The small cap fund consists of 43 companies, and Petter Löfqvist and his colleague Joel Backesten, regularly discuss
with the companies how they can grow their bottom line by leveraging sustainability.
Sustainability should be embedded in business development
Petter Löfqvist and Joel Backesten are looking for the
future winners that can deliver competitive returns to Danske Bank’s customers. In this quest, they see
sustainability as a crucial part of the recipe to become a successful company.
“Companies that fully integrate sustainability into their businesses can to a greater extent use it as a business
enabler and be better positioned than competitors to create growth and development. Smaller companies typically have
a more focused business model and are more agile than larger companies, which enables them to adjust products and
services faster or launch new ones that live up to the rising sustainability requirements from governments as well
as the growing demand from consumers for green solutions,” says Joel Backesten, Portfolio Manager.
Green transformation putting new demands on the transport sector
The transportation sector plays a key role in the transition to a low-carbon society, with electrification and
biofuels gaining ground as a means of reducing the sector’s carbon emission impact. Swedish firm Nobina is the
largest operator of public bus transportation in the Nordics, and it has a clear strategy to increase energy
efficiency and transition from diesel to biogas and electricity. The company has increased its share of green energy
in recent years, and in 2018 some 81% of the buses’ energy consumption came from renewable energy. Nobina’s
initiatives included putting 19 electrically driven buses into service in Landskrona in 2018 and they expected to
have 44 electric buses in Oslo in 2019. At the end of 2019, they expected to operate a total of 147 electric buses.
“Nobina sees the transition to a green economy as a business opportunity and a means to strengthen its market
position. Many cities are already demanding that buses only run on green energy, and we expect that more cities will
make similar or stricter contractual demands for bus transport in the future. That is why it is important that
Nobina future-proofs its buses at an early stage, and we discuss this regularly with Nobina,” says Petter Löfqvist.
Petter and Joel have for instance advocated that Nobina improved the level of transparency and the communication of
their climate and environmental impacts and how that benefit Nobina’s long-term growth as well as society as a
whole. As a result, Nobina now discloses e.g. their net carbon emissions per passenger and reduction in air
pollution.
Nobina’s work with sustainability is not only of importance to Danske Bank’s small cap equity team but also to the
corporate bond team. In 2019, Danske Bank’s corporate bond team was one of the investors in Nobina’s green bond
issue of SEK 500 million. That was the first time a green bond was used to support the green transformation of
public transport in the Nordics, with proceeds used to finance e.g.more fossil-free and electric Nobina buses.
Before investing in Nobina, The Danish-based corporate bond team discussed Nobina’s financial and sustainability
perspectives with Joel Backesten and Petter Löfqvist to leverage their deep understanding of the company. It is an
example of how Danske Bank’s investment teams collaborate and share company insights with each other in order to
make the best possible investment decision to the benefit of Danske Bank’s customers.
“There was considerable and broad interest in investing in the green bond, and that resulted in lower loan costs for
Nobina, which can benefit our potential return as shareholders. The level of demand shows that the financial markets
is supportive of Nobina’s approach to fusing climate and profit, and that is one of the company’s great
strengths," says Joel Backesten.
Energy-saving balconies have growth potential
Another example is Swedish-based Balco, which is one of the Nordic market leaders in glazed balconies and also
growing in the northern European markets. The company’s glazed balconies have a lifespan that is up to five times
longer than traditional concrete balconies, and they have lower maintenance costs. In addition, Balco has a balcony
solution where the building’s entire facade is built together with the balcony, which gives significant savings of
up to 15% on the apartment’s energy consumption.
