Sustainable occupational pensions

December 2022

SPP, the IGP Network Partner in Sweden, is part of Storebrand, the Norwegian Financial Services Group, which strives to make the world in general, and in particular the financial sector, more sustainable. Their commitment to promoting sustainable investments is internationally recognized. The Group believes it has a responsibility to manage their customers' savings and pensions in a way that contributes to sustainable development.

With the Impact Agenda¹, Manulife / IGP also focus on sustainability, whereby Manulife delivers measurable sustainability, DE&I (Diversity, Equity & Inclusion) and CSR (Corporate Social Responsibility) initiatives: we are building a better business, to better the world. 

We take pride in the fact that many of the IGP Network Partners share the same view. 

SPP developed the "Er Hållbarhetskarta" (“Your Sustainability Map”) to monitor the sustainability (social, environmental and governance factors) of a company's pension savings. 

We spoke with Ms. Johanna Lundgren Gestlöf, Head of Sustainability at SPP:

"By increasing the interest for sustainable investments and the potential impact of shifting capital towards companies that contribute to improved sustainability in the world, SPP hopes that our Swedish B2B customers will set high sustainability requirements on how their occupational pension capital is invested. We believe it is important for businesses to obtain actual data on sustainability factors of their pension investments, to use it in documents such as the company's sustainability report, or to strengthen the brand and attractiveness of the employee benefit package. 

When it comes to choosing an employer, today's young Swedes are more purpose-driven than any previous generation, and a company's sustainability efforts thus play an important role. An employer can use an affordable and sustainable occupational pension to attract and retain future talent."

Previously, sustainability was often regarded as a niche concern, with only a few funds bearing the label "ethical" or "sustainable." If you want to invest in funds that incorporate sustainability issues such as the environment, social issues, and corporate governance into their investments, you now have a lot more options. However, it is more difficult than ever to understand exactly what is meant by a sustainable fund. This is where the sustainability map can help. 

Mr. Daniel Kvist, the IGP contact person at SPP, explains the "sustainability map" in more detail. The “Sustainability Map” allows companies and employees to see sustainability data for their savings in four key areas:

1. Fossil-free savings: What proportion of the occupational pension is invested in fossil-free funds.
2. The Employees carbon footprint with regard to the funds chosen: How the funds compare to their indices in terms of carbon footprint, i.e. how much lower the carbon footprint is than a comparable fund selection without sustainability requirements.
3. Sustainability-focused funds: This shows how much of the employee's total pension savings are in funds in the two most sustainability-focused categories according to the EU’s Sustainable Finance Disclosures Regulation (SFDR)². 
4. The sustainability level of the funds: This shows the sustainability rating of the total pension savings according to SPP’s own rating based on environmental, social and governance factors. 

SPP's "Sustainability Map" was launched in 2021 and it continues to evolve. The next step is to add more parameters to get a better picture of how the capital is invested also in relation to how much the companies contribute to e.g., sustainable cities, the circular economy, equal opportunities for people across the globe or the development of renewable energy, etc.

Every day, Swedish employers contribute SEK 600 million³ to occupational pensions – a salary benefit that many people take for granted. It is a large personnel cost for companies, but at the same time, it is considered a low interest product, something most people rarely think about. According to a survey conducted by SIFO (Swedish Institute for Opinion Surveys) on behalf of Swedbank in November 2020, one in every three people over the age of 55 wishes they had started saving earlier or saved more for retirement.

Employees, especially younger ones, find it difficult to become involved in their retirement. However, knowledge of the pension increases power over the future and makes the large resources that the employer spends on the occupational pension more visible.

Employers can use SPP's Sustainability Map to raise awareness of what an occupational pension actually contains and increase the attractiveness of the benefit the employer provides. The occupational pension is becoming an increasingly important part of the pension system and can help to accelerate the climate transition. Many employees today are value-driven, and sustainability can pave the way to increased interest in the otherwise often undervalued occupational pension.