Annual report 2021 KLP Group, Sustainability and KLP

KLP’s most important stakeholders are our owners and customers, which consist of municipalities, county municipalities, and the healthcare sector in Norway. Their values and priorities are therefore decisive for KLP’s priorities. We are in constant contact with mayors and other local politicians, municipal administrators and health trust executives to obtain input for our work and our priorities. Of equal importance, our owners help set KLP’s course through their representation in all our governing bodies.

In the spring of 2021, we also conducted a stakeholder analysis among our owners, focusing on corporate responsibility and sustainability. Our objective was to get a snapshot of what our owners want of us, as a pensions provider and corporate citizen, and whether they perceive endeavours in the field of sustainability to be valuable and important. Among our main findings was that sustainability and responsible asset management are extremely important for our owners, and something they consider natural that KLP should engage in. KLP’s primary focus should always be our main purpose, which is to provide high-quality pension services. They also pointed out that KLP has great insight and data that the municipal sector could make greater use of.

In 2021, we decided to exclude a further 16 companies from KLP’s investment portfolio due to their links to Israeli settlements in the West Bank. These settlements are deemed to violate international law, pursuant to the rules on occupation in the Hague Regulations and the Fourth Geneva Convention.

We performed a thorough assessment after the United Nations High Commissioner for Human Rights published a list of companies with operations linked to the Israeli settlements in the occupied Palestinian Territory. Our conclusion was that the excluded companies’ association with the Israeli settlements in the occupied West Bank constituted an unacceptable risk of contributing to the violation of human rights in situations of war and conflict.

The companies excluded operated in the banking, construction, infrastructure, and telecommunications sectors in the West Bank. The banks have been excluded because they contribute to the development, expansion, or maintenance of the settlements through the provision of financing. Construction companies were excluded on the grounds of their deliveries of materials and infrastructure. Telecommunications companies were excluded because telecoms services are deemed to be a fundamental infrastructure. KLP had investments worth NOK 275 million in these companies at the time the decision to exclude them was taken.

• That KLP’s investments are 100 per cent Paris aligned
• That KLP’s investments reach net zero emissions by 2050
• That KLP increases its climate-friendly investments by NOK 6 billion per year

Companies must meet strict requirements if they are to operate in line with the goals of the Paris Agreement. This is also clear from KLP’s Paris Alignment Percentage (PAP). Expanding the measurement horizon from one to two years means that carbon intensity must be reduced by more than seven per cent per annum over two years, instead of over one year. The market has also developed, changing the weighting such that sectors with a high PAP have become a smaller percentage of the portfolio, while sectors with a low PAP have gained ground. The reduction in KLP’s PAP is therefore attributable to companies not doing enough in relation to the goals of the Paris Agreement and to changes in the market.

I 2021, KLP invested over NOK 12 billion in climate-friendly investments in Norway and around the world and reached the target by a good margin. Investments included renewable energy projects, renewable energy funds, a new forestry fund, two investment partnerships for sustainable infrastructure worldwide, and four new green buildings. The new green buildings are in Trondheim and Copenhagen and constitutes a significant share of new investments. When disregarding these, climate-friendly investments increased by around NOK 7.2 billion.

To improve our reporting, we changed the reporting routine for climate-friendly investments in 2021 and adjusted the definition of certain indicators. This is explained in more detail in the notes Climate-friendly investments.

In line with the proposed criteria in the EU’s taxonomy, KLP has changed its definition with respect to green buildings. There is still uncertainty concerning the criteria and what buildings will meet the taxonomy’s specifications. We have therefore sorted our properties by energy class and included those that meet energy class A, since these buildings are certain to meet the taxonomy’s criteria (the 15 per cent most energy-efficient buildings in the country). If we include buildings with the energy classifications A and B, the market value comes to NOK 20.6 billion, which corresponds to 23 per cent of the portfolio’s value and 22 per cent measured in in square meters.

• To reduce the property portfolio’s energy consumption to 180 kWh per square meter.
• To sort more than 65 per cent of our waste at source on average, with a minimum sorting rate of 50 per cent at each individual property in the portfolio.

Emissions from KLP's real estate portfolio decreased from 7,866 tonnes in 2020 to 5,343 tonnes in 2021, which corresponds to a reduction of 32 percent. The reduction is due to a large decrease in emissions from energy consumption (scope 2), and also a reduction in emissions from waste (scope 3). Energy consumption per square meter in 2021 was 161 kWh, which is a small reduction from 2020 and well within the target of 180 kWh per square meter. The sorting rate of waste is at the same level as last year and is still below target.

The infection control measures during the pandemic have affected the activity in the buildings in KLP's property portfolio throughout the year, which, among other things, has contributed to lower energy consumption and less waste, but this is expected to increase somewhat as society reopens.

• increase our knowledge about climate risk within the company and among KLP’s external stakeholders.
• develop scenarios and climate risk data to assess material risk factors and opportunities.
• integrate climate risk in established investment and risk management processes in a more systematic way.
• influence companies in which KLP is invested to develop good climate risk management processes and set climate goals in line with the Paris Agreement.
• increase the volume of climate-friendly investments by NOK 6 billion per year.

We structure our climate risk reporting in accordance with the recommendations of the Task-Force on Climate Related Financial Disclosure (TCFD). The TCFD recommends reporting on how climate risk is integrated in 1. governance, 2. risk management, 3. strategy, and 4. metrics and targets.

KLP’s starting point is that climate risk must be handled in accordance with the ordinary allocation of roles and established strategy and risk management processes. Through the year, the board of directors works on strategic issues to determine KLP’s overarching goals and strategies. The board also approves the overarching group strategy and other group-wide strategies, such as strategies for asset management and corporate responsibility, which both address climate risk as a prioritised topic. Furthermore, climate risk is addressed in the board’s treatment of risk. Several risk-related matters are also tabled for discussion at board meetings and are dealt with in more detail in the board’s risk or audit committees. In sum, therefore, climate-related issues are discussed numerous times a year at board level, and the board is continuously involved in KLP’s efforts to identify climate risk and raise the company’s competence on this issue. It is also involved in how the company plans to work with respect to climate risk in the years to come.

Group management is responsible for implementing the adopted strategies and managing climate risk. Each year, group management reviews and makes decisions on how the company is to implement the strategy adopted by the board of directors. An important aspect of this work is to increase the extent to which climate risk is integrated in KLP’s risk management and control functions. As part of this, a review of all board-approved guidelines was performed in 2021. The objective was to explicitly incorporate references to climate risk and sustainability risk, to make it plain that these types of risks must be prioritised and to allocate responsibility for this more clearly.

According to KLP’s Guidelines for Risk Management and Internal Control, all material risk factors must be taken into consideration. We consider climate risk to be a material risk factor and are working to analyse and to integrate this to a greater extent in our established risk management and investment processes. The Financial Supervisory Authority of Norway (FSAN) has put climate risk on the agenda in connection with its monitoring of the financial sector. Going forward, we expect new and more specific requirements with regards to climate risk to be included in key regulations to which KLP is subject. For the third year in succession, climate risk was part of KLP’s ORSA report to the FSAN in 2021. In this report, we give an account of our approach to climate risk and the results of our climate analyses on the property portfolio as well as investments in listed companies and bonds.

In 2021, we began working with the firm of analysts that supplies the analysis model KLP uses in connection with ORSA. The objective is to update the model to include climate risk. In this connection, KLP has aligned itself with the climate risk scenarios created by the Network of Central Banks and Supervisors for Greening the Financial System (NGSF). We have also looked to the NGSF, among others, to keep track of developments in the methods and data used to perform climate risk analyses.

KLP has updated its climate risk analysis for listed companies and bonds on the basis of the scenarios published by The Inevitable Policy Response project. According to this study, KLP’s risk exposure is in line with the outcome of previous studies KLP has performed since 2018.

Climate risk analyses must gradually improve if they are to be usable as the basis for decision-making. Nevertheless, we are working to integrate climate risk more systematically into various parts of the organisation, based on the analyses we perform and the understanding of climate risk that we and the business sector develop.

KLP works with third parties like investors, research communities and multilateral organisations to develop better data and knowledge about climate risk. One example is the “Climate Futures” research project in which KLP participates.

According to the analyses of KLP’s investments in listed companies and bonds that have been performed, the total risk exposure seems to be relatively low. Furthermore, KLP’s broadly composed investment portfolio successfully diversifies the risk – as it is intended to – in terms of climate risk as well. However, the analyses contain a high degree of uncertainty. We believe therefore that they do not so far provide sufficient credibility to draw conclusions about whether, in reality, KLP’s asset management strategy effectively manages climate risk. Nevertheless, we assume that KLP’s asset management strategy could have a positive impact on its climate risk exposure.

As it stands today, the most important priority relating to climate risk is to constantly improve our climate risk analyses and increase our understanding thereof in-house.

Through KLP’s goal of aligning its investment portfolio with the Paris Agreement’s 1.5C target, we will work to influence companies in the portfolio to make changes in line with the needs defined by the Intergovernmental Panel on Climate Change (IPCC). We hope that KLP’s influence in this respect can help to reduce climate risk exposure in companies and markets.

In line with the TCFD’s recommendations, we measure annual emissions and carbon intensity in our listed shareholdings and bonds investments. These indicators enable us to compare how well KLP’s investments are doing against a representative index (figures in brackets itn the table). For more information on how these results are calculated, please see the notes Climate, environment and nature.

To reduce emissions and combat climate change, having good reporting systems in place is crucial. We believe that companies’ current emission reporting gives a relatively slim foundation for assessing climate risk. Going forward, emission data should be seen in the context of other indicators, as part of a broader assessment of different kinds of climate risk. KLP currently reports on emission indicators based on the TCFD’s recommendations. However, we feel that they do not necessarily provide a good expression of climate risk. Hence, we will also consider whether there are other and better ways of quantifying and reporting climate risk.

• To halve greenhouse gas emissions from our own operations by 2030, compared to emissions in 2010
• To prioritise environmentally certified suppliers ahead of other suppliers

In addition, we have adopted goals relating to energy consumption, air travel and waste sorting. We also have several goals relating to procurement. These include assessing sustainability in all procurement processes, giving priority to suppliers which report on their greenhouse gas emissions in climate accounts, and calculating the emissions relating to our largest procurements.

The corona pandemic and ongoing infection control measures continued to affect the business and how we worked also in 2021. KLP has mainly maintained a home office scheme and restrictions on business travel, but in periods with fewer local and national restrictions, we have also softened our guidelines. In total throughout the year, however, there were fewer employees in the offices and less travel activity, which has led to lower energy consumption, less waste and increased source sorting, and fewer flights.

This has also led to a continued reduction in emissions from our own operations, which has been reduced by 29 per cent from 2020. The reduction is due to a reduction in scope 3 emissions, and that the ongoing pandemic has led to lower waste volumes and less travel. Compared with 2010, the reduction has reduced emissions by as much as 87 percent, but it is likely that emissions will increase as society reopens.

To increase lending to purposes of this type.

In 2021, KLP’s net lending rose by almost NOK 3.7 billion. Loans were given for a new racket sports hall in Mysen, offering opportunities to play tennis, squash, table-tennis, and badminton; a new multipurpose indoor arena and clubhouse in the Nordstrand area of Oslo; and the clean-up of Hammerfest’s port and harbour.

To invest NOK 500–1,000 million in seed-capital, thereby contributing to innovation and new business.

Through the year, we have increased our investments in several of the 13 seed funds we are invested in. In total, these investments rose by NOK 147 million net in 2021.

To constantly increase the number of projects and installed capacity.

At the close of 2021, KLP had contributed funding to the construction of 41 new renewable energy projects worldwide. This is an accumulated figure and not all new projects during the year. The power produced by these projects corresponds to the energy needs of almost 9.2 million residents in the various countries, and contributes to the avoidance of 4.8 million tonnes of greenhouse gas emissions. Some of the increase from 2020 can be attributed to subsequent reporting of already completed projects. However, further projects were completed in 2021, including solar power projects in Chile and Portugal, and wind power projects in India and Spain.

To increase investments in the banking and financial sector in developing countries, thereby contributing to economic growth and higher living standards in those countries.

In 2021, KLP’s investments in developing countries’ banking and financial sectors rose by NOK 47 million net. The increase stems from an increased investment in NorFinance and a rise in the market value of these investments.

To help boost knowledge about pensions among our customers and members.

In 2021, a total of 6,588 people were given personal advice about pension matters. This is a slight rise from the year before. The number of participants in the “Worth Knowing” educational programme on pensions also increased. The guidance was provided both in person and online. Our newly established Customer and Advisory Centre has carried out many of the online advisory sessions, while most of the in-person advice was given by KLP’s Customer Service Section in connection with visits to customers and owners.

There were fewer media reports on pensions involving a spokesperson from KLP in 2021 than in previous years.

• To support 28 projects regarding health-promoting workplaces at our owners
• To hold 50 training courses on the prevention of property damage

Through 2021, there were 41 on-going projects on health-promoting workplaces. This includes 12 projects that were concluded in May 2021, 12 projects that will conclude in May 2022 and 17 project that were included in the network in March 2021.

KLP stages numerous courses relating to health-promoting workplaces, and the number includes major lunch webinars with many participants, which are held monthly, as well as smaller meetings and courses that are carried out with the individual customer.

Based on our experiences from the first year of the Covid-19 pandemic, we changed the way courses on the prevention of property damage were held at the start of 2021. Instead of large-scale courses with many participants from different municipalities, as had been the practice before, the courses were staged for individual customers. This also promoted greater interaction and dialogue and made it possible to link relevant professionals in the municipalities to the right resources at KLP. This change led to more courses being organised, but with fewer participant. In 2021 we had 360 course participants, against 820 in 2020. In addition, many courses were switched to a meeting format, and we therefore report the number of activities, not simply the number of courses.

KLP strives to be an attractive workplace, with a working environment characterised by equality and diversity, and where everyone feels respected for who they are. Our employees score highly for job satisfaction, have a low rate of sickness absence, work reasonable amounts of overtime and staff turnover is low. The company facilitates plentiful opportunities for development and competence enhancement, and management has a positive dialogue with the employees’ elected representatives and the health and safety service.

KLP works actively and systematically to promote equality and prevent discrimination and has several goals in this area.

Goals

• To achieve a gender balance in management positions and senior professional positions (the highest paid positions)
• To work systematically to achieve pay equity
• To be a facilitating workplace for workers with disabilities
• To ensure that all employees feel respected for who they are, irrespective of gender, religious faith or belief system, functional capacity, sexual orientation, gender identity, gender expression, age or other material factors
• To raise the average age of retirement

KLP engages in systematic HSE activities to ensure a safe and proper working environment, establish good procedures, and achieve better health and wellbeing, reduced sickness absence and the wholehearted commitment of employees. The Norwegian Working Environment Act and Internal Control Regulations are among the most important legislative and regulative provisions that create the framework for HSE at KLP. KLP’s Personnel Handbook and HSE Handbook aim to inform staff of the HSE activities and processes that are of significance for managers and employees.

KLP Eiendom has always performed discretionary due diligence assessments of future customers in order to fulfil our aims and requirements with respect to corporate responsibility. These due diligence assessments have not been systematised or put down in writing. With respect to human and labour rights, attention has so far been focused on our processes for the procurement of goods and services, typically in connection with the remodelling of property for letting, and not on the actual tenancy. Historically, we have no knowledge of human rights abuses or failure to provide decent working conditions on the part of our tenants. In 2022, we will systematise our endeavours with regard to due diligence assessments and how we deal with potential norm violations and adverse impacts.

Our property lease contracts currently contain no specific provisions with respect to human and labour rights. This is something we will work on in 2022. Today’s leases regulate liabilities and rights relating to the office premises and the physical activities that take place therein. The tenancy is also regulated by a number of laws and provisions that are not explicitly mentioned in the leases. As a rule, the tenant is liable for ensuring that the premises meet requirements and are approved for the purpose for which they have been leased and pursuant to applicable regulations at the location, such as building area per employee, emergency exits, ventilation and temperature. As an employer, they will also be bound by provisions such as holiday entitlement and overtime working. Both parties are, furthermore, bound by a number of laws and provisions regulating the activity in which they are engaged, both inside and outside the premises.

Due diligence assessments are currently maintained as part of day-to-day operations. How we should address sustainability risk is laid down in both the Guidelines for Insurance Risk and the Guidelines for Risk Management.

For numerous reasons, including human and labour rights, KLP Skadeforsikring is prudent with respect to the companies it uses as reinsurer. As recently as in 2021, KLP Skadeforsikring refrained from using certain reinsurance companies because we did not know their policies on human and labour rights.

Most of the company’s reinsurers originate from and are headquartered in Europe, but there are also some that have non-European owners. The country in which the company is registered, and the identity of its owners, are examples of factors we always consider, also with regard to stable legislation, respect for human rights and decent working conditions.

All reinsurers with which we have a business relationship are internationally rated. As an element in the rating, importance is also attached to ESG-related matters. We have not made explicit demands with respect to the companies’ policies in this area, but note that several of our reinsurers, which are among the world’s largest in the field, emphasise sustainability and human rights as key criteria in their work. We are not aware of that any of our reinsurers have breached key human rights or failed to provide decent working conditions. We have no knowledge of whether our reinsurers themselves insure companies responsible for such abuses, but note that several of them have pledged to support the UN’s Sustainable Development Goals.

During the first half-year, we will continue working to draw up clearer formal requirements for reinsurance within this area, and request documentation on the matter when we hold follow-up meetings with reinsurers.

KLP seeks to operate in a responsible manner that ensures our customers the pension and services they are entitled to. It is important for us that our owners and their employees are satisfied, and we are therefore open about complaints we receive.

In 2021, there was a decrease in the number of complaints relating to both pension matters and to banking, non-life insurance and fund services. KLP received 991 complaints relating to pension matters, with 37 cases being heard by the National Insurance Court. The court found in favour of KLP in 34 of these cases, implying that KLP was found to have a legal right to demand repayment of pensions, though the amount was reduced in the court’s ruling.

KLP Banken received 30 customer complaints, 16 of which were upheld. At the start of 2021, KLP Banken undertook a project to lower the threshold for received complaints to be reported in the improvement system. For example, the refusal of an application for a home loan due to the Mortgage Regulations is now reported as a complaint. The lowering of the threshold for what is reported may explain the substantial increase in the number of complaints from 2020 to 2021. Two complaints about the bank were heard by the Norwegian Financial Services Complaints Board, which found in favour of KLP in both cases.

KLP Kapitalforvaltning received 26 customer complaints, 16 of which were upheld.

KLP Skadeforsikring received 99 complaints, 23 of which were upheld. In addition, 92 cases were heard by the Norwegian Financial Services Complaints Board, which found in favour of KLP in 76 cases.

In February 2022, the Norwegian Competition Authority carried out an unannounced inspection at KLP's head offices in Oslo. The visit concerned Kommunal Landspensjonskasse gjensidig forsikringsselskap, and the background was a request from the Norwegian Competition Authority to investigate whether KLP has complied with the competition rules. The process is still ongoing at the time of publication of the annual report for 2022. KLP cooperates well and closely with the agency, and provides full insight into the agency's need for information.

Paris Alignment Percentage (PAP) shows the percentage of KLP’s investments whose emissions are compatible with the world achieving the 1.5C target and reaching net zero emission by 2050. KLP divides its investments into four categories to calculate its PAP, and uses specific assessment methods for each category. For further details, see here.

Zero-emission investments are investments in companies and projects with zero or practically zero emissions. The PAP for all these investments is 100 per cent.

High-emission sectors are investments in sectors that are deemed to constitute high-emission sectors and where there are science-based reference pathways that can be used to link emissions from a company to the global emission pathway. KLP uses reference pathways from PACTA (Paris Agreement Capital Transition Assessment) and CRREM (Carbon Real Risk Estate Monitor). The sectors currently divered are cement, steel, oil and gas, electricity generation, aircraft manufacturing, vehicle manufacturing and real property. Coal is not included because KLP has divested from coal. KLP assesses each company’s carbon intensity or production mix in relation to the requirements in the reference pathway, and then calculates a weighted average PAP for the sector.

Other investments are investments for which there are no recognised reference pathways. Where there is no available reference pathway, KLP uses changes in carbon intensity and a temperature score. KLP assesses each company to determine whether it meets the requirements for change in carbon intensity and/or temperature score, and then calculates a weighted average PAP for the sector.

Investments without data are investments about which KLP lacks the necessary climate data to work out a PAP. In such cases the PAP is assumed to be 0 per cent.

For a more detailed description of the methodology, see The Road to Paris – KLP’s roadmap to net zero emissions

Due to delays in the reporting of climate data by companies to data suppliers, there is a lag in the figures. The PAP reported by KLP as of 31 December 2021 is therefore calculated on the basis of financial data as at 31 December 2021 and climate data as of 31 December 2020. The climate goal focuses on companies developing in the right way over time, and since this delay is consistent, the figures will show a correct trend.

Percentage of the portfolio shows each category’s percentage of the total portfolio to which the climate goal applies, measured by market value.

It is the market value of the investments, in NOK million, that is disclosed. New investments are net new investments through the year.

The percentage is calculated as the investments’ percentage of KLP’s collective portfolio.

To maintain consistency with respect to the definitions KLP uses in our climate goals, we have revised the definition of climate-friendly investments. KLP divides climate-friendly investments into zero-emission investments and transitional investments. Where practical and appropriate, historic figures have been restated in respect of the new definition. However, the figures are, in principle, not comparable with previously reported figures.

Greenhouse gas emissions from KLP’s property portfolio are calculated by a third-party consultant. The buildings KLP manages itself form the basis of the calculation. The emissions are converted into tonnes of CO₂-equivalents in accordance with the standard from The Greenhouse Gas Protocol Initiative. The greenhouse gas emissions encompass energy consumption, waste, and other management of the properties. Greenhouse gas emissions from KLP’s property portfolio are included in Scope 3 of KLP’s overall greenhouse gas emissions.

Renewable energy production in KLP’s property portfolio is the amount of kWh of renewable energy produced on-site at KLP’s property. Production is primarily from solar panels.

Energy consumption is the average 12-month, climate-adjusted specific energy consumption in buildings managed by KLP itself. These are properties that KLP owns, has responsibility for operating and maintaining, and where it is in a position to implement and measure the impact of environmental initiatives. KLP has such buildings in Oslo, Trondheim, Copenhagen, and Stockholm. All of these have energy surveillance systems, where energy and water consumption are registered and monitored. In most of the buildings, tenants’ energy consumption is also included, so that we have an overview of the total energy consumption for the buildings. Buildings’ energy consumption is temperature adjusted to allow the effect of energy saving initiatives to be measured.

In the first quarter 2021, KLP started using a new energy and environment follow-up system for properties in its portfolio. This has taken some time to implement. Due to a lack of data from some properties, the reporting does not include the energy consumption from all buildings. Obtaining data from tenants has been a particular challenge, since they must now give their consent before KLP can collect this data. When data from all buildings is included in the new system, we will have a better basis for reporting than before. In connection with the incorporation of the buildings into the new system, some adjustments have been made in the energy consumption of certain buildings. For this reason, the energy consumption for the property portfolio in 2020 has been updated with the latest available data.

KLP has a large portfolio of buildings, which evolves over time. Some buildings may also change patterns of use for shorter or longer periods of time, in connection with a change in tenants, for example. 

It may occasionally be impossible to obtain correct figures for a variety of reasons, such as faulty meters or overdue reporting of figures from our subcontractors. This is taken into account in that the report includes only those buildings that KLP manages itself and that have comparable operating conditions 12 months back in time from the reporting date. Although this means that the buildings on which KLP reports vary slightly from year to year, our assessment is nevertheless that this will identify the correct trends in the company’s property base.

Waste volume in KLP’s property portfolio covers buildings that KLP manages itself but does not include all the buildings in its property portfolio. Since waste is not weighed upon collection in all buildings, e.g., in Stockholm, it is not possible to obtain waste data for all buildings. In 2021, the figure includes waste from 47 buildings, compared with 51 buildings in 2020.

Rate of sorting at source shows the percentage of waste that is sorted at source. The materials from sorted waste can be recycled to a greater extent and therefore have a less negative environmental impact than waste that is not sorted and that is either disposed of in landfills or incinerated for energy recovery.

Water consumption shows the actual amount of water, in millions of litres, consumed in buildings managed by KLP itself.

Greenhouse gas emissions from KLP’s own operations are calculated by a third-party consultant. The emissions are converted into tonnes of CO₂-equivalents (CO₂ e) in line with The Greenhouse Gas Protocol Initiative’s standard. The greenhouse gas emissions encompass use of diesel-powered vehicles (Scope 1), energy consumption (Scope 2) and air travel, business travel by car and waste from KLP’s own offices (Scope 3). When calculating greenhouse gas emissions relating to air travel, a distinction is made between short, medium and long-haul flights, and cabin class. Radiative forcing (RF) is also included in the calculation.

Number of flights is based on figures provided by our travel agency, and it is the number of legs that is reported. A leg means an individual distance.

Due to the pandemic, many journeys were cancelled or not undertaken. This has been adjusted for, and the figure shows the actual number of legs flown.

Energy consumption is a material source of greenhouse gas emissions for KLP. The energy consumption at KLP’s own offices is not temperature adjusted but shows actual consumption. KLP’s own offices are defined as the office premises in which the KLP Group’s employees work. In previous years, we have included only KLP’s offices in Norway. This year, however, we include offices used by KLP Eiendom in Stockholm and Copenhagen. The energy consumption data is obtained from our energy monitoring system.

Volume of waste from KLP’s own offices includes offices in Oslo, Bergen and Trondheim. The waste scales at KLP’s offices in Oslo were out of commission for large parts of 2021, and the volume is therefore based on the recorded amount of waste from certain months in 2021.

Rate of sorting at source shows the percentage of waste that is sorted at source. The materials from sorted waste can be recycled to a greater extent and therefore have a smaller negative impact on the environment than waste that is not sorted and that is either disposed of in landfills or incinerated for energy recovery.

Percentage of environmentally certified suppliers. The reported figure shows the percentage of KLP’s purchases from major Norwegian suppliers that have either Eco-Lighthouse or ISO 14001 certification. Some suppliers may be certified in accordance with several standards. However, they are included only once in the figures. Companies are defined as major suppliers if KLP purchases goods and/or services worth more than NOK 1 million from them in the course of the financial year.

The list of certified companies is sourced primarily from a third-party supplier. In some cases where data has been lacking, information about certification has been obtained manually, e.g., from the supplier’s website.

The reporting covers third-party suppliers that provide goods and services directly to KLP’s financial operations. Suppliers from within the Group, suppliers relating to the settlement of insurance claims and agents for foreign companies are not included.

In 2021, KLP had 108 suppliers with sales worth more than NOK 1 million, 62 of which were environmentally certified. This corresponds to 57.5 per cent of major suppliers. Purchases from the environmentally certified suppliers accounted for 83.9 per cent of all purchases from companies defined as major suppliers.

Lending for roads and transport covers, for example, loans for road and infrastructure projects and the procurement of means of transport.

Lending for publicly owned real property covers, for example, loans for school buildings, town halls and other municipally owned buildings.

Lending to the public sector and associated entities covers the funding of various types of investments in municipalities, country municipalities and entities owned by municipalities, such as preschool nurseries, care homes for the elderly or schools.

Lending to water and sewage services, and waste management covers loans to various projects relating to the water supply, sewage and waste management.

The figures for lending in 2020 are different from those published in KLP’s 2020 Annual Report. This is because the published figures for lending for roads and transport, publicly owned real property and to the public sector and associated entities had not been updated with the latest adjustments and are therefore incorrect.

Seed capital investments are investments in seed funds relating to research institutions in Norway. The reported figure is the market value of the investments made. At the close of 2021, KLP had invested in 13 different seed funds.

The projects included are KLP’s investments specifically in the construction of new renewable energy capacity. This includes direct investments in project and companies, investments in funds and loans to projects.

Media articles/reports on pensions quoting a spokesperson from KLP is based on a media analysis performed by Retriever. The figure shows the number of media articles/reports on topics relating to pensions and life insurance, which mention KLP and where a spokesperson from KLP is quoted.

Personal guidance on pension-related matters covers guidance that KLP has given our customers’ employers and employees on a variety of pensions-related matters. The guidance is given both in person and online.

“Worth Knowing” courses on pension-related matters are courses that KLP holds at our customers’ premises. KLP holds these courses every second year, with a “refresher course” in between. The course topics cover employees’ pension rights, reporting to KLP, training in KLP’s online solutions, and what will happen to public sector pensions in the future. The courses are an important element in KLP’s efforts to boost our customers’ knowledge about pensions. The figure reported shows the number enrolled on the courses, but the number of actual participants may deviate from this figure. Since the courses have been held online, it has been difficult to document whether all those enrolled have actually participated, and whether more people have taken part together.

All the figures reported relate to the KLP Group’s permanent workforce in Norway, Sweden, and Denmark, unless otherwise specified.

Number of employees are permanent employees of the KLP Group in Norway, Sweden, and Denmark, including employees on welfare leave and those who work part-time.

Part-time employees are permanent employees who work less than 100 per cent.

Temporary employees are employees on temporary contract who are paid by KLP. This figure does not include staff supplied by employment agencies.

Age distribution among employees is based on the permanent workforce.

Staff turnover is the number of people who have left the KLP Group. Employees who switch jobs within the KLP Group are not included.

Total salary paid to employees is the total amount of salary recognised in expenses, less fees paid to third parties. Benefits-in-kind are not included. The salary information relates only to permanent employees in Norway and is therefore calculated on the basis of fewer employees than the number given under the item Number of employees.

Average salary by gender is calculated on the contractually determined salary for a 100 per cent position, not adjusted for the percentage of part-time working. Women’s average salary is lower than men’s average salary because there is a higher percentage of men in high paid jobs. With respect to salaries, KLP does not differentiate between men and women in similar positions.

KLP defines managers at three different levels. Level 1 is Group Management, including the CEO. Level 2 are managers reporting directly to an EVP (member of Group Management). Level 3 are managers who report to Level 2 managers.

Employees in the highest-paid positions are permanent employees who are not managers and salaried outside the standard pay scale.

Other employees are permanent employees salaried in accordance with a standard pay scale, who are not managers or employees in the highest-paid positions.

Gender balance at various management levels and among all employees is based on the permanent workforce.

Women’s salary as a percentage of men’s is defined in the same way as for the average salary per gender. It is calculated on the basis of the contractually determined salary for a 100 per cent position, not adjusted for the percentage of part-time working. Women’s average salary is lower than men’s average salary because there is a higher percentage of men in high paid jobs. With respect to salaries, KLP does not differentiate between men and women in similar positions.

CEO’s salary as a percentage of median salary in the Group. The CEO’s salary is a contractually determined fixed salary, not including benefits-in-kind. The median salary is defined as the median salary for permanent employees of the Group in Norway, including Level 1 management.

Gender balance for absence to care of sick children is calculated on the basis of “sick child leave” days taken by permanent employees, broken down by gender.

Gender balance for parental leave taken is calculated on the basis of the total amount of parental leave taken by permanent employees, broken down by gender.

Percentage of part-time employees shows the percentage of the total number of permanently employed women and men working part-time on a voluntary basis.

Average retirement age is calculated as the average age at retirement under the AFP or state pension scheme for permanent employees.

Sickness absence is self-certified or medically certified sickness absence among permanent employees. Short-term sickness absence is defined as absence of 1–3 days. Long-term sickness absence is defined as absence of 4 days or more.

Sickness absence gender balance is calculated on the basis of the total sickness absence among permanent employees.

Personal injuries cover self-reported personal injuries and injuries reported as actual and potential work-related injuries to KLP’s non-life insurance company. This does not included injuries incurred during employees’ leisure time.

KLP reports tax and revenues by country for those operations over which KLP has a controlling influence. This means that tax and revenues from investments in non-Norwegian securities are reported in the country breakdown as Norwegian, unless KLP has a controlling influence over the investment such that a group relationship is established. The amount includes KLP’s withholding tax in fund investments. In practice, KLP’s business activities abroad relate to property investments.

Number of employees is the number of permanent employees in the country concerned, including employees who are on welfare leave and who work part-time.

New property investments are net new investments for the year, not the total balance.

Revenues are the total net revenues for the year, as stated in the financial statements.

Profit/loss before tax is the profit/loss before tax, as stated in the income statement.

Actual tax payable for the financial year. Tax here means corporation tax. Indirect taxes and other levies are not included in the reported figures. Paid income tax in 2021 concerns the years 2018 to 2020.