17.03.2023
The LHV Group has assessed the climate impact of its loan portfolio, or financed emissions, for the first time, and also calculated the CO2 footprint of the company’s office activities in 2022.
Financing and lending activity accounts for the lion's share of the environmental impact of financial undertakings, but it is also important to manage the impact of our own day-to-day activities. What is measured can be managed by setting targets. According to the standard, the impact of different levels must be taken into account when calculating emissions. At LHV, we have already been analysing the CO2 footprint of our office activities across our entire value chain for several years, but now we are also placing an emphasis on assessing the impact we are having through our financing activities,’ said Ragne Maasel, Head of ESG at LHV.
In 2022, LHV's office operations had a CO2 footprint of 1968 tonnes of CO2 equivalent, i.e., 2.5 tonnes per employee at the time of calculation. In 2021, the figure would be 1444 tonnes of CO2 equivalent, or 2.3 tonnes per employee. The CO2 footprint increased mainly because the Tallinn office was heated more, and the number of business trips by plane was greater than in 2021, when the corona pandemic largely curbed this.
The calculation of the CO2 footprint for office activities includes, among other things, office buildings, business travel, paper and equipment used, as well as travel to and from work by employees. The results of the calculations are expressed as a CO2 equivalent, which is a universal unit of measure for the emission of greenhouse gases reflecting their differing global warming potential.
LHV's offices mainly create emissions through the use of thermal energy, the commuting of employees between home and work, and business trips.
Estimates of financed emissions
As a large part of the emissions by financial companies are related to their financing activities, LHV began to prepare assessments of emissions from its loan portfolio in 2022 using the PCAF methodology. ‘By the new year, we had completed assessments of four asset classes: business loans, vehicle leases, commercial property loans, and housing loans. The initial estimate of the volume of emissions financed by LHV amounted to 562,506 tonnes of CO2 equivalent. This translates into 183.4 tonnes of CO2 equivalents for every million euros borrowed. We were able to value 96% of our credit portfolio across the analysed asset classes,’ explained Ragne Maasel.
Emissions estimates depend on the quality of the input data used in the models. In order to obtain the most accurate results possible, we will continue to strive to improve data quality by obtaining more accurate information directly from our clients. We realise that the methodology is flawed, and we recognise that it has room for improvement, but it is now a clear starting point that will allow us to get a better picture of our operations, and on the basis of which we can set targets to reduce the climate impact of our business activities,’ commented Maasel.
While LHV has taken significant steps to reduce its CO2 footprint, this is only possible up to a certain level. For the second year in a row, LHV is offsetting the CO2 footprint created by its office operations with a solution provided by local innovative company eAgronom.
Through eAgronom, LHV buys carbon credits from Estonian farmers who implement best practices to increase the level of carbon sequestration from the air to the soil. Last November, LHV received its first CO2 credits, which means that LHV Group has achieved climate neutrality at the level of its office operations.
See more: https://www.lhv.ee/assets/files/LHV_susinikujalg_2022.pdf
LHV Group is the largest domestic financial group and capital provider in Estonia. LHV Group’s key subsidiaries are LHV Pank, LHV Varahaldus, and LHV Kindlustus. The Group’s companies employ more than 910 people. As at the end of February, LHV’s banking services are being used by 387,000 clients, the pension funds managed by LHV have 130,000 active clients, and LHV Kindlustus protects a total of 155,000 clients. LHV’s UK branch offers banking infrastructure to 200 international financial services companies, via which LHV’s payment services reach clients around the world.
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