For Swedbank, lending to individuals and businesses is a long-term responsibility. In corporate lending, Swedbank’s credit policy requires the borrower to be sound and sustainable and the loan to be based on familiarity with the company, its business, future prospects and an assessment of its social impact. It is important that Swedbank’s customers are financially sustainable and prepared for unforeseen events with the right amortisation and debt levels.
Swedbank encourages sustainable business models and plans to continue to develop financing products and services that contribute to the transition to a more sustainable society. Swedbank offers low-interest consumer and business loans for installation of solar panels, which has a positive impact on the sustainability of the customer's finances and on society’s energy transformation. Green mortgages and car loans are also available. Swedbank sees this as the right way to address the opportunities and risks of sustainable finance. Swedbank also evaluates our loan portfolio according to the TCFD recommendations based on related climate risks and opportunities.
Swedbank performs detailed sustainability risk analyses in connection with business loans of more than SEK 8m in Sweden and EUR 0.8m in the Baltic countries based on social and environmental aspects. The analysis includes sustainability-related issues such as human rights, the environment and climate change, taxes and corruption. For principles and guidance, Swedbank also has Group-level policies, sector guidelines and position statements. When sustainability risks and dilemmas arise, Swedbank’s Sustainability Committee provides further recommendations.
A key factor in our general lending processes is to verify the identity of our customers and analyse the customer's ability to fulfill their obligations to the bank, known as a Know Your Customer (KYC) analysis. For corporate customers, the analysis should create an understanding of how the customer's business operations create the conditions for fulfilling the commitments that the credit entails on an ongoing basis. Creating a good understanding of how value is generated in the company and how cash flow and earnings are generated in day-to-day operations is central. Our assessment is also based on an understanding of the owner's purpose for the company, their competence in the area, their private finances as well as historical actions and future plans. Additional aspects of the analysis include ESG-related issues such as business ethics, environmental impact and so on. Thus, sustainability risks relating to the bank's credit decisions are regarded as an integral part of the bank's risk analysis.
The corporate loan application process at Swedbank includes a special assessment of sustainability risks. Using an analysis model, we look closely at a company’s impact on human rights and the environment as well as how it handles corruption. We also look at what the company is doing to guarantee respect for human rights in its supply chain, among employees and in the local community. We also evaluate whether there is structured environmental work going on and analyse how the company delegates responsibility, its routines and how it follows up issues. The aim is to see how risks related to these areas could impact the customer’s profitability and reputation, as well as our own. By engaging in dialogue with the customer, we can also identify new opportunities, such as investment needs tied to the specific sector’s sustainable development. The overall objective is to promote long-term sustainable development for our customers and for the bank.
For our large corporate customers, we have integrated a specific ESG risk rating into the KYC process using an external rating provider. The ESG risk rating is designed to help identify financially material ESG risks within portfolio companies and to understand how those ESG risks could affect long-term performance. The ESG risk rating is a valuable tool in our corporate lending, as it enables us to measure a company’s exposure to industry-specific material ESG risks and how a company is managing these risks.
