Stabelo – on a (e)mission towards a sustainable future

Stabelo Asset Management AB (“Stabelo”) is part of the Stabelo Group that provides sustainable mortgages with emphasis on responsible lending to discourage financial distress or burdensome debt load as well as green mortgages for their clients. A green mortgage is a mortgage loan accompanied by a green discount available for those who live in, or plan to buy, an energy effective home or invests in energy effective mitigation activities

With the growing interest in climate related aspects Stabelo and their investors wanted to know more about their business’ climate footprint. At this time the EU had not yet released or adopted their standard regarding how financial institutions should calculate and report their greenhouse gas (GHG) emissions. Thus, in early 2020 Stabelo asked FCG, now Advisense, to support the company in developing a method to calculate the carbon footprint of their mortgage portfolio.

The Challenge

“Understanding and tracking CO2 emissions is quite a complex task that requires a deep understanding of frameworks, classifications and standards. Here, FCG provided crucial know-how.” -Sofie Wacha

When measuring and calculating GHG emissions, the Greenhouse Gas Protocol’s international standard were used as a baseline. The protocol divides emissions into three different scopes depending on their source and directness. Scope 1 captures emissions directly attributable to the own production, whereas scope 2 refers to direct emissions from consumption of electricity, steam, heating, and cooling. Lastly, scope 3 contains the indirect emissions throughout the products lifecycle. Due to limited access to valid data, the calculation of the carbon footprint mainly focused on scope 1 and 2 of the GHG-protocol and included available categories for scope 3.

The Solution

The solution was to create a dynamic calculation tool that could be updated yearly with new data. A top-down approach was used as method of calculation. External data sources had to be consulted in order to collect all relevant environmental data. Some of the data points gathered were the household composition, type of residence, energy consumption per county and energy types per county. The emissions were calculated in carbon dioxide equivalents (Co2-eq) to incorporate the different emissions negative climate impact.

The method is revised yearly and has been updated in 2021 to align it with the new PCAF standard, enabling financial institutions to assess and disclose greenhouse gas emissions of loans and investments. The PCAF Standard defines how the GHG emission from mortgage loans should be calculated based on energy consumption.

The Results

The calculation provided Stabelo with a deeper understanding of the CO2-eq drivers in their mortgage portfolio. With this information at hand, they can better track and estimate their business adverse climate-related impacts. Furthermore, this Carbon Footprint gave their investors a unique view into their portfolio, which was highly appreciated. Increased transparency in the area of sustainability provides Stabelo with a first step in the right direction before EU-standards have been implemented and gives them a good foundation for future climate related disclosures. This enables Stabelo to be in the forefront of tracking and disclosing emissions and other climate related impacts, an ever-growing area of EUs regulatory landscape.

“The tool helps us being accurate and transparent towards all our stakeholders and also helped us forestall EU-standards and be a front-runner in the market” – Sofie Wacha