Annual Report 2022KLP Group, Sustainability, KLP

• KLP’s investments should be 50 per cent Paris-aligned by 2025, and 100 per cent Paris-aligned over time
• All companies in high-emission sectors should have set a science-based climate target by 2030
• KLP’s investments should reach net zero emissions by 2050
• We should increase our climate-friendly investments by a further NOK 6 billion each year

In 2022, KLP’s investments were 54 per cent Paris-aligned. This means that more than half of the companies we are invested in have an emission trend consistent with reaching net zero by 2050. This implies a temperature score of 2.3 degrees – in other words, KLP’s investment portfolio is heading for a global temperature increase of 2.3 degrees. The goal is to reduce this to 1.5 degrees.

The PAP has seen a significant increase from last year, suggesting that many companies are reducing their emissions in line with the 1.5-degree target. However, changes from year to year may also result from improvements in methodology, increased data coverage or changes in the composition of the market. For KLP, the most important thing is to assess how the PAP develops over time, and ensure that the trend is moving in the right direction.

The increase in 2022 is mainly driven by three things. Firstly, the number of companies without any data has decreased because our data provider has broadened its data coverage. This means that we can calculate the degree of Paris alignment for more companies, which increases the PAP. Increased access to data has been one of KLP’s priority areas in 2022, and something we will continue to focus on in the future.

Secondly, KLP has changed the way in which we assess the financial sector. For the financial sector, scope 1 and 2 emissions are often negligible compared to scope 3 emissions, primarily from investments. This is a challenge as many companies still do not report on scope 3 emissions, which can give a misleading picture if we judge the financial sector on operational emissions. KLP has therefore taken a new approach where we assume that the financial sector, with its often very diversified portfolios and exposure to all sectors, represents an average for the economy. On this basis, we have used the average trend in emissions for companies in the portfolio to estimate the trend in scope 3 emissions for the financial sector.

Thirdly, KLP has gained access to data that enable us to assess all high-emission sectors against relevant reference pathways, and not just property as in previous years. As shown in the table below, most high-emission sectors have a relatively high Paris alignment percentage, which means that the PAP for this whole category increases when we can take these into account.

Refer to the Notes for further details of the calculation and method.

If the world is to reach the 1.5-degree target, it is particularly important for high-emission sectors to embark on the necessary transition. Even though the high-emission sectors have a high Paris alignment score at present, the reference pathways show that these sectors will have to undergo major restructuring in the years ahead to stay in line with the Paris Agreement. This involves both reducing emissions and developing and implementing ambitious climate change plans. KLP is therefore monitoring companies in these sectors both to check on emission cuts and to see whether they have set science-based climate targets. The tables below show the PAP for these sectors, and how many companies in these sectors have set science-based climate targets.

At the end of 2022, 9 per cent of the companies KLP is invested in had set a science-based climate target, but these accounted for 17 per cent of the investment value. When it comes to investments in high-emission sectors, only 49 companies have reported to CDP (the Carbon Disclosure Project) that they have set a science-based climate target, which represents 5 per cent of the amount invested in these high-emission sectors. This is too low, and KLP will work actively to push companies in these sectors to set climate targets. Reporting science-based climate targets to CDP in accordance with SBTi (the Science-Based Targets Initiative) is only one indicator of willingness to adapt, and will understate the level of ambition with regard to restructuring in the portfolio. For example, it is currently not possible for oil and gas companies to achieve an SBTi-approved climate target, and there are many companies that do not report to CDP and so will not be captured.

For climate-friendly investments, we distinguish between two different categories:

• Zero-emission investments – These are investments with zero or near-zero emissions from operations (not including scope 3 emissions), and include renewable energy, sustainable forests and zero-emission transport. These are the same zero-emission investments that are 100 per cent Paris-aligned in KLP’s climate goals.
• Transitional investments – These are investments that contribute to a reduction in emissions and the development of new technologies, or that help sectors that would find it hard to reach zero emissions to reduce their emissions and become more sustainable. This is achieved through green lending and bonds, green buildings, and infrastructure.

In 2022, KLP placed over NOK 8.6 billion in climate-friendly investments in Norway and around the world. Climate-friendly investments are a priority area for KLP and a way for KLP to contribute to the green transition. KLP therefore aims to put NOK 6 billion into new climate-friendly investments every year, which was achieved by a good margin. The total market value of climate-friendly investments has increased to almost NOK 72 billion and accounts for more than 10 per cent of KLP’s investments. Among the new investments in 2022 are an investment partnership with Norfund to develop the power grid in India, an investment fund for renewable energy and zero-emission solutions, and sustainable forestry. You can read more about these and other climate-friendly investments here.

Refer to the Notes for a more detailed definition of climate-friendly investments.

KLP only has to report on its total assets under management. For KLP, we assess whether the total assets are covered by and in compliance with the taxonomy. This is calculated both for companies that are required to report under the NFRD (which account for around NOK 179 billion), and also including estimates for companies in the portfolio that are not subject to the NFRD (accounting for around NOK 395 billion). The latter reporting group also includes the companies that are subject to the NFRD. Total assets stand at NOK 911 billion. Investments where we have insufficient data are treated as not covered by the taxonomy.

For KLP’s investment portfolio, the taxonomy reporting looks like this. More detailed information can be found in the Appendix.

KLP Kapitalforvaltning also only has to report on its total assets. For KLP Kapitalforvaltning, we assess whether the assets are covered by the taxonomy. This is calculated both for companies that are required to report under the NFRD (which account for around NOK 59 billion), and also including estimates for companies in the portfolio that are not subject to the NFRD (accounting for around NOK 395 billion). The latter reporting group also includes the companies that are subject to the NFRD. Total assets stand at NOK 673 billion. Investments where we have insufficient data are treated as not covered by the taxonomy.

For KLP Kapitalforvaltning’s investment portfolio, the taxonomy reporting looks like this. More detailed information can be found in the Appendix.

KLP Banken has to report on its assets, which primarily consist of loans and investments in securities. KLP Banken mainly has loans to municipalities and mortgages to private individuals. Municipalities are not subject to the NFRD reporting rules, and so are not covered by the taxonomy. Nevertheless, the taxonomy allows for all loans with a clearly defined area of use (“known use of proceeds”) for climate-related purposes to be covered by the taxonomy. We therefore assume that green loans as a product for municipalities are covered by the taxonomy.

Although private individuals are not subject to the reporting requirements under the NFRD, there is broad agreement in the market that mortgage loans to private individuals are also covered by the taxonomy. We therefore assume that all mortgages are covered by the taxonomy.

For investments in securities, we currently have no data – neither figures for companies that are subject to the NFRD nor estimates for companies that are not covered by the Directive. These investments are therefore considered not to be covered by the taxonomy.

The maturity of the taxonomy and access to data is expected to increase significantly in the coming years, so it is natural to expect the share covered by KLP Banken’s assets to increase, and we will understand more about the amount that is in compliance with the taxonomy.

For KLP Banken’s assets, the taxonomy reporting looks like this. More detailed information can be found in the Appendix.

KLP Skadeforsikring has to report on premiums earned from insurance activities and investments. This year’s reporting is limited to reporting the share of premiums earned from insurance activities and the proportion of investments covered by the taxonomy; next year we will also report the percentages that are in compliance with the taxonomy.

The criteria in the taxonomy specify which insurance categories will generally be covered by the taxonomy. For these to be covered in practice, the insurance must include cover for at least one climate-related risk such as floods or landslides.

For KLP Skadeforsikring, all of the premiums earned, excluding life insurance and general liability insurance, are covered by the taxonomy. It is worth noting that the latter category includes the Municipal Liability (Kommuneansvar) insurance product, which lessens the municipalities’ liability risk in the face of a more unpredictable climate. However, despite this important climate risk element of the product, it is not covered by our taxonomy reporting because this type of insurance is not among the predefined insurance categories included in the taxonomy.

For KLP Skadeforsikrings’s premiums earned, the taxonomy reporting looks like this. More detailed information can be found in the Appendix.

KLP Eiendom is a non-financial company engaged in the purchase, sale, ownership and management of property. This is an activity that can contribute to the environmental goal of limiting climate change and is therefore covered by the taxonomy. We have assumed that only rental income is covered by the taxonomy, and not other operating income. This means that 98 per cent of revenues are covered by the taxonomy.

The most important factor in determining whether this activity complies with the taxonomy is the primary energy demand of the buildings. Buildings constructed before 31.12.2020 can meet the criterion if they are in energy class A or are among the top 15 per cent of all buildings within the same nation or region. There is insufficient data on this, and uncertainty in the market as to which buildings satisfy this criterion. For Norway and Denmark, KLP Eiendom has chosen to define buildings with energy ratings A and B as complying with the taxonomy for the reporting year 2022 until a national definition is in place. In the national building stock, buildings with energy ratings A and B represent around 14 per cent of buildings with active energy labelling, so this will probably accord with the forthcoming definition. In Sweden, the Swedish property industry, through the interest group “Fastighetsägarna”, has developed its own thresholds which have been used in the assessments for the Swedish properties.

In 2023, we will be working to develop systems and procedures to identify and map capital investments and operating costs that are in compliance with the taxonomy.

For KLP Eiendom, the taxonomy reporting looks like this. More detailed information can be found in the Appendix.

• Reduce energy consumption in the property portfolio to 180 kWh per square metre.
• On average, the proportion of waste sorted at source should be more than 65 per cent and should not drop below 50 per cent in any property in the property portfolio.

Emissions from KLP’s property portfolio increased from 5,343 tonnes in 2021 to 5,979 tonnes in 2022. The increase is due to a rise in scope 3 emissions from increased waste, which is related to the reopening of society and the resulting growth in activity in the buildings in KLP’s property portfolio. KLP has also included well-to-tank emissions (WTT), which are related to the upstream transport and distribution of energy under scopes 1 and 2. This gives an increase in emissions of 947 tonnes.

Energy consumption per square metre in 2022 was 155 kWh/m2. This is a reduction from 2021 and well within the target of 180 kWh/m2. The recycling rate has fallen further and is below the target. This is a point KLP will follow up in 2023 and work to improve.

• Halve greenhouse gas emissions from our own operations by 2030, based on emissions in 2010.
• Reduce the number of flights by 45 per cent compared to 2019
• Give priority to suppliers that are environmentally certified over other suppliers

We also have goals related to energy consumption and source separation. We also have a number of goals for the purchasing area, including assessing sustainability in all procurement processes, prioritizing suppliers who report on their greenhouse gas emissions in climate accounts, and calculating the emissions from our biggest purchases.

KLP’s emissions have increased significantly from 2021. This is mainly due to two things. Firstly, we have included more emission sources in our climate accounts. KLP wants to have the most comprehensive climate accounting possible, and in 2022 we prepared climate accounts for the purchase of IT products and services. We have also included emissions from serving hot food in the canteen. The emissions for the dishes served in the canteen are shown on the menu every day, helping employees make more conscious food choices. In the long term, we want to be able to include emissions from more types of purchase in the climate accounts. KLP has also included well-to-tank emissions (WTT), which are related to the upstream transport and distribution of energy under scopes 1 and 2.

The second reason for increased emissions is that after several years of pandemic, we have finally returned to a normal situation, which is also shown by the figures for flights and energy consumption. KLP still aims to reduce unnecessary flying, but the removal of restrictions on business travel has led to a large increase in the number of flights compared to the last two years. However, the pandemic does seem to have changed our travel habits, and compared to 2019 (the last normal year before the pandemic), the number of flights is down 46 per cent. KLP has introduced hybrid offices, and although some employees work from home, there has been a big increase in employees in the offices. This leads to an increased volume of waste.

KLP has had an overall goal of halving emissions by 2030 compared with 2010. In 2022, emissions from KLP’s operations were down by just under 5 per cent compared with 2010, but this is mainly because we have included more emission sources in the climate accounts. In order to assess how emissions have developed over time, KLP has estimated the emissions for IT procurement and canteen operations for 2019. The updated baseline shows that the emissions in 2019 were around 1,897 tonnes, which means they decreased by 21 per cent from 2019 to 2022. During 2023, we will use the updated baseline for 2019 to set an updated climate target for KLP’s operations. KLP will continue to focus on reducing emissions from its own operations, and we are purchasing climate credits to compensate for the emissions we have not yet been able to cut. You can read more about this here.

Climate risk is integrated into KLP’s corporate governance in the same way as other sustainability risks. This is described in more detail in the section on Corporate responsibility in KLP’s corporate governance.

KLP is invested in a broadly diversified portfolio with a global reach, and has both short-term and long-term commitments to its customers. Our diversified global reach and long-term commitments mean that we will be affected by climate change not only in Norway but also in other countries that are more vulnerable. In other words, we have a clear vested interest in working to reduce greenhouse gas emissions at the macro level, in order to reduce the negative impact of climate change on the portfolio coming from vulnerable areas or markets.

Climate risk could affect KLP via the calculation of pension and insurance premiums, valuation of our assets, capital adequacy requirements and general market reputation. KLP’s exposure to climate risk is judged to be greatest through its investments in the various asset classes. Overall, we divide climate risk into transition risk and physical risk. Physical risk represents the economic costs and losses resulting from the increasing severity and frequency of physical climate events, and the way in which this then affects the valuation of our investments. Transition risk is a risk associated with the way in which society, and with it financial markets, is affected by the transition to a low-carbon economy, including changes in policies and regulations, technologies, reputation and markets.

Many former employees in the municipalities and health trusts are now pensioners, while those who have just started their professional careers will not receive their first pension payment for another 50 years. KLP has to manage the capital so the municipalities and health trusts can meet their pension obligations in both the short and the long term. In the short and medium term, transition risk is considered to be the most significant climate risk for the financial markets. This represents a potential downside for investments in high-emission sectors that are unable to adapt, and corresponding opportunities for those that manage to do so. Here there is some uncertainty as to when, how and how much the conditions in these risk sources could affect the economy and the financial markets, and so pose a financial risk for KLP. Physical climate risk is expected to be greatest in the longer term, and is linked to the scale of both chronic and acute climate change. Climate change is expected to a major impact on productivity in the economy and to increase insurance costs and the need for climate adaptation measures, which will have an adverse effect on the financial markets and KLP’s portfolio.

Analyses conducted in 2022 on KLP’s investments in listed equities and corporate bonds indicate that the overall risk exposure is relatively low. We have based our analyses on three of the climate scenarios from the Network for Greening the Financial System (NGFS). In the “Net Zero 2050” scenario, the Paris target is reached, with a temperature increase of 1.5 degrees by 2050. In the second scenario, “Delayed Transition”, the Paris target is reached by 2050, with a temperature increase of 2 degrees. In the third scenario, “Current Policies”, the world retains the current regulations and temperatures increase by over 2 degrees to 2050.

Regardless of the climate scenario, we see little effect on long-term expected returns, i.e. more than 50 years ahead. This result indicates that KLP’s broad-based investment portfolio is managing to diversify risk as it should – also with regard to climate risk. In the short to medium term, however, we see some short-term negative effects on returns related to transition risk in the Net Zero 2050 and Delayed Transition scenarios. The model analyses show that KLP’s capital adequacy ratio is sufficiently high for the effects of the modelled climate risk to be absorbed, and the ability to maintain exposure through short-term turbulence means that the effect on long-term returns is marginal.

It is important to emphasise that the analyses contain a high degree of uncertainty. So far, the scenario analyses do offer sufficient confidence to decide whether KLP’s asset management strategy effectively manages climate risk in reality. Nevertheless, we believe that KLP’s asset management strategy could have a positive effect on climate risk exposure. The uncertainties associated with assumptions and the choice of both scenarios and models mean that, at this stage, the scenario analyses can mainly be used for build up expertise in the field. The model we have used is not sector-specific and only addresses the aggregate effect of climate risk. In order to strengthen its analytical capabilities in the field, KLP started a process in 2022 of assessing best practice among climate risk models around the world, to see which are best suited to KLP’s operations.

According to KLP’s Risk management policy, all significant risk factors have to be considered and documented. KLP should set high ambitions for environmental, social and governance issues, and focus on these risk factors. KLP has a moderate risk appetite for sustainability risk, while recognising that a well-diversified investment universe carries some sustainability risk, cf. Policy for investment risk.

Through KLP’s climate target of aligning its investment portfolio with the 1.5-degree target in the Paris Agreement, we will work to urge companies in the portfolio to adapt in line with the needs defined by the UN’s Intergovernmental Panel on Climate Change. Preliminary analysis results suggest that there is not much difference in returns and risk between a fully climate-adapted portfolio and the current KLP portfolio. This is an area we will analyse further in the future to increase awareness in the organisation and equip us to make good knowledge-based choices for our customers and owners.

Climate risk is on the agenda for the Financial Supervisory Authority of Norway in its supervision of the finance industry. For the fourth year in a row, climate risk was included in KLP’s ORSA report to the FSA in 2022, in which we describe our approach to climate risk. New this year is the requirement for scenario analyses for climate change. Here we collaborated with the analysis company that supplies the model KLP uses in the ORSA to update the model to include climate risk based on scenario analyses.

The analysis results engage the organisation right up to Board level. The industry framework for climate risk analysis remains immature and uncertain, as it reflects the wide range of climate risk from possible natural changes and environmental refugees to economic growth and financial impact. To increase understanding of and manage climate-related risk, we are taking two key steps forward. Firstly, we are testing various climate risk models in the market with the aim of identifying and applying best practice, including models that capture all substantial sources of climate risk in the short and long term. Secondly, we are analysing how the composition of KLP’s portfolio could push expected returns and climate risk in a more climate-friendly direction.

In line with the TCFD’s recommendations, we measure the annual emissions and carbon intensity of our investments in listed shares and corporate bonds. For more on how these are calculated, refer to the Notes.

In 2022, KLP joined the Partnership for Carbon Accounting Financials (PCAF), which aims to increase transparency and consistent measurement of financed emissions across the whole of the financial sector. Among other things, the PCAF has made recommendations for how financial companies should report on financed emissions, and in line with these recommendations, KLP has worked to increase the share of the portfolio on which financed emissions are reported. To do this, KLP uses its own estimates for emissions from companies where we do not have the necessary data to calculate financed emissions. We have also included financed emissions via government bonds and residential mortgage lending for private individuals. We have also introduced a data quality score that tells us something about the data quality behind the financed emissions. Refer to the Notes for further details of calculation and method, as well as data coverage and assessment of data quality.

The tables below show KLP’s financed emissions and the recommended indicators from the TCFD. The first table shows that scope 1 and 2 emissions from the portfolio have decreased marginally, while scope 3 emissions have increased slightly. This is related to the fact that the oil and gas companies in the portfolio have increased production in response to the war in Ukraine. The data quality for scope 3 is also gradually improving over time. We can also see a relatively large increase in the weighted average carbon intensity, which is related to the fact that the investment value of oil and gas companies saw quite strong growth in 2022.

In order to reduce emissions and counter climate change, it is essential to put good reporting in place. The emission intensity from the portfolio provides an indication of exposure to transition risk associated with higher carbon pricing. KLP’s exposure to carbon-intensive companies is moderate, and high-emission sectors (excluding property) account for only 2.8 per cent of the portfolio.

The difference between “weighted average carbon intensity” and “carbon intensity” is that the former weights carbon intensity according to KLP’s financial exposure to the company (invested amount), while “carbon intensity” only looks at the average carbon intensity for the whole portfolio.

Reporting on greenhouse gas emissions and intensity are among the PAIs (Principal Adverse Impact Indicators) introduced via the Disclosure Regulation. See Appendix for an overview of the other mandatory indicators for KLP’s portfolio.

As part of a broader assessment of different types of risk, emissions data and indicators should be viewed in conjunction with other indicators, including companies’ willingness and ability to adapt in line with what is required by the Paris Agreement. So, in addition to emissions indicators based on the TCFD’s recommendations, we also look at the share of companies in the portfolio in general, and in the high-emission sectors in particular, which:

1. Have an emission profile in line with 1.5 degrees of warming (Paris alignment percentage)
2. Have set a science-based climate target.

You can read more about these indicators here. It is important to emphasize that high-emission sectors (excluding property) accounted for just 2.8 per cent of KLP’s total portfolio at the end of 2022, while zero-emission investments (mainly renewable energy) accounted for 6.4 per cent.

As shown above, the Paris alignment percentage for KLP’s investments was 54 per cent at the end of 2022. In other words, a large proportion of investments are already on the right track. At the same time, we can clearly see that the pace of the transition needs to increase going forward. Whether the companies have set a science-based climate target is an indicator of their willingness and ability to adapt in line with the Paris Agreement. Analyses of data from the Carbon Disclosure Project (CDP) show that 17 per cent of KLP’s investments are in companies that have set a science-based target for their greenhouse gas emissions.

If we only analyse the high-emission sectors (excluding property), the PAP is currently relatively high (about 90 per cent). However, the share of KLP’s investments in high-emission sectors that have set themselves science-based is only 5 per cent. KLP exercises active ownership to reduce climate risk, for example by stating its expectation that all companies in high-emission sectors should set clear targets for future restructuring.

Increase lending for this type of purpose.

In 2022, KLP’s net lending increased by NOK 707 million. For green loans, there was a net reduction of NOK 1 million in 2022. KLP has provided loans for many different projects throughout the year, which cover different needs for the municipalities. Among other things, we have provided loans for the construction of Ranheim sports hall, green loans for a new fire station in Eidskog, and loans to purchase accommodation for refugees in Modum.

KLP has offered green mortgages since 2018, and at the end of 2022 the outstanding loan amount was more than NOK 1.3 billion.

To invest between NOK 500 million and NOK 1 billion in seed capital, thereby contributing to innovation and new business.

In 2022, KLP increased its investments in several of the 13 seed funds we have invested in, and also committed to investing in two new seed funds. In total, these investments rose by NOK 121 million net in 2022. You can read more about the projects KLP has helped to finance here.

To constantly increase the number of projects and installed capacity.

At the close of 2022, KLP had contributed funding to the construction of 58 new renewable energy projects worldwide. This is a cumulative figure and not new projects for the year. The power produced by these projects equates to the energy needs of over 10 million residents in the various countries, and contributes to the avoidance of 3.9 million tonnes of greenhouse gas emissions compared to the energy supplied via the grid. The reason for the decrease in avoided emissions is that we have updated the emission factors we use to reflect the general decrease in emission intensity in the electricity mix. You can read more about some of the projects KLP has helped to finance here.

Increase investments in banking and finance in developing countries and so contribute to economic growth and better living conditions in these countries.

In 2022, KLP’s investments in banking and finance in developing countries increased by NOK 30 million net, and at the end of the year there were 9.4 million active borrowers through Abler Nordic. Since its inception, more than 12 million people have been granted loans, which can make a big difference in lifting people out of poverty.

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

In 2022, a total of 7,269 people were given personal advice about pension matters, which is a slight increase from the previous year. The consultations were held both electronically and physically. The number of participants in the “Worth Knowing” course on pensions decreased.

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

There were 42 ongoing courses on health promotion in 2022. You can read more about the working environment network and examples of participating projects here.

KLP runs numerous courses relating to health promotion, and the number includes large lunchtime webinars with many participants which are conducted every month, and smaller meetings and courses held with the individual customer.

For activities to prevent damage to property, there has been an increase in the number of courses and participants. The increase has been particularly related to issues with waste collection and fire safety.

KLP strives to be an attractive and flexible workplace which provides good development opportunities in a working environment characterized by equality and diversity, where everyone feels respected for who they are. KLP is a member of Finans Norway, an employer and business organization for the finance industry, and is affiliated with its Basic Agreement and General Agreement with the Finansforbundet trade union. We also have a separate corporate agreement, which applies to all employees of KLP and wholly owned subsidiaries except for senior management and managers who report to them, and temporary staff on short-term assignments. Our employees score highly for job satisfaction, have a low rate of sickness absence and work reasonable amounts of overtime, and staff turnover is low. The working environment is characterized by good dialogue with employee representatives and the health and safety service.

The use of external consultants has been mainly related to two works contracts, a major digitization program for efficient case management for pensions and an improved customer experience, and projects to make use of cloud services for our IT systems. We have used temporary hires from staffing agencies for tasks within pension settlements and as temporary cover for employees who are on leave or off sick throughout KLP. We have also hired individual consultants from production companies.

We believe in a workplace with a wide range of people contributing to innovation, growth and value creation. ​​​​​​​All employees in KLP are given equal opportunities, regardless of age, sex, disability, political convictions, religion, beliefs, sexual orientation, gender identity, gender expression and ethnic background. KLP should contribute to gender equality and diversity in the workplace and in society by focusing on UN Sustainable Development Goals 5 and 8: Gender equality and decent work and economic growth.

KLP has clear guidelines, specific goals and measures for the Group, which are systematically addresses throughout the year. We carry out analyses, due diligence and risk assessments, and draw up action plans and follow up measures. Principles for equality and diversity in accordance with the Accounting Act are reflected in KLP’s articles of association, internal guidelines and instructions to the nomination committee.

We provide a decent working environment through systematic HSE work where we implement good procedures which contribute to reduced sick leave and increased employee engagement. Our HSE goals, and goal attainment and improvement measures, are discussed with the health and safety officers and employee representatives and presented to the Working Environment Committee.

The Working Environment Act and the Internal Control Regulations are among the most important acts and regulations that provide the framework for the HSE work. KLP’s Personnel Handbook and HSE Handbook are intended to provide information on HSE activities and processes that are important for managers and employees.

Specifically for purchasing in KLP Eiendom

KLP Eiendom has its own management system based on ISO 9001 and ISO 14001, where requirements for corporate responsibility among customers and suppliers are a key concern. A systematic review of governing documents and guidelines is ongoing, to ensure that the company operates to the due diligence standards described in the Transparency Act. This includes establishing a system for collecting and processing sustainability information from suppliers and business partners.

Each year, KLP Eiendom selects two suppliers that we audit together with one of our partners. The audit provides a status report on the supplier’s procedures in key areas, such as compliance with laws and regulations within HSE, employment, competence, CSR, quality assurance and the environment.

KLP Eiendom take its corporate responsibility seriously and has always carried out discretionary due diligence assessments of future tenants. These due diligence assessments used not to be systematised or put down in writing and, with respect to human and labour rights, attention focused on our processes for procurement of goods and services, typically in connection with remodelling of property for letting. In 2022, we implemented several measures to maintain a focus on human and labour rights among our tenants and we have established our own procedure for compliance with the Transparency Act. Among other things, this covers our handling of actual and potential negative consequences for fundamental human rights and decent working conditions. In the standard lease, we have added a separate section on the Transparency Act which states that “The landlord and tenant undertake to promote respect for fundamental human rights and decent working conditions”, and we have communicated our procedures and the obligations the Transparency Act places on our tenants. We have made adjustments to our CRM system to ensure that it is easy to retrieve an overview of our due diligence assessments and have established a separate form for the evaluation work here. As of 31.12.22, we have carried out just under 300 assessments, and our goal is to carry out due diligence on the entire customer portfolio by 01.07.2023. Historically, we are not aware of any human rights violations or violations of decent working conditions by our tenants.

Our lease contracts govern responsibilities and rights related to the office premises and the physical activity that takes place in the offices. The tenancy is also governed by a number of laws and regulations that are not explicitly mentioned in the lease. As a general rule, the landlord is responsible for ensuring that the premises meet the requirements and are approved for the purpose for which they are being rented out. The tenant is responsible for ensuring that the use they make of the premises is in accordance with the purpose of the lease and complies with the applicable regulations in the area, including space per employee, evacuation routes, air volumes and temperature. As an employer, they will also be bound by provisions on things like holiday and overtime working. Both parties are also bound by a number of laws and regulations that regulate the activity they engage in inside and outside the premises.

Reinsurers are important counterparties for KLP Skadeforsikring. Business contacts in this field are assessed with a view to detecting violations of human rights and decent working conditions in line with other key suppliers. The assessments are made when we enter into or renew reinsurance contracts, and due diligence is a topic that the company raises in follow-up meetings with the reinsurers. KLP Skadeforsikring has refrained from using certain reinsurers, where we have no idea of the company’s attitude to human rights and working conditions.

We generally use large and well-respected reinsurers with a long history. Most of the company’s reinsurers have their origins and head offices in Europe, but there are some that have non-European owners. The country where the company is registered and the identity of the owners are examples of questions that we always consider, along with stable legislation, respect for human rights and decent working conditions.

All of the reinsurers that we deal with are internationally rated. ESG is also emphasised as an element of the rating, including problematic issues related to the environment, social conditions or business ethics. KLP Skadeforsikring is not aware that any of the company’s reinsurers have violated fundamental human rights and decent working conditions. We cannot know whether the reinsurers are insuring other companies that commit this kind of violation, but we note that the reinsurers themselves are increasingly emphasising sustainability, including human rights, when assessing the kind of risk they want to assume.

We will continue to work on clearer formal requirements for reinsurers in this area, and will ask for documentation on this topic when we have follow-up meetings with them.

In 2022, there was an increase in the number of complaints both in pension cases and related to banks, non-life insurance and funds. KLP received 1,082 complaints about pension cases, 29 of which were dealt with by the National Insurance Court. The Court found in favour of KLP in 28 of the cases, which basically means that it affirmed that we have the legal authority to claim repayment of pensions, but the Court reduced the amount.

KLP Banken received 30 complaints, and we upheld the customer’s claim in 7 of them. The bank had 10 cases heard by the Financial Complaints Board, which found in favour of KLP in all of them.

KLP Kapitalforvaltning received 17 customer complaints, and we upheld the customer’s claim in 10 of them. There were no cases brought before the Financial Complaints Board.

For KLP Skadeforsikring, 108 complaints were received, and we upheld the customer’s claim in 13 of them. A further 75 cases were dealt with by the Financial Complaints Board, with the Board upholding 9 of them.

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, prompted by the Authority’s wish to investigate whether KLP had complied with the competition rules. The process is still ongoing at the date of the Annual Report for 2022. KLP is cooperating with the Authority, and providing full access to any information that it needs.

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 the PAP, and uses specific assessment methods for each category. For a more detailed description of the method, see www.klp.no/klima.

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

High-emission sectors are investments in sectors that are deemed to be high-emission areas 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 (the Paris Agreement Capital Transition Assessment) and CRREM (Carbon Risk Real Estate Monitor). The sectors included as of today are cement, steel, oil and gas, electricity generation, aircraft manufacturing, vehicle manufacturing and real property. Coal is not included as KLP has divested from coal companies. 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.

KLP has also changed the method used to assess the property portfolio to an assessment of the property portfolio as a whole. This means that buildings with energy consumption lower than the requirement in the reference pathway can compensate for buildings with higher energy consumption. This is in line with the way we calculate for other sectors.

Other investments are investments where there are no recognised reference pathways. Where reference pathways are not available, KLP uses changes in carbon intensity and temperature scores. For each company, KLP assesses whether it meets the requirements for a change in carbon intensity and/or temperature score, and then calculates a weighted average PAP for the sector. For the banking sector, we estimate emissions based on an average of emissions in the portfolio, on the assumption that financial companies with broadly diversified portfolios are exposed to the entire economy and represent an average.

Investments without data are investments where KLP does not have the necessary climate data to calculate a PAP. In these cases, the PAP is assumed to be 0 per cent.

For a more detailed description of the method, see “The road to Paris – KLP’s roadmap to net zero emissions”.

There is a delay in the figures due to delays in reporting of climate data from companies to data providers. This means that the PAP reported by KLP as of 31.12.2022 has been calculated from its own financial data as at 31.12.2022 and climate data as at 31.12.2021. The climate target 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 how much a category constitutes of the total portfolio covered by the climate target, measured by market value.

Number of companies with climate targets is based on data from the Carbon Disclosure Project (CDP). This is a voluntary self-assessment for companies, where one of the questions is whether the company has a science-based climate target. The number of companies with climate targets includes companies that have a climate target approved by the Science Based Targets initiative (SBTi), that are in the process of getting climate targets approved by the SBTi, or have committed to seeking such approval.

The market value of the investments in NOK millions is reported. New investments are net new investments through the year.

The proportion represents the investments as a percentage of KLP’s common portfolio.

The definition of some of the indicators has been changed in this year’s reporting, and this is described in more detail where relevant. The history has been updated to reflect the new definitions, and the sum of climate-friendly investments, and the share of all investments, will differ from what has been reported before.

KLP divides climate-friendly investments into zero-emission investments and transitional financing. Where practicable, historical figures have been restated according to the new definition, but the figures are generally not comparable with previously reported figures.

Zero-emission investments

Zero-emission investments are investments with zero or near-zero emissions from operations.

Renewable energy in Norway investments in shares and bonds in Norwegian electricity generating companies and power grid operators. The electricity generating companies are classified as those operating hydro, wind or biofuel power plants. The figures also include loans to companies and projects in Norway within the power sector.

Renewable energy abroad covers investments in renewable energy projects outside Norway. This includes both equity investments and project financing. The investments are made either through external fund managers specialising in energy or through other partners. The figures also include companies that derive more than 95 per cent of their revenue from the production of renewable energy.

Renewable energy in developing countries covers investments in new renewable energy projects. The investments are made partly as direct investments in cooperation with Norfund, and partly as fund investments through Climate Fund Managers. The investments are part of KLP’s portfolio of impact investments, which is one of the measures in the Guidelines for KLP as a responsible investor. The aim is to achieve both financial returns and benefits to society. The investments are based on commercial risk and return assessments, but also emphasise the effect on social and environmental parameters.

When the definition of investments in renewable energy was changed in 2021, the aggregation of renewable energy back in time in the table was not changed. This meant that the sum of investments in renewable energy did not match the various lines in the table. The figures for 2021, 2020 and 2019 have been restated so the aggregation is correct, so they differ from the figures reported earlier.

Sustainable forests are investments in funds that invest in FSC-certified forest properties in Sweden, Finland and the Baltic states.

Zero-emission ferries are loans for electric ferries. These loans were redeemed in 2022.

Transitional investments

Transitional investments are investments that contribute to a reduction in emissions and the development of new technologies, or which help sectors that would find it hard to reach zero emissions by becoming more sustainable and reducing emissions.

Green buildings. The market value of green buildings in KLP’s property portfolio and the total number of square metres are reported. Green buildings are defined as buildings rated in energy class A or B. The requirements in the taxonomy state that buildings must have energy class A or be in the top 15 per cent of all buildings within the same nation or region. In the national building stock, class A and B buildings represent around 14 per cent of buildings with active energy labelling, so this will probably accord with the forthcoming definition. KLP therefore uses this as a criterion. In the annual report for 2021, KLP limited the definition of green buildings to those with an energy rating of A, where we also used to include buildings that are BREEAM certified with a minimum rating of very good, which produce their own energy through solar panels, or which have won a Norwegian property prize where the environment is an important measurement parameter. In order to obtain comparable figures over time, the indicator for previous years has been updated in accordance with the new definition. The historical figures therefore differ from what was reported in previous annual reports.

Green loans are loans to municipalities, county authorities and entities owned by municipalities. The loan must have a clearly positive environmental and climate effect and satisfy specific criteria according to the type of project. The project categories are water and sewage services, waste management, transport, and building construction and renovation. The criteria are based on the Green Bond Principles, the Climate Bond Initiative Taxonomy and the Nordic Public Sector Issuers Position Paper on Green Bonds Impact Reporting. The criteria are revised as and when required.

Green bonds are bonds classified as green and having external third-party verification. This does not include bonds already included in KLP’s investments in renewable energy in Norway, as above.

Infrastructure includes investments in funds for sustainable infrastructure in Europe.

Fossil energy represents KLP’s investments in companies classified as oil and gas companies, including exploration, production and refining. Transport and oil industry service companies are not included.

KLP reports according to the recommendations of the TCFD and reports on the four recommended indicators for carbon measurement of investments. The definition of the different indicators varies across different sources, and even varies within the EU regulations. KLP applies the following principles when calculating the climate profile of investments:

1. The climate indicators include both listed equities and corporate bonds.
2. To calculate carbon intensity, carbon footprint and carbon emissions, we use “enterprise value", which includes a company’s stock value and debt.
3. The climate indicators are calculated for scope 1 and 2 and for scope 1, 2 and 3.
4. Following the TCFD’s definition, the calculations are made in US dollars.

In 2022, KLP worked to reduce the share of the portfolio on which financed emissions are reported. To do this, KLP uses its own estimates for emissions from companies where we do not have the necessary data to calculate financed emissions. We have also included financed emissions via government bonds and residential mortgage lending for private individuals. The figures for 2021 and 2020 have been restated according to the new method in order to obtain comparable figures over time.

KLP obtains data on emissions, revenues and enterprise value from our data provider and calculates the indicators internally. There is a delay in the figures due to delays in reporting of climate data from companies to data providers. This means that the emissions reported by KLP as at 31.12.2022 have been calculated using financial and climate data as at 31.12.2021. As this delay is consistent, the numbers will show a correct trend over time.

Data is not available for all investments. For these investments, we estimate emissions based on the average of emissions per NOK from companies in the same sector in KLP’s portfolio. To be transparent about the estimated share, KLP has calculated the coverage rate for the various indicators, i.e. the proportion of listed equities and corporate bonds that actually report emission figures.

A data quality score has also been calculated for the various emissions in line with the standard from the Partnership for Carbon Accounting Financials (PCAF). The score says something about the quality of the figures used in the calculation. The best score is 1, and is given in cases where the company itself has reported all the necessary data. Cases where the company’s emissions are estimated by the data provider get a score of 4, and cases where we ourselves estimate emissions based on other companies in the sector get a score of 5. Mortgages receive a quality score of 3 in cases where emissions are estimated from the type of home and the energy rating, and 5 where we use data from the PCAF database for Swedish homes. All measured emissions from government bonds have a score of 1. The different quality scores are weighted together for the different emission groups based on their value in the portfolio.

Coverage and data quality scores for the various indicators of financed emissions are shown in the table below.

Weighted average carbon intensity shows the exposure of the investments to carbon-intensive companies. The indicator is expressed in tonnes of CO2 equivalents per million dollars the company takes in revenue, weighted for that company’s share in the portfolio.

Greenhouse gas emissions are those that KLP owns. This means that KLP-owned emissions are allocated from the company’s total emissions based on KLP’s ownership interest in the company and its enterprise value. The portfolio’s total investments in the company are divided by the company’s total value (value of shares and debt) to derive the ownership interest. 

Carbon intensity shows the carbon efficiency of the investments. The indicator is calculated as tonnes of owned CO2 equivalents per million dollars the company takes in revenue, i.e. the quantity of emissions owned by the portfolio in relation to revenues owned by the portfolio. Unlike weighted average carbon intensity, carbon intensity is not weighted for KLP’s financial exposure. The portfolio’s total investments in the company are divided by the company’s total value (value of shares and debt) to derive the ownership interest. 

Carbon footprint shows the quantity of emissions owned relative to the size of the portfolio, i.e. how large a carbon footprint the portfolio has, taking account of its size. The indicator is calculated as tonnes of owned CO₂ equivalents divided by the market value of the portfolio. The portfolio’s total investments in the company are divided by the company’s total value (value of shares and debt) to derive the ownership interest. 

Greenhouse gas emissions from KLP’s property portfolio are derived by extracting energy and waste data for KLP-operated buildings from KLP Eiendom’s environmental monitoring system. The emissions are converted into tonnes of CO₂ equivalents in line with the standard from the Greenhouse Gas Protocol Initiative. To convert into greenhouse gas emissions, there is a need for updated conversion factors which can be difficult to obtain, and an external consultant is therefore used. Greenhouse gas emissions include energy consumption and waste. Greenhouse gas emissions from KLP’s property portfolio are included in scope 3 within KLP’s overall greenhouse gas emissions.

Renewable energy production in KLP’s property portfolio is kWh of renewable energy produced locally from solar energy at KLP’s properties. The production of heating and cooling from heat pumps is not included.

Energy consumption is the average 12-month, climate-adjusted specific energy consumption in KLP-operated buildings. These are properties that KLP owns and is responsible for operating and maintaining, and where it is in a position to implement and measure the impact of environmental initiatives. These are buildings in Oslo, Trondheim, Copenhagen, and Stockholm. All of these buildings have energy monitoring systems in which energy and water consumption is recorded and monitored. In most of the buildings, tenants’ energy consumption is also included, so we have an overview of the total energy consumption for the buildings. Reported energy consumption is climate-adjusted in order to compare developments over time regardless of annual temperature variations.

In the first quarter of 2021, KLP implemented a new energy and environmental monitoring system for the properties in KLP’s property portfolio. This has taken some time to implement and, because of 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, as 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. As the buildings have been incorporated 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. The individual buildings can also change their consumption patterns over shorter or longer periods, e.g. in connection with changes of tenants.

There may be various reasons why it is sometimes impossible to obtain correct figures, such as faults in meters or figures reported late by our sub-contractors. This is taken into account in that the reports only include KLP-operated buildings which have comparable operating conditions going back 12 months from the reporting date. However, this means that the buildings KLP reports on vary slightly from year to year, but we believe that this will still pick up the correct trends in the company’s property portfolio.

Waste volume in KLP’s property portfolio covers buildings that KLP manages itself but does not include all the buildings in its property portfolio. As the waste is not weighed on collection in all buildings, e.g., in Stockholm, it is not possible to obtain waste data for all buildings. In 2022, the figure includes waste from 50 buildings, compared with 47 buildings in 2021.

Rate of sorting at source shows the percentage of waste that is sorted. More of the materials from sorted waste can be recycled , so they have less negative environmental impact than waste that is not sorted and is either disposed of in landfills or incinerated for energy recovery.

Water consumption shows actual consumption in millions of litres in KLP-operated buildings.

Greenhouse gas emissions from KLP’s own operations are compiled by an external consultant. The emissions are converted into tonnes of CO₂ equivalents in line with the standard from the Greenhouse Gas Protocol Initiative. Greenhouse gas emissions include emissions from the use of diesel vehicles (scope 1), energy consumption (scope 2), and flights, business travel by car, waste from KLP’s own office premises, food served in the canteen in KLP-Huset, and purchases of IT goods and services (scope 3).

Emissions from electricity consumption (included in scope 2 emissions) in the table are calculated using the location-based Nordic mix emission factor, which is a weighted average of electricity production in the power grid in Norway, Denmark, Sweden and Finland. Using a market-based factor instead, scope 2 emissions from electricity consumption are 676 tonnes.

In calculating greenhouse gas emissions from air travel, we differentiate between short, medium and long-haul, and by cabin class, and there is an RF factor included in the calculation.

Emissions from fuel and energy-related activities are linked to “Well-to-Tank” (WTT). WTT describes emissions from fuel supplies, from production at the energy source to delivery of the fuel. These are emissions related to the upstream transport and distribution of scope 1 and 2. This is the first year WTT emissions have been included in the climate accounts.

Emissions from the purchase of IT goods and services are not complete, but cover parts of this purchasing area. The emissions are calculated internally by KLP based on the numbers of individual products held by KLP and information on lifecycle emissions for products obtained from our suppliers.

Emissions from the canteen are related to hot meals served in the canteen in KLP-Huset. The emissions are calculated by KLP’s canteen provider using tools from Klimato. They have different emission factors for different foods based, among other things, on the country of production and the shipping method, and allow us to calculate emissions per dish. To arrive at the total emissions, this is multiplied by the number of each dish sold.

Number of flights is based on figures from our travel agency, and the number of individual legs is reported. A leg means a single flight, and a round-trip journey may consist of several legs.

Energy consumption is a major source of KLP’s greenhouse gas emissions. The energy consumption in KLP’s own office premises is not temperature-adjusted, but shows actual usage. ‘Own office premises’ are the offices where the KLP Group’s employees work. Before 2021, we only included KLP’s offices in Norway, but in 2022 and 2021 we will also include office premises for KLP Eiendom in Stockholm and Copenhagen. Energy consumption is derived from our energy monitoring system.

Volume of waste from KLP’s own offices includes Oslo, Bergen and Trondheim. For offices in Oslo, only paper waste and residual waste are weighed and recorded per user, while the other waste fractions are estimated based on an area key. In 2022, it was found that, for some properties where KLP shares waste rooms with other companies, no area key was used for the breakdown of waste. This has been corrected in the reporting for 2022, and an updated area key has been entered.

Rate of sorting at source shows the percentage of waste that is sorted. More of the materials from sorted waste can be recycled, so they have less negative environmental impact than waste that is not sorted and is either disposed of in landfills or incinerated for energy recovery.

Water consumption in KLP’s own office premises shows water consumption in KLP-Huset in Oslo. It has been challenging to retrieve data from the water meters, and water consumption for the year is estimated from water consumption readings in the period June to December.

Percentage of environmentally certified suppliers. The reported figure gives the share 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, in which case they are included only once in the figures. Large suppliers are defined as suppliers where KLP’s purchases amount to NOK 1 million or more during the financial year.

Lists of certified companies are mainly sourced 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 who provide goods or services directly to KLP’s financial operations. Suppliers from within the Group and suppliers to the non-life business or agents for foreign companies are not included.

KLP had a total of 274 suppliers with turnover above NOK 1 million in 2022. Of these, 138 suppliers, i.e. half, were environmentally certified. Purchases from the environmentally certified suppliers accounted for 78 per cent of total purchases from suppliers over NOK 1 million.

Lending for roads and transport includes loans for road and infrastructure projects and the procurement of vehicles.

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

Lending to the public sector and associated enterprises covers the funding of various types of investments in municipalities, country authorities 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 loans in 2020 have been changed from the figures published in KLP’s annual report for 2020. The reason is that the figures for lending for roads and transport, publicly-owned real property and the public sector and associated enterprises were not updated with the latest adjustments, and are therefore incorrect.

Green mortgages are offered to members of KLP who have energy-friendly homes, or who choose to take steps to make their homes more energy-friendly. To qualify for a green mortgage, with better interest rates on the loan, one of these two criteria must be satisfied: i) the home must have an energy rating of A or B; or ii) the customer must have received an Enova grant for upgrading or for energy consulting on the home in the last two years.

KLP first reported on green mortgages in its annual report for 2022, but has included the history to show the development over time.

Seed investments are investments in seed funds linked to research institutions in Norway. The market value of investments made is reported. KLP had investments in 15 different seed funds at the end of 2022.

The projects included are KLP’s investments dedicated to the construction of new renewable energy capacity. This includes direct investment in projects and companies, fund investments and loans for projects.

Number of completed projects and installed capacity

The number of completed projects, and their total installed capacity, is cumulative since the start of the investments. The figures refer to the projects as a whole; KLP’s stake is not taken into account.

Number of inhabitants whose electricity needs are covered by the new capacity

The renewable energy projects that KLP has invested in produce electricity equivalent to the needs of a given number inhabitants in the countries where the generation facilities are in operation. The calculation is based on the average capacity of the respective technologies obtained from the Intergovernmental Panel on Climate Change, and the average electricity consumption per capita in the country in question taken from the US Energy Information Administration (EIA). The figures for Rwanda are based on data from worlddata.org and the CIA Factbook. The factors for per capita electricity consumption used in the calculation were updated ahead of this year’s reporting. The history has not been restated using the new factor, so the figure is not directly comparable with previously reported figures.

CO2 emissions avoided as a result of the new capacity

The emissions theoretically avoided compared to the average for the same amount of electricity produced by the country’s normal forms of electricity production. The figures for emissions in gCO2e per kWh for each country are taken from International Financial Institutions (IFI), which uses scenarios from the International Energy Agency (IEA). For Rwanda, the figures are based on reporting by the authorities to the UN Convention on Climate Change, reconciled against the African Carbon Forum. This gives a conservative estimate of the reduction in CO2 emissions.

The factors for average emissions in the electricity grid used in the calculation were updated prior to this year’s reporting. The history has not been restated using the new factor, so the figure is not directly comparable with previously reported figures. Because emission intensity has generally decreased, this has led to a reduction in avoided emissions, even though the number of projects has increased.

Investments in banking and finance

Investments in banking and finance in developing countries are KLP’s investments in Abler Nordic and NorFinance. NorFinance is an investment company that KLP owns together with Norfund, among others. The investments are made as part of KLP’s development investment portfolio, which is one of the instruments in the Guidelines for KLP as a responsible investor. The aim is to achieve both financial returns and benefits to society.

Borrowers in developing countries

Borrowers in developing countries through the Abler Nordic are active borrowers through the microfinance institutions that Abler Nordic has invested in. The number represents microfinance institutions as a whole; Abler Nordics’ stake in any given microfinance institution is not taken into account. Of the 9.4 million borrowers, 93 per cent are women, and 69 per cent of borrowers live in rural areas.

Media items about pensions with a spokesperson from KLP are based on media analyses prepared by Retriever. The figure shows the number of media items concerning pensions and life insurance where KLP is mentioned, and where the item includes a representative from KLP.

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 runs at our customers’ premises. KLP runs these courses every other year, with a “refresher course” in between. The topics covered by the course are employees’ pension rights, reporting to KLP, training in KLP’s online solutions, and the future of public-sector occupational pensions. The courses are an important part of efforts to increase KLP customers’ knowledge of pensions. The figure reported shows the number enrolled on the courses, but the number of actual participants may differ from this figure. As 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.

Damage-prevention activities

Damage-prevention activities are those where KLP Skadeforsikring provides training in fire safety and fire prevention. Previously, a large number of participants from a variety of different municipalities attended the same course. However, based on experience gained during the pandemic, these courses have become smaller, with fewer participants all from the same municipality. Many courses have been held in a meeting format. The courses are a collaboration with the Norwegian Association of Fire Officers.

KLP also reports the number of participants in courses on damage prevention. This indicator was removed from reporting in 2021, but included again in 2022. However, we have included the history in order to be able to compare over time.

Courses and projects on health-promoting workplaces

Projects on health-promoting workplaces are part of KLP’s working environment network, where municipalities, county authorities and health enterprises can apply for specific projects related to the working environment/health and safety. The projects run for three years and become part of the network, where they receive professional and financial support and can share experience with other projects. The number of ongoing projects through the relevant year is reported, not just projects that are ongoing as at 31.12.2022.

KLP also organises courses on health-promoting workplaces with our customers. These are courses on various topics related to health-promoting workplaces, such as preventing personal injury and violence and threats in the workplace. They are held as large-scale webinars with many participants and as meetings and courses for the individual customer.

All the figures reported relate to the KLP Group’s permanent workforce in Norway, Sweden, and Denmark, unless otherwise specified. Figures relating to pay and absence do not include Sweden and Denmark.

Number of employees refers to permanent employees in the KLP Group in Norway, Sweden and Denmark, and includes employees on leave of absence and those working part-time.

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

Temporary employees are employees with a temporary contract who are paid by KLP.

Age distribution among employees is based on permanent employees .

Number of external consultants refers to external consultants hired for construction agreements and consultants hired from production at the end of the year.

Staff turnover is the number of permanent employees who have left the KLP Group in relation to the average number of employees in the year. People who have changed jobs internally within the KLP Group are not included.

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

Average salary by gender is calculated on contractual salary for a 100 per cent position, and is not adjusted for the percentage of part-time working.

KLP defines managers at three different levels. Management level 1 is the Group management, including the CEO. Management level 2 covers the managers who report directly to an executive vice president (member of Group management). Management level 3 are the managers who report to level 2 managers.

Higher-paid roles are non-executive positions with an annual salary of more than NOK 1 million. 

Other employees are permanent employees salaried in accordance with a standard pay scale, who are not in management or other higher-paid roles with an annual salary of more than NOK 1 million.

Gender balance at various management levels and in other higher-paid positions and among all employees is based on the permanent workforce.

Gender balance for higher-paid roles is calculated as the percentage of women and the percentage of men within the total number of employees with an annual of more than NOK 1 million. The calculation is based on the start date in the position. The figure reported shows the gender balance at the end of the year, and not in the year.

Women’s salary as a percentage of men’s is defined in the same way as for the average salary by gender. It is based on the contractually determined salary for a 100 per cent position, not adjusted for the percentage of part-time working.

CEO’s salary as a percentage of median salary in the Group. The CEO’s salary is a contractual fixed salary, not including benefits in kind. The median salary is defined as the median salary for permanent employees of the Group in Norway, and includes management level 1.

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

Gender balance for parental leave taken is based on 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 and medically certified sickness absence among permanent employees. Short-term sickness absence is defined as 1-16 days, long-term absence is 17 days or more.

Gender balance for sickness absence is based the total sickness absence among permanent employees.

Personal injuries are self-reported injuries to employees and claims for actual and possible occupational injuries to KLP’s non-life insurance company. This does not included injuries suffered during employees’ leisure time.

Reports of discrimination or harassment are a way for employees, contractors, persons undergoing training and participants in labour market initiatives to report matters of concern in the workplace.

Official fees, sanctions and fines

This indicator shows the amount paid in fees, sanctions and fines from authorities for non-compliance with laws and regulations. This includes fees from the Financial Supervisory Authority of Norway, the Norwegian Data Protection Authority, the Labour Inspection Authority and the Norwegian Competition Authority, fines from prosecuting authorities and fines imposed by the courts. In 2022, KLP did not incur any such fees, sanctions or fines.

Reports via external whistleblowing channel

KLP has an external whistleblowing channel where people can report matters of concern while remaining anonymous. The reported figure is the number of actual notification cases received via this channel. KLP received no such notifications in 2022.

Complaints via KLP contact points

Most complaints to KLP come via our own contact points, such as the contact form on klp.no, e-mail, phone-calls and conversations with customer service staff in the different parts of the business. The number of complaints reported is the number reported to the Financial Supervisory Authority of Norway and considered to be genuine complaints.

For KLP Skadeforsikring, KLP Banken and KLP Kapitalforvaltning we also report the number of complaints where customers have had all or part of their complaint upheld after KLP reconsidered the matter.

For pensions-related complaints to KLP, it has not been possible to obtain similar figures due to limitations in the system. The number of pensions-related complaints includes both initial complaints and appeals. If a customer disagrees with the outcome of a complaints case, they can appeal. This appeal is processed and adjudicated by a legal affairs department. One complaints case may therefore be registered twice if it has been appealed.

Cases heard by the National Insurance Court

The indicator shows the number of cases dealt with in the National Insurance Court in 2022 and the number of cases where the customer received full or partial satisfaction. The processing time in the National Insurance Court is 8 to 10 months, so the figure includes cases that were submitted to the Court in 2021 and 2022.

Cases before the Financial Services Complaints Board

If one of our customers has submitted a complaint to KLP and is not satisfied with the response or the follow-up, the complaint can be referred to the Norwegian Financial Services Complaints Board. The indicator shows the number of cases dealt with by the Financial Services Complaints Board in the year and the number of cases where the customer received full or partial satisfaction where KLP Banken, KLP Kapitalforvaltning or KLP Skadeforsikring were the counterparty.

KLP reports tax and income broken down across the countries where KLP has operations over which it exercises control. This means that tax and income from investments in foreign securities are reported as Norwegian in the country breakdown, unless KLP has a controlling influence over the investment such that there is a group relationship. The amount includes KLP’s withholding tax on fund investments. In practice, KLP’s activities abroad are investments in property.

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

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

Revenues are the total net revenues for the year, as shown in the income statement.

Profit/loss before tax is the profit/loss before tax, as shown 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.