In a recent panel at the COP26 Summit, Bjørn Sibbern, Nasdaq’s President of European Markets, highlighted the increased desire for green investment—investors who are looking to fund companies and company initiatives that are healing the planet. This week, in a TradeTalks interview, Fredric Nyström, Head of Responsible Investments at Öhman Group, reflected this evolving desire. He spoke with Nasdaq’s Global Market Reporter Jill Malandrino about the emerging requirement of green profiles from companies looking for investment and how they can best amplify them.
While green investment is on the rise, one of its main problems is the standardization of data. Nyström highlighted the complicated nature of how to know if an investment is truly green, “A [market] standard makes our investment process easier, and it also makes our reporting to clients and stakeholders easier [because] we can point to a market standard and not come up with our own solution,” said Nyström.
For Öhman Group, a Stockholm-based asset management firm that runs EUR 10 billion, a simple standard for calibrating green investment is a sure way to get investment. Nyström made clear that Öhman Group, and other investment firms like it, are looking to market actors like Nasdaq to provide these standards.
“It is important that credible ‘actors’ in the market are stepping up to promote and facilitate sustainable investments. Nasdaq has an important role to play here as a credible ‘actor,’ [as] an important intermediary between companies and investors,” according to Nyström.
In response to this growing need, Nasdaq recently launched its Green Designations Program. Now, companies on the European market can feature their green business models and strategies directly to investors through the exchange enabling increased visibility and transparency for investors looking for sustainable investments.
These designations are broken out into two categories:
Nasdaq Green Equity Designation Companies Must Have:
- More than 50% of their revenue derived from business activities considered green
- More than 50% of their investments allocated to activities considered green
- Less than 5% of revenue derived from fossil fuel activities
Nasdaq Green Equity Transition Designation Companies Must Have:
- More than 50% of their investments allocated to activities considered green
- Less than 50% of their revenue derived from fossil fuel activities
For companies seeking investments from firms like Öhman Group, Nyström says, “Aim higher” when promoting green initiatives.
“To reach the Paris Agreement target, it is not enough that companies do a little bit more, a little bit better than before, companies also need to be more innovative and develop new business models and new solutions,” said Nyström.
He thinks Nasdaq’s Green Designations is key for authentically green companies to shine. He also made clear that big investors like Öhman Group want to see results from companies that target ambitious climate agendas.
“It is not enough for them to talk about their ambitions; they also need to deliver results of the topics they are talking about,” said Nyström.
www.nasdaq.com