Investing in the future

Thina Margrethe Saltvedt of Nordea outlines how greater scrutiny of environmental performance may impact upon maritime’s access to finance. Saltvedt, a common face on both TV and in the newspapers in Norway due to her financial expertise and knack of explaining complex issues in simple terms, has turned her back on the black stuff. After over 10 years as a chief analyst for the oil sector at Nordea Markets, she’s recently made the shift to a group role focusing on sustainable finance.

It is, she explains, a personal transition mirroring a wider movement.

Sharpening focus

“Society is changing, financial institutions are changing and, as a result, the companies we conduct business with are changing,” Saltvedt notes. “Climate change is an existential threat to humanity and society is beginning to demand action from the business world… and that includes shipping.”

Saltvedt recently spoke at Nor-Shipping's Opening Oceans Conference initiative, addressing the audience on how the financial world is evolving in line with the challenges, and opportunities, facing the ocean space, and is keen to explain more about the transformation of the environment – both the physical and commercial.

“Greater consciousness of climate change is now impacting upon decision making,” she stresses. “From an investor angle this means individuals and funds are sharpening focus on where their money goes, seeking disclosure about environmental performance and adjusting where capital flows accordingly. Governments and regulatory bodies are also seeking insights into environmental risk in investments. This is driving change and, as environmental concerns grow, the pace of that will accelerate.

“That is something every business, especially those in the maritime and ocean segments, where operations are conducted within a fragile environment with high levels of public scrutiny, must consider. For sustainable commercial success, a sustainable environmental focus is increasingly imperative.”

It pays to perform

Saltvedt may sound idealistic here, but she is certainly not naïve. Her economics Ph.D. and lengthy tenure as a macro and oil expert has given her an intimate understanding of the working of markets, commodities and the world’s prevailing reliance on fossil fuels.

“Oil is still our most important energy source,” she states, referring to both her home country and further afield, “but the innovation, investment and energy that is flooding into more sustainable solutions suggests that this is where the growth is. Financial institutions are both reacting to and enabling that development.”

Nordea, a Swedish headquartered bank and major maritime player, has made its ambitions clear, incorporating sustainability as a key ‘business pillar’ (as Nor-Shipping has too) within the last year and developing mechanisms for assessing lending risk in accordance with environmental risk.

“We take the environment very seriously and ask our customers and partners to do the same,” Saltvedt says. “Those that don’t will face an increasingly problematic route when accessing finance in the future, with high climate footprints impacting upon credit terms, credit rating (both Moody’s and S&P Global are considering incorporating climate risk in their credit risk rating models) and the pricing of loans. In short, it will be more expensive for shipowners or equipment manufacturers with poor environmental performances to get loans – and in some cases there may be no access to new financing at all.

“On the other hand,” she counters, “those with smaller climate footprints will enjoy more favorable terms, with financial products geared to reward sound environmental credentials.”

Positive maritime moves

Saltvedt is positive about the future of both maritime and finance, believing that tighter environmental regulations, such as the 2020 sulfur cap, and increased awareness will drive innovation, new technologies and services.

“We see this a business opportunity for our customers, rather than a threat” she concludes. “A chance to challenge themselves, work with new partners and develop solutions that benefit both their businesses, society and the environment. My message to those attending Nor-Shipping in 2019, and the industry in general, is talk to your banks and see how we can help you realize your potential. Take the leap.”

It’s a strategy that, with a growing product portfolio, momentum and market demand, certainly seems to have worked for Saltvedt.