an extremely solid foundation provided by our sustainable investment team across all our offerings, combined with taking the lead on multiple key issues globally, and providing key solutions for clients – meeting their needs through integrating sustainability in a way that makes sense across asset classes, funds and strategies.

Why is China so important in the world of renewable energy?

If geopolitical power has historically been centered around energy – the future of energy is much more technological than in previous iterations, and thus energy production and power has a greater connection to this technology. Without oversimplifying – China has since the 1980s had government support for the development of renewable energy and technology. Today, China controls most of the solar value chain – from polysilicon production to wafers, cells and modules – and the world is to a large extent dependent on China for solar power through this value chain. The same is true for much of the wind industry – although operating more domestically there are recently several examples of Chinese OEMs entering the European market. Importantly – the EU and the US have started to recognize this position and much of the IRA (Inflation Reduction Act) and the EU Green Deal is a about reverting these value chains to home markets. Inefficient from a global perspective but it opens opportunities for companies in the EU and US. Positioning in this regard can be vital when analyzing these markets and the companies.

What could be potential effects from the US election on the topic of renewable energy?

Short term it could cause volatility – as climate change itself has become a more politicized topic, and efforts to increase renewable energy production capacity can get drawn into a nonsensical political debate. Long term I honestly believe that we will need more energy across the board – and that renewable energy production represents a substantial part of the answer to several major challenges; increasing energy demand and electrification, climate change, increasing scarcity of freshwater and air quality and local pollution issues. While the short term focuses more of the media picture and sentiment regarding the topic – look at Texas – it’s the largest producer of renewable energy in the US, and didn’t become so because of political sensitivities.

Could you elaborate on two of Storebrand’s central sub-themes that lay the foundation of successful expansion of renewable energy: Renewable Energy Technologies and Energy Storage and Distribution. (referring to Storebrands’whitepaper (2021) on this particular topic).

We like to focus on entire value chains, and windmills and solar cells only represent a smaller part of these value chains – and often the most well known names are the ones you can “rubber stamp” with a brand name. However, in order to succeed we also need companies that are at the forefront of storage technologies; batteries; hardware like cables, switches and inverters; software to digitalize grids; ships to install windmills offshore; meters to use electricity more efficiently; we need access to copper, metals and numerous critical minerals; and numerous other parts that make it a successful offering in terms of energy production. For us – understanding the entire value chain also grants us the ability to diversify and look at different entry points that have different qualities and attributes in a portfolio.

Storebrand was an early mover in excluding coal mining and power companies from its portfolios in 2021. Why? And what makes Storebrand stand out from its competitors?

Our energy production system is the largest contributor to climate change – and also one where we have solutions in place. Coal is by far the “easiest” win from the perspective that coal power is hugely destructive in terms of climate change – but also through air pollution and its negative impact on human health. Now – dynamics in the market, especially with covid, has led to more use of coal power in Asia, and increasing use of LNG in the US and Europe – but if we cant even agree to phase out coal then what can we agree on? And when I say phase out – we don’t have time to wait 20 years either – it needs to happen sooner rather than later. We have other issues to address as well.