Annual Report 2023KLP Group, Sustainability Report and KLP

To calculate the denominator in the taxonomy fraction for KLP Kapitalforvaltning, we have used the company’s total capital under management. This means that the denominator includes all investments managed on behalf of KLP, all external client assets and investments in the KLP funds, and investments that appear on the company’s own balance sheet. In line with Article 7 of the supplementary provisions to the Taxonomy Regulation, we have excluded all exposures to governments and central banks from the denominator, while derivatives, cash and other financial instruments are included in the denominator of both fractions, but excluded from the numerator.

To assess which companies in the investment portfolio are taxonomy-eligible, we rely on data from MSCI and Nordic Trustee. The bulk of the data comes from MSCI, which has good coverage for listed companies, while we use data from Nordic Trustee for Nordic bond issuers.

According to the Regulation, the assessment and reporting of the taxonomy-eligibility and alignment of an investment should be based on data from companies subject to the EU Accounting Directive (Directive (EU) 2013/34), Articles 19a and 29a. Companies subject to the Accounting Directive make up a limited part of KLP’s portfolio and there is still only a small proportion of reporting companies for which data is available. This gives limited coverage for taxonomy data. To increase data coverage, KLP uses estimates prepared from MSCI to say whether a company has activities that are subject to the taxonomy criteria or not. To prepare the estimates, MSCI assesses whether and, if so, how much of a company's revenue comes from activities that are taxonomy-eligible.

The proportion of the capital under management that is eligible is calculated by weighting each company with its share of the portfolio multiplied by the share of that company’s earnings that is eligible.

The assessment of the share of securities investments that are taxonomy-aligned is also based on data from MSCI and Nordic Trustee. For the “alignment fraction”, we rely only on reported data and do not use estimates. Where it is available, we collect data on the company’s earnings (“turnover”) and investment expenditure (“CapEx”) that are taxonomy-aligned.

The proportion of the capital under management that is taxonomy-aligned is calculated by weighting each company with its share of the portfolio multiplied by the share of that company’s earnings that is covered. In order to report in line with the detailed templates from the Annex, we also calculate the total market value that is consistent based on the company’s investment expenditure (“CapEx”).

To classify companies according to the categories in the template in Annex VI, we have made the following assumptions:

• Financial and non-financial companies: Classification based on sector codes such as GICS, NACE or other sector codes
• Companies in the EU and outside the EU: The classification is based on where the company is registered for tax purposes
• Companies subject to the Accounting Directive (Directive (EU) 2013/34), Articles 19a and 29a: The classification is based on data from MSCI or on our own assessment of earnings data from the companies. In our own assessment, we assume that companies with earnings over EUR 40 million are subject to the Accounting Directive (Directive (EU) 2013/34), Articles 19a and 29a. All of the companies are exchange-listed and will be public-interest entities, but we have not checked whether they have over 500 employees. This will lead to over-reporting of companies that are subject to the Accounting Directive and are taxonomy-eligible. As some companies are not actually subject to the Accounting Directive, we lack data for them, so they will contribute zero values to the numerator in the alignment fraction. We are working with our data providers to improve data coverage on this point.

To calculate KLP Kapitalforvaltning’s green fraction, the ‘green investment ratio’ or GIR, we divide the sum of the market value that is taxonomy-aligned, based on earnings, by the denominator (the sum of the capital under management excluding exposure to governments and central banks). Similarly, the proportion of investments that are taxonomy-eligible is calculated by dividing the sum of the market value that is eligible by the denominator.

The detailed table for management capital from Annex IV in supplementary provisions to the taxonomy regulation can be found in Annexes I-i to the sustainability accounts.

To calculate the denominator in the fraction for the KLP Banken Group, we have taken the sum of the assets in the balance sheet. KLP Banken’s assets consist mainly of loans to municipalities and mortgages to private individuals, plus investments in securities.

In line with Article 7 to the supplementary provisions to the Taxonomy Regulation, we have excluded all exposures to governments and central banks from the denominator and the numerator, while derivatives, cash and other financial instruments are included in the denominator but excluded from the numerator. All exposure to municipalities, both through lending and securities, is also included in the denominator.

The assessment of the share of securities investments that are taxonomy-eligible and taxonomy-aligned has been made by KLP Kapitalforvaltning on behalf of KLP Banken. The method for assessing the securities investments is the same as for KLP Kapitalforvaltning as described earlier in this section .

For KLP Skadeforsikring, we also report the share of investments that are covered by and aligned with the criteria in the taxonomy. This is described in Article 6 and Annex IX to the supplementary provisions to the Taxonomy Regulation on reporting requirements for insurance and reinsurance.

The method for assessing the securities investments is the same as for KLP Kapitalforvaltning as described earlier in this section . The assessment is based only on the non-life company's own investments.

The method for assessing property investments is the same as for KLP Eiendom described later in this section. In the assessment, the non-life company's ownership interests have been taken into account.

To calculate green investments (GIR), we divide the sum of the market value that is taxonomy-aligned, based on earnings, by the denominator (sum of the capital under management excluding exposure to governments and central banks). Similarly, the proportion of investments that are taxonomy-eligible is calculated by dividing the sum of the market value that is eligible by the denominator.

The detailed table for investments from Annex X in supplementary provisions to the taxonomy regulation can be found in Annexes I-iii to the sustainability account.

In the denominator for the ‘investment expenses’ fraction, facilities under construction are included in the balance.

The most relevant activities for KLP Eiendom related to investment expenses are 7.1 Construction of new buildings and 7.2 Renovation of existing buildings. As of now, there are no investment expenses shown to be associated with taxonomy-aligned financial activities, so we believe that none of our ongoing projects can meet the taxonomy criteria.

The detailed table for investment expenditure from Annex IV in supplementary provisions to the taxonomy regulation can be found in Annexes I-iv to the sustainability account.

The denominator in the fraction for operating costs includes direct, non-capitalised costs related to building renovation, maintenance and repairs as well as all other direct expenses related to ongoing maintenance of property, plant and equipment carried out by the company or by a third party. The extract from the accounts includes the account type “maintenance costs”.

For example, current taxonomy-aligned economic activities relevant to KLP Eiendom could include CCM "7.3 Installation and operation of energy efficiency equipment" and "7.5 Installation and operation of instruments for measuring the energy performance of buildings". For 2023, it is not possible in the company's accounts to separate the share of operating expenses related to activities that might meet the environmental criteria. It is also unclear how the component requirements for energy-efficient equipment should be interpreted, as these refer to the 2010 Building Energy Directive which has not been introduced in Norway. As these activities cover a small portion of the items that make up the company’s operating expenses, it is expected that the proportion that might represent taxonomy-aligned economic activities would be small compared to the total operating expenses. In the reporting for 2023, a numerator is therefore set to 0.

The detailed table for operating costs from Annex IV in supplementary provisions to the taxonomy regulation can be found in Annexes I-iv to the sustainability account.

To calculate the denominator in the fraction for KLP, we have used KLP’s balance sheet. In line with Article 7, we have excluded all exposures to governments and central banks from the denominator. All exposure to municipalities, both through loans and securities, is included in the denominator. Derivatives, cash and other financial instruments are included in the denominator, but have zero value in the numerator.

To calculate the numerator in the fraction, we have looked at the different parts of the balance sheet and assessed whether the investments are in line with the criteria. The balance sheet for the life company consists mainly of property investments, lending, securities investments, ownership interests in the subsidiaries and associates and joint ventures.

Property investments

For investment property, we have used the fraction from KLP Eiendom's assessment of rental income from the buildings (see method description earlier in the section). As all of the buildings are on KLP’s balance sheet, we have derived the value of eligible and aligned property investments by the life company by multiplying the fractions by the balance sheet value of property investments.

Lending

The assessment of lending follows the same method as described for KLP Banken above. Only the loans on KLP’s balance sheet are included in the assessment. These are both residential mortgages and green loans to municipalities and county authorities Their contribution to the numerator, the value of loans that are taxonomy-eligible and taxonomy-aligned, is calculated by multiplying the fractions by the balance-sheet value of the loans.

Securities investments

The assessment of securities investments managed by KLP Kapitalforvaltning follows the same method as described above. Only the securities investments that are on KLP’s balance sheet are included in the assessment. Their contribution to the numerator, the value of securities investments that are taxonomy-eligible and taxonomy-aligned, is calculated by multiplying the fractions by the balance-sheet value of securities investments.

Investments managed by KLP are assessed individually. These investments consist largely of unlisted equity and debt funds, and there is limited data coverage and granularity (breakdown) for these investments. For example, some of the funds report the proportion of infrastructure projects that are taxonomy-aligned, while others report the share of earnings. Based on available data, we have calculated the value to be included in the numerator for KLP by multiplying the reported fraction from the fund by the market value of KLP’s investment.

Subsidiaries

To calculate the value from ownership in the subsidiaries to be included in the numerator for KLP, we have used the subsidiaries’ own fractions and multiplied them by the balance-sheet value of the subsidiaries. For KLP Banken, we have used the banking group’s GAR (green fraction). For KLP Skadeforsikring, we have used its fraction for insurance income, as this gives a best picture of the company’s business. For KLP Kapitalforvaltning, we have used its fraction, which only includes capital under management on the company’s own balance sheet and excludes KLP’s assets and external funds.

Associates and joint ventures

KLP’s associates and joint ventures are mainly related to Norwegian power companies and infrastructure investments. For these investments, we have mainly used reported data from the companies on their own earnings. Where the companies report the share of earnings that is taxonomy-eligible or taxonomy-aligned, we use these figures directly. Where the company or fund has not reported the share that is eligible, but we know that the fund is a pure renewable fund, we have assumed that the fund is 100 per cent taxonomy-eligible. If we do not have data on the proportion that is taxonomy-aligned, we have not made any assumptions or estimated the proportion, and these investments have zero value in the numerator in the fraction. We have assessed the total exposure KLP has to the company, i.e. the sum of shares and bonds. To find KLP's taxonomy fraction, we have multiplied the company's taxonomy fraction by the total market value of KLP's investments.

To find the numerator in the green fraction (GIR) for KLP, we add up the balance-sheet values that are taxonomy-aligned. We calculate the GIR by dividing the numerator by the denominator (KLP’s balance sheet excluding exposure to governments and central banks). Similarly, the proportion that is taxonomy-eligible is calculated by dividing the sum of the balance-sheet value that is eligible by the denominator.

The detailed table from Annex VI in supplementary provisions to the taxonomy regulation can be found in Annexes I-v to the sustainability report.

To calculate the denominator in the fraction for the group, we have used the consolidated balance sheet. In line with Article 7, we have excluded all exposures to governments and central banks from the denominator. All exposure to municipalities, both through loans and securities, is included in the denominator. Derivatives, cash and other financial instruments are included in the denominator, but have zero value in the numerator.

To calculate the numerator in the fraction, we have looked at the different parts of the consolidated balance sheet and assessed whether the investments are in line with the criteria. s the consolidated balance sheet encompasses the assets of the parent company and the subsidiaries, we have used the following fractions to calculate the numerator for the Group:

• The total property investments that KLP Eiendom manages
• All mortgages and green loans to municipalities from the KLP Banken Group
• Total assets for KLP Kapitalforvaltning

From KLP Skadeforsikring, we use the securities investments that are consolidated into the KLP Group, and these are included in KLP Kapitalforvaltning’s total capital under management.

To calculate the KLP Group’s green fraction (GIR), we divide the sum of the balance sheet values that are taxonomy-aligned by the denominator (the group’s balance sheet excluding exposure to governments and central banks). Similarly, the proportion that is taxonomy-eligible is calculated by dividing the sum of the balance-sheet value that is eligible by the denominator.

The detailed table from Annex IV in supplementary provisions to the taxonomy regulation, as well as the mandatory template for exposure to gas and nuclear power, can be found in Annexes I-vi to the sustainability report.

Climate risk was a key area in the 2023 ORSA process in KLP. The main focus of this year’s analysis was on how climate risk could affect the value of the investment portfolio, i.e. the asset side of the balance sheet. Climate risk, and our handling of it, may also have an impact on the development of our pension obligations and our customer base (the liability side), and is assessed qualitatively.

To quantify the climate risk associated with KLP’s portfolio, we have applied the ClimateMAPS climate risk model developed by Ortec Finance in collaboration with Cambridge Econometrics. The model is rooted in empirical relationships and results from the research literature. The choice of climate risk model was made after demo testing and evaluation of different providers.

ClimateMAPS is designed to capture both physical climate risk and transition risk in financial markets. Physical climate risk is the direct impact of climate change on the value of investments related to both chronic events (average temperatures) and changes in the likelihood of acute events (extreme weather). Transition risk is linked to changing macro conditions for the economy in the transition to a low-emission society, including tighter policies, regulations, reputation and market conditions.

The macroeconomic model E3ME, developed by Cambridge Econometrics, is used to estimate the economic shock associated with transition risk. E3ME models the relationship between value chains in the economy, energy systems and the environment. The model is based on statistical relationships without any added assumptions about rational actors and general equilibrium in the economy. This allows E3ME to capture realistic real economic effects of policy changes in the short and medium term related to e.g. bottlenecks in the economy, involuntary unemployment and the spread of innovative technologies.

The impact of chronic physical climate risk on the economy is estimated in ClimateMAPS based on research articles Burke and Tanutama (2019) and Nelson et al. (2014). These articles are used to model the relationship between higher temperatures, GDP and inflation. The economic consequences of increased acute physical climate risk are estimated with the ClimatePredict model. ClimatePredict estimates the relationship between the increased frequency of various forms of extreme weather and national GDP growth.

The economic shocks associated with climate change, in the form of changes in GDP and inflation at the national level and value creation at the sector level, form the basis for estimating effects on financial markets. This is done via Ortec Finance’s stochastic modelling of the financial markets. For example, the modelling takes account of the fact that the correlation in the market between different assets typically increases in times of crisis (short term) and that the outcomes in the market do not show a normal distribution but have skewed and fat tails.

An important part of KLP’s asset management strategy is that the allocation should reflect the long-term nature of the pension obligations. In the analysis, we have therefore looked at the development of KLP’s investment portfolio in the short (1-5 years), medium (6-15 years) and long term (up to 40 years ahead). The analysis is based on four different climate scenarios developed by Ortec Finance:

1. The Net-zero (NZ) scenario is characterised by moderate transition risk and relatively low physical risk. NZ is a physical climate scenario where we avoid exceeding 1.5°C of warming by 2100 with 50 per cent probability. The scenario also shows a socially sustainable development with extensive fulfilment of the UN Sustainable Development Goals, including moderate economic growth across countries, rapid technological progress and measures for social inclusion and redistribution in connection with the transition. The scenario includes the introduction of global carbon pricing for the vast majority of sectors, like the EU quota system.
2. The Net-zero financial crisis (NZFC) scenario is similar to the NZ scenario, but with greater transition risk. The key difference between the two scenarios is that in NZFC, climate policy is suddenly tightened towards 2025 with a subsequent decline in emissions, but also a crisis in financial markets related to massive repricing and contagion effects.
3. The Limited action (LA) scenario is characterised by high physical climate risk and some transition risk. The scenario is based on an expected temperature rise of 2.8°C by 2100 and assumes moderate economic growth, continuation of current societal trends and limited measures to address climate change. Countries make some, but more limited, attempts to achieve climate targets compared to net zero scenarios. The countries that have carbon pricing today will continue to do so, but no new scheme will be implemented. LA is the scenario that comes closest to the expected climate change if the current policy level remains unchanged (The Climate Action Tracker, 2022).
4. The High warming (HW) scenario is characterised by very high physical climate risk and no transition risk. HW produces an expected temperature rise of 4.2°C warming by 2100 and is characterised by economic inequality, failing cooperation and limited measures to reduce emissions. Compared to LA, HW is characterised by increased social inequalities and lack of cooperation across countries and regions.

The scenarios from Ortec are based on physical and socio-economic scenarios in the 5th and 6th synthesis reports from the UN Intergovernmental Panel on Climate Change (IPCC). The scenarios are not the same as those developed by the central banks’ and supervisory authorities’ Network for Greening the Financial System (NFGS), although the basic idea is similar.

The climate risk model provides results at the sectoral and regional level broken down by asset class. The results provide a basis for identifying which sectors within particular asset classes are most exposed to both transitional and physical climate risk. They also show which sectors have great opportunities.

There are also parts of KLP’s climate risk that are not covered by modelling. Firstly, the model only covers the asset side of KLP’s balance sheet. Secondly, it does not cover transitional risk factors related to reputation and the risk of litigation. These are climate risk factors that KLP also needs to assess in the future:

• Pension obligations We would also expect climate risk to have an impact on pension obligations through changes in inflation and interest rates, and potentially through demographic changes also.
• Reputational risk: Financing activities that have a negative impact on climate carries reputational risk. The consequences of a negative reputation can be poorer competitiveness and loss of customers.
• Risk of litigation: There is an increasing trend for the courts to be involved in climate change, including actions to claim compensation for climate change. Climate-related actions can have direct financial implications for KLP, as well as reputational damage from any involvement in litigation.
• Company-level climate risk: The climate risk model we have used takes a top-down approach to modelling climate risk, with estimates at the sectoral and regional levels. This means that the model does not capture estimated differences in climate risk between companies within the same sector. These may be risks related to technological differences, exposure to physical climate risk, or risks associated with behaviour, including the risk of being sued or reputational damage in general.

KLP’s main ways of restructuring the investment portfolio are to:

• Increase climate-friendly investments by at least NOK 6 billion each year
• Influence companies to set climate targets and cut emissions, and contribute to more transparency about companies’ own climate outcomes
• Take action on high-emission sectors and companies that are not following the emissions path to reach the 1.5 degree target
• Push for a faster transition towards a low-emission society by influencing markets and policies

These instruments do not have a fixed end-date, but are integrated into the ongoing work. The decision to place at least NOK 6 billion in climate-friendly investments each year has been in effect since 2018.

KLP influences companies through bilateral dialogue, voting at general meetings and clear communication of our expectations for the company’s climate and environmental work. At general meetings in 2023, KLP voted against the boards of 67 companies for climate and nature-related reasons, and rejected five proposals for climate plans as inadequate. In order to further incentivise restructuring in these companies and to reduce KLP’s transition risk, we will also prioritise financing of companies that set science-based transition plans in the future. For the same reason, we will also consider risk-based divestment from individual companies within high-emission sectors that do not have specific restructuring plans for their business and are not working on any.

A key element of the work to influence markets and policy in 2023 was KLP’s participation in the expert group set by the Science-Based Targets initiative (SBTi) to develop a net-zero target standard for financial service companies. KLP has also participated in an expert group producing guidance on transition plans for sustainable Norwegian businesses. This work is expected to be completed in early 2024. We have also provided input to consultations on licensing processes for the development of offshore wind in Norway, tax on ground rent for onshore wind, extraction of minerals on the seabed, and the need for active ownership from the Government Pension Fund Global to contribute to the transition. The report “Enough people?“, produced by KLP together with the Norwegian Climate Foundation, focused on the shortage of staff to implement the green transition. Through its green shipping programme, KLP has been involved in developing a framework for transitional financing of ports, and in producing a note focusing on how institutional capital can be effectively released to finance green maritime infrastructure in Norway.

The whole of KLP’s climate change adaptation plan contributes to reducing global greenhouse gas emissions, and so also helps to reduce physical climate risk in the form of global warming. However, this risk factor depends on the rest of society also changing. As things stand, most specific assessments of physical climate risk in connection with investments are made in the property portfolio where Going forward, however, it may also become more relevant to make adjustments to other parts of the portfolio to address the risk of physical climate change.

In KLP’s roadmap towards net zero emissions for the investment portfolio, we have developed the Paris alignment percentage. The Paris alignment percentage (PAP) is a weighted average of how far away each individual investment is from a emissions path consistent with 1.5 degrees of warming. The PAP is a KLP-specific indicator, but the methodology is based on established standards and best practice and has been developed in consultation with leading NGOs in the area of climate and environment.

We want the PAP to tell us something about the ability and willingness to realign the business in line with the ambitions in the Paris Agreement. If KLP’s portfolio has net zero emissions in 2050, this will give us a PAP of 100 per cent. In order for the portfolio to be in line with the 1.5-degree target on the way to net zero by 2050, emissions from the portfolio must be reduced by 7 per cent a year from 2020 until 2030. For high-emission sectors, we use sector-specific science-based emission paths that companies should be following, as per the global net zero scenario from the International Energy Agency. Both net zero and emissions cuts in line with the pathways must be achieved if the portfolio is to be managed in line with global warming limited to 1.5 degrees.

KLP’s overall goals for the investment portfolio (scope 3, category 15) adopted by the Board are:

1. KLP’s investments should be 100 per cent Paris-aligned over time, and
2. KLP’s investments should reach net zero emissions by 2050

KLP has also set more short-term targets to ensure that we achieve the long-term goals. In KLP’s vision of reaching net zero for the investment portfolio, we have defined these targets:

• Increase the Paris alignment percentage to 60 per cent in the 1-year term (2024), and to 72 per cent in the 3-year term (2026). If we succeed in this, we will have over-fulfilled the objective that was set in the roadmap for 50 per cent Paris alignment in 2025.
• Work to increase the share of the portfolio with science-based climate targets by 5 per cent in the one-year term and 15 per cent in the three-year term
• Reduce financed emissions by 20 per cent over three years.

These targets are consistent with the SBTi’s standard for short-term climate targets for financial institutions.

In 2023, KLP Banken adopted a target for its mortgage portfolio to reduce emission intensity by at least 33 per cent by 2030, compared to 2020. This corresponds to a linear projection towards a target of net zero emissions in 2050. The matter was dealt with by the Board.

As of today, we do not have a method for mapping financed emissions for loans to the local government sector, and it is challenging to set climate targets for this portfolio. In 2024, we will work on mapping financed emissions.

In the sustainability strategy developed in 2023, KLP Eiendom set a Board-approved goal of reducing greenhouse gas emissions from operations by 10 per cent in 2025, 35 per cent in 2030 and 60 per cent in 2035, compared to 2022. The targets are based on developments in country-specific reference pathways from Carbon Risk Real Estate Monitor (CRREM) in line with the 1.5 degree target. KLP Eiendom's emissions level is currently below the pathway, so we have set the targets on the assumption that we stay below the pathway in the future.

For greenhouse gas emissions from materials in new construction and refurbishment (development projects), no target has been set for reducing absolute emissions, as the scope of projects varies greatly from year to year. There are currently no recognised international reference pathways for material emissions from new construction and refurbishment, but it is expected that this may be available during 2024. For development projects, KLP Eiendom has set an ambitious target of a 50 per cent reduction in material emissions compared to the current market standard. This is in line with the Futurebuilt methodology. For smaller projects such as tenant alterations, a target 50 per cent reduction in material emissions by 2030 has been set, compared to the 2020 level. It will be appropriate to update climate targets for development projects when suitable recognised frameworks are available.

For KLP’s own operations, we have an overall goal of halving emissions by 2030 compared with 2010. This goal applies to scope 1 and 2, as well as scope 3 categories 1 to 14. This objective is supported by other environmental targets related to KLP’s operations, which will be revised for 2024:

• Sustainable Procurement initiative
• Reduce the number of flights by 45 per cent compared to 2019
• Reduce waste and increase the sorting at source to 60 per cent in KLP offices

We have also adopted sustainability targets for procurement at Group level which give buyers a mandate and duty to prioritise sustainability in the purchasing process. Our targets for sustainable procurement are: 

• Assess sustainability in all procurement processes 
• Give priority to products and suppliers that are environmentally certified over other suppliers 
• Prioritise suppliers who report on significant greenhouse gas emissions in a climate account and can point to their own emission reduction targets in line with the 1.5-degree target in the Paris Agreement 
• Work in line with the requirements for sustainability in public procurement and use guidance and recommendations for public procurement in our work. 
• Make specific emissions calculations for our largest purchases and estimate emissions for all purchases together, based on analyses of invoice data.  
• Use the insights gained to calculate the sustainability footprint, including greenhouse gas emissions, and apply this in budgeting and purchasing decisions 
• Continuously measure the sustainability footprint of our purchases and use the insights to continuously reduce our sustainability footprint and risk from procurement 

KLP is determined to reduce unnecessary flights, but we still see a significant increase in the number of flights compared to last year. Compared to 2019, however, the number of flights has decreased by 34 per cent, somewhat below the target. This may indicate that we have reached a new normal level for post-pandemic travel, and that we are taking fewer long-haul flights than before. Air travel is one of the biggest emissions sources from KLP’s operations, so from 2024 we aim to reduce emissions from flying rather than the number of flights.

Method and explanations

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.

Figures for environmentally certified suppliers show the share of purchases from large Norwegian suppliers to KLP that are Eco-Lighthouse certified or certified according to ISO 14001 or other relevant standards. Some suppliers are certified under multiple schemes but, if so, 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.

Information about suppliers' certification is obtained from the Eco-Lighthouse scheme, KLP's own follow-up directly with the supplier or from information that the supplier has published on its website.

The reporting covers third-party suppliers who provide goods or services directly to KLP’s business, and our largest contract partners for settlements. Suppliers from our own Group and foreign suppliers are not included.

For operation-related emissions, we include direct emissions (scope 1), indirect emissions from energy consumption (scope 2) and other indirect emissions from waste, flights and parts of purchases (scope 3). From 2022 to 2023, there has been a 3 per cent reduction in operational emissions, driven mainly by a reduction in emissions from purchased IT goods and services and scope 1 emissions. However, emissions from air travel and canteen operations have increased significantly. One of the reasons may be that we are back to normal activity levels after several pandemic-affected years. Compared to 2010, the reduction is only 6 per cent, but this is because we included emissions from purchases in 2022. If we keep the yardstick constant, the reduction is 49 per cent compared to 2010.

IT systems and information services make up KLP’s largest purchasing category. In 2023, we started work on expanding the basis for calculating greenhouse gas emissions to apply to all purchasing categories. We have continued our environmental work in claims settlements and are stipulating a larger proportion of used parts for cars more than 5 years old. For providers of rental cars (courtesy cars), we require the percentage that are electric to match the percentage of electric cars in the total insured by KLP.

Method and explanations

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.

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 second 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. Currently, this is the only canteen where we have data. 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.

For KLP, it is the investment portfolio that constitutes the largest source of emissions. This means that this is where we can make the biggest difference in reducing global emissions. At the same time, our financed emissions say something about exposure to transition risks linked to higher carbon pricing.

Financed emissions have varied somewhat over time, but the trend in recent years shows a clear reduction. Scope 1 and 2 have been reduced by an average of 6.4 per cent a year since 2019, while Scope 1-3 have been reduced by an average of 4.2 per cent per year. Financed emissions have fallen somewhat since 2022, and if we focus on the change over the last year, it is a small number of large individual companies within high-emission sectors that are responsible for the large absolute reduction in emissions from 2022 to 2023.

Method and explanations

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, and do not currently include scope 3 emissions. 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.

In order to reduce emissions and counter climate change, it is essential to put good reporting in place. In 2022, KLP joined the Partnership for Carbon Accounting Financials (PCAF), which aims to increase transparency and provide for consistent measurement of financed emissions across the whole of the financial sector. Among other things, the PCAF has drawn up recommendations for how financial companies should report financed emissions. In line with these recommendations, KLP has been working to increase the share of the portfolio where 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 also include financed emissions via government bonds and residential mortgage lending to private individuals. To be transparent about the proportion estimated, KLP has calculated the degree of coverage for the various indicators. This includes the share of publicly traded stocks, government and corporate bonds, and the mortgage portfolio, which reports actual emissions figures.

Greenhouse gas emissions from securities investments are calculated by obtaining data on emissions, revenue and enterprise value from MSCI and Stamdata. These indicators are calculated in line with the recommendations from the PCAF and Finance Norway’s guide to calculating financed emissions. For investments where there is no available data, emissions are estimated from the average emissions per krone in income from companies within the same sector in relevant indices. This estimation process takes a hierarchical approach, starting by looking at the most specific index level, which may be the national level (e.g., Norway), then gradually expanding the search to the regional, continental, and ultimately global level, if there are fewer than five companies within the specified sector. This hierarchical principle ensures that the emissions estimates are based on the most relevant and comparable data. It is worth noting that the estimation method has been updated since the previous report. To ensure consistency with the historical greenhouse gas figures for securities investments, these figures have been updated to reflect the new approach.

It is worth noting that the estimation method has been updated since the last annual report. This has led to an increase in financed emissions, particularly scope 3 emissions. The historical figures have also been updated to ensure consistency in the time series and comparability over time.

Emissions from securities investments and government bonds are rounded to the nearest thousand tonnes.

Greenhouse gas emissions from mortgages

The KLP Banken Group has set itself a target to bring emissions from lending (residential mortgages) down to net zero by 2050, and has worked in 2023 on setting more short-term targets and improving the calculation of financed emissions. This work is based on Finance Norway’s guide to calculating financed emissions as well as the recommendations from the PCAF. Here we report on energy consumption in the homes we have financed. 

The calculation of financed emissions depends on the type of data we have on the financed objects:  

• For objects where we know the actual or estimated energy rating, we use this to estimate the expected energy use.  
• For those objects where we lack data on energy rating and floor space, we look at the year of construction. For objects built after 2010, we assume that they conform to regulation TEK-10 and have a C rating. If it was built after 2017, we assume that the building conforms to TEK-17 and has a B rating. We have good data on energy ratings for homes built after 2010, so there are relatively few homes where we make these assumptions based on the year of construction.
• For those objects where we do not have an energy rating but use floor area, we use estimates from the PCAF for homes in Sweden. KLP does not finance homes in Sweden, but as we have our own estimates for homes in Norway and we assume that energy consumption in Swedish housing is roughly the same as in Norway, we use these estimates to estimate energy consumption.

In calculating financed greenhouse gas emissions, we have chosen to use a location-based method for electricity. As recommended in the guide to calculating financed emissions, the NVE’s climate declaration for physically supplied electricity is used. 

The emissions from the home are broken down according to the bank’s exposure to the home and

the value of the home. In the past, we have used the latest available market value, but for the calculation in 2023 we have used the original value when the loan was taken out. In the case of refinancing, the current price is taken into account. Using the original value rather than market value, our financed emissions increased significantly in 2023.

Reported emissions for mortgages have been adjusted for the years 2021 and 2022. The reason for this is an aggregation error in previously reported figures, as well as a changed methodology. For the years 2021, 2022 and 2023, we have based the calculations on Finance Norway’s guide to calculating greenhouse gas emissions.

In line with the TCFD’s recommendations, we measure the annual emissions and carbon intensity of our investments in listed shares and corporate bonds.

The difference between "weighted average carbon intensity" and "carbon intensity" is that the former weights the 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 entire portfolio. The weighted average carbon intensity has fallen by over 7 per cent on average per year since 2019. The reason for this is similar to the change in financed emissions. The portfolio's emission intensity says something about exposure to transition risk linked to higher carbon pricing. KLP's exposure to carbon-intensive companies is moderate, and KLP's defined high-emission sectors (excluding property) make up only 3.7 per cent of KLP's portfolio.

Method and explanations

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.

Reporting on greenhouse gas emissions and intensity are some of the PAIs (Principal Adverse Impact Indicators)

which was introduced via the Disclosure Ordinance. See the appendix for an overview of the remaining mandatory indicators for KLP's portfolio.

Emissions from securities investments and government bonds are rounded to the nearest thousand tonnes.

For several years, KLP has purchased climate credits from various projects to compensate for the emissions related directly to our operations. We do not count these credits in our climate accounts, but see them as a contribution to climate change adaptation. In the long run, in order to reach net zero emissions, KLP must find ways to offset our residual emissions, but we must be in a position to reduce emissions as far as possible before there is a real problem. You can read more about this at klp.no.

KLP also focuses on its contribution to renewable energy. The construction of additional renewable energy capacity, particularly in developing countries, is crucial if we are to ensure that the energy system of tomorrow is sustainable. Increased access to clean energy has a number of beneficial effects on social development and growth and is one of the keys to succeeding in achieving sustainable development in developing countries.

At the end of 2023, KLP had contributed funding to the construction of 95 new renewable energy projects worldwide. Together, these projects have added over 12 gigawatts of renewable capacity to the market.

Method and explanations

The number of projects is cumulative across all years and not just new projects for the year, and it also includes projects that KLP has withdrawn from and projects that were completed earlier but were not included in KLP's reporting. This includes direct investment in projects and companies, and fund investments and loans for projects, but not projects where KLP has contributed to refinancing. KLP's ownership interest has not been taken into account.

In previous years, we have reported greenhouse gas emissions that the projects have helped to avoid, and how many inhabitants can have their electricity needs met from the projects. We are now working on updating the method for calculating these indicators and will wait to report these until the method is in place so that we can have a higher degree of certainty around the numbers.

KLP is still in a learning phase as regards our impact on nature and biodiversity, and the risks associated with this. KLP’s main actions are as follows:

• Clear communication of our expectations for sustainable management by our portfolio companies, public authorities and and other stakeholders
• Further development of the method for assessing and measuring nature risk for KLP’s investment portfolio
• Management and reporting of nature risk in line with Taskforce on Nature-related Financial Disclosures (TNFD) recommendations

All of these measures are ongoing, without a specific end date. KLP has identified the following five particularly high-risk sectors in our portfolio that we judge to have the greatest negative impact on nature and biodiversity: forestry and paper production, oil and gas, agriculture, fishing and aquaculture, and mining and metals. We place great emphasis on these in our communication and follow-up of our expectations. The goal is for portfolio companies to increase their awareness and competence around nature risk, to enable them to assess and manage the risk in a good way. In 2023, for example, KLP took the initiative to communicate concrete investor expectations on measures towards sustainable management of Nordic boreal forests to companies in our portfolio that either directly engage in forestry themselves, or process the wood products. In general meetings, KLP has also voted against the boards of 67 companies for climate and nature-related reasons.

KLP worked in 2023 to identify and develop relevant methods for measuring companies’ impact and dependence on nature, and the indicators KLP should report on to provide a good picture of our impact on nature. This is an effort we will continue to develop in the coming years. As part of this, KLP will be taking part in pilot testing of the TNFD framework in 2024. In the future, KLP will continue to integrate the work on climate and nature to ensure that it is a unified process, and not a set of parallel processes. As with climate change, KLP envisages structuring the analyses around scenarios that stress-test financial consequences for the portfolio from different aspects of nature risk. The TNFD has produced a guide on what such a scenario analysis should include for nature risk (TNFD, 2023). However, there is currently no industry standard for natural scenarios. The Network for Greening the Financial System (NGFS), an international network of financial regulators and central banks, has produced standard climate scenarios for the finance industry and is now working on developing guidelines for nature (NGFS, 2023).

KLP has also provided input to consultation procedures related to licensing processes that have an impact on nature and biodiversity. In its response to consultation on licensing processes for the expansion of offshore wind in Norway, KLP focused on the importance of mapping the impact on the natural environment, including bird and marine life, stressing that such nature concerns should be properly taken into account in the tendering process ahead of the auctions. In our input on the consequences of mining on the seabed, KLP stated that the precautionary principle dictates that we should hold back on any commercially oriented surveys and mining on the seabed until we have a better knowledge base. In 2023, KLP also provided a response to consultation to the Norwegian Nature Risk Commission. In our response, we referred to KLP’s work on analysis and management of nature risk, the kind of data we need, including dilemmas in balancing the need for more renewable energy against concerns for nature, and the importance of robust licensing processes in these situations.

KLP had operating costs equal to about two FTEs related to impact and analysis work on nature and biodiversity in 2023, and expects to see similar resource use for 2024.

The vision for KLP Skadeforsikring to be a “driver for a circular economy” states that the non-life company should work systematically on re-use, repair and other measures to reduce the resource usage from claims settlements, and that the effect of the measures should be assessed and documented through greenhouse gas accounts. This requires us to work holistically on circular solutions, from product development and the wording of terms and conditions to our procurement strategy and specific agreements with suppliers and partners. We are working on a long-term procurement strategy for 2024-2027 in which circularity is a stated objective to be followed up with annual measures. The vision is backed by specific indicators that will be used to follow up on progress in processes/activities and in results. Overall progress towards the vision will be included as an indicator in the company’s score card for 2024. The objectives and indicators supporting the vision will be regularly followed up in the management team, which will also keep the Board informed. 

The switch to a more circular business model presents significant opportunities for KLP Skadeforsikring.

Being among the first to move away from non-circular claims settlement processes allows us to establish good routines and cooperation agreements for circular settlements by trial and error, ahead of tighter regulation in the field. As described in the section on risks related to the circular economy, we think it likely that the rules on the use of virgin raw materials will be tightened up at some point, within buildings and property for example.

We already have several ongoing initiatives to reduce resource use in the claims settlements. We believe that the greatest potential for reducing new resource use lies in preserving what we call residual assets in property claims cases, i.e. building elements that can be reused. In many cases, there are also financial savings in using residual assets in the restoring damaged buildings. However, the financial savings are more variable, as there are often some costs associated with refurbishing the building elements and ensuring sufficient quality for re-use.

The transition to circular settlement processes and a more sustainable approach to the business generally is seen as an opportunity to strengthen the reputation of KLP Skadeforsikring among customers, suppliers, potential employees and other stakeholders.

On the other hand, KLP Skadeforsikring is exposed to various types of risk associated with a circular economy. Risks related to the circular economy are not seen as material risks to the company and so are not addressed in the company's Own Risk and Solvency Assessment (ORSA).

We believe that there is regulatory risk in future regulatory instruments that will impose a higher degree of circularity. This applies in particular to the construction industry, but also in other relevant fields, such as in the automotive/workshop industry. This could include higher taxes on, or reduced access to, virgin raw materials. Another form of regulation we expect to see is likely is tighter regulatory requirements for public procurement to consider climate and environmental issues in general and circular solutions in particular. This could affect KLP Skadeforsikring in that claims settlements within our property and in some cases motor vehicle insurance policies for the public sector are subject to the procurement regulations. Stricter requirements for the repair and reuse of materials and components in buildings or cars could also make claims settlements more expensive than they are today, and/or require types of expertise that the company and its suppliers do not have today.

Currently, however, the applicable legislation is seen as more of a hindrance than a help towards more circular claims settlement. Building regulation TEK-17 provides little scope for re-use of building elements and imposes considerable additional work and extra costs on the client in the form of inspections and requests for exemptions. Such time-consuming additional processes are demanding to implement in a claim settlement where the policyholder is suddenly left without an important building, whether it be a school building or a home.

In the short term, we think it most likely that risk related to the circular economy will take the form of reputational risk, where we risk losing the respect of some customer groups if we fail to deliver more circular settlement solutions in line with our customers’ expectations and with the market in general.

As of today, KLP Skadeforsikringalso believes that there is also a reputational risk associated with being too circular. There has long been a culture of insurance companies replacing damaged assets with new ones. Repairing a damaged asset may take longer than replacing it, while also missing out on the benefit of replacing something old with something new. It is therefore reputationally difficult to go much further than customer expectations and other insurance companies’ practice in this area. We are working to adjust our customers’ expectations through changes to the insurance terms and conditions that make it clear that repair and reuse should be prioritised in remediation works where appropriate. In the coming year, we will also place more emphasis on quantifying and communicating to the customer the environmental benefits of repair and reuse versus replacement in claims settlements.

The most significant issues concerning resource use and circularity in KLP Eiendom are related to material consumption and a circular economy, greenhouse gas emissions in the supply chain and generated waste. These are captured in the two vision statements prepared for KLP Eiendom in light of KLP's new sustainability strategy.

They deal with circularity in new builds and tenant alterations and set out an ambition to reduce greenhouse gas emissions from the construction projects. An important measure is the choice of materials, and we have therefore developed a material document that ensures that the materials used meet requirements for greenhouse gas emissions, circularity and the absence of pollutants. KLP Eiendom has its own sustainability strategy, where circular economy and resource use are an important topic. KLP Eiendom also has its own environmental management system which is certified according to ISO 14001.

We believe in a workplace with a wide range of people contributing to innovation, growth and value creation. All of our employees are given equal opportunities, regardless of age, sex, disability, political convictions, religion, beliefs, sexual orientation, gender identity, gender expression and ethnic background. We 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. We support all of the UN Sustainable Development Goals and have also identified specific goals that reflect engagement, and these are integrated into our strategy and action plans.

We have clear guidelines, specific goals and measures for the Group, which are systematically and actively addressed throughout the year. We conduct analyses, due diligence and risk assessments and develop an action plan and follow up on actions to ensure that we contribute to an equal and diverse working environment.

We provide for a satisfactory working environment through systematic HSE work, with processes that ensure that we work in an appropriate manner and have the resources we need to maintain a good working environment and prevent health problems among our employees. Among other things, we have good written procedures for following up on employees on sick leave, and we have created our own e-learning courses for managers and employees on processes and rules concerning sick leave. Our HSE goals, and target 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.

KLP has overarching guidelines for salary and other benefits. The Code aims to reward behaviour and promote a culture that ensures long-term and sustainable value creation and reflects the company’s attitude to wages and other remuneration to employees. To ensure that the guidelines are complied with, the way the compensation scheme is practised is subject to annual internal controls, pursuant to Section 15-2(4) of the Financial Institutions Regulations. Internal Audit presents the results of this internal control process to KLP’s remuneration committee once a year. The companies in the KLP Group are bound by the agreements between Finance Norway and Finansforbundet. Employees’ commitment, expertise and results should influence their salary reviews.

A fixed base salary is the main element of the total remuneration, which also includes insurance and pension schemes and benefits in kind. The Group’s asset management environment competes for labor in markets where it is commen that parts of the salary is based on achieved results. The Group therefore offers salaries that are partly performance-based for employees within asset management who have direct responsibility for results. In accordance with the regulations, payment of this remuneration is spread over several years and is partly linked to the growth in value in selected securities funds. Performance-related pay has not been introduced elsewhere in the Group or in Group management.

We have clear and predictable procedures for monitoring and making arrangements for employees on sick leave. Both employees and managers have access to the procedures on the intranet. We offer counselling with a psychologist at low cost and with short waiting times for employees who need it. Employees with high-risk working conditions are offered health checks every two years. The health checks were last carried out in 2022 and will be repeated in 2024. Pregnant employees are given the necessary facilities to keep on working throughout their pregnancy, with support from a midwife and the occupational health service. We provide flexibility in your working life. In 2023 we introduced a scheme whereby employees can enter into an agreement to work from home up to two days a week if this is compatible with their duties.

KLP has also implemented a number of measures to provide for a good physical and psychosocial working environment, including adapting workplaces where necessary, along with various competence enhancement activities for managers and employees. KLP runs various professional and social events for all employees, including events for organisational development, a Christmas lunch, Christmas feast, decorating the Christmas tree, and events for the pensioners’ association. KLP has an active company sports club which aims to promote sports, health and cooperation. It organises trips, activities, team sports and courses and runs a fitness centre which offers group sessions. Other welfare services include a photography club and an art club.

There is generally not much overtime in KLP, though the situation varies across the different business areas. There was an increase in overtime use from 2022 to 2023, and we have seen periods with extra work related to the development of a new pension system. The use of overtime is closely monitored by both management and HR. The working environment committee receives quarterly reports showing the total amount of overtime in KLP. We have good routines for following up overtime in collaboration with the employee representatives. Individual agreements are entered into between employees, managers and employee representatives in periods when there is a need for employees to work rather more than normal.

In 2023, we ran AKAN courses for managers, elected representatives and the safety officers, as well as HR, to teach people to recognise signs of substance abuse and how to conduct a conversation where there is a concern. We also focused on mental health on World Mental Health Day by hosting a lecture and webinar with psychologist Christine Lien on the subject of back pain. We have also carried out a safety inspection consisting of a questionnaire sent out to all employees with questions about physical conditions in the workplace. The results were reviewed afterwards and follow-up measures were initiated where needed.

An important means of improving the gender balance is the development of managers and high-fliers in our leadership development programme. It is important to build the right skills within the organisation to provide candidates for new roles. We are drawing up good development plans in staff appraisals to build up employees’ expertise and experience, and to secure enough female candidates who may be suitable for higher-paid or management positions in the future.

The proportion of men in the highest paid positions has been higher for many years and they represent professions that are the highest paid. In some areas, it is particularly challenging to recruit women because there are far fewer women than men among the candidates. This is especially true in KLP Kapitalforvaltning, Economics and Finance and Technology. We have spent more time and tried different approaches to get more women to apply and come for interview.

We conduct wage negotiations with a particular focus on equal pay. We prepare analyses and have conversations with managers to ensure that there are no unjustified pay differences. Women’s share of men’s pay is affected by the gender distribution in the higher paid positions. Activities to improve the gender balance will therefore help support the progress towards equal pay.

In 2023, we implemented several measures related to the different target areas within gender equality and diversity. We have worked on improving our recruitment processes to provide for inclusion including a better gender balance in the interview process and candidate follow-up. We have continued our sponsorship work with Women in Finance, a partnership we have had since 2021. Here, the aim is to increase the proportion of women in executive positions and specialist functions in the finance industry in Norway.

In 2023, we had internships that helped to raise awareness of diversity among our own employees. We also have apprenticeships in construction and office roles, with a good gender balance among the apprentices themselves.

Work on increasing support for employees with disabilities continued in 2023 in collaboration with a recruitment agency, focusing on helping people with disabilities to enter the labour market. This is an area we will continue to work on in the future.

In 2023, we also ran the “Pink competence” course in collaboration with the Norwegian Organisation for Sexual and Gender Diversity (FRI). The aim is to give staff and managers good advice and ideas on how to talk confidently about sexual orientation and gender expression in the workplace. In the employee survey, we measure whether employees feel respected for who they are, and we get consistently high scores. While the results are good, we know there are unconscious biases both in workplaces and in society, so it is important to continue this work. We participate in “LGBT in the workplace”, a network that we helped establish in 2017. Here we share knowledge and experience in work and actions taken.

KLP’s retirees represent a valuable source of labour and expertise for the company. KLP aims to have a senior policy that motivates employees to stay in work for the benefit of KLP, society and not least the individual employee. We have various schemes that help seniors who can and want to stay in work for a long time. We have our own resources and training events for seniors to provide for continuous development throughout their employment. We arrange pension courses for employees which aim to foster security, dialogue and reflection on work and retirement for every individual, so the employees know about the pension scheme and can make good choices.

We mark selected days to highlight inclusion and provide support. Among the occasions that we celebrate are Women’s Day, World Mental Health Day, Pride in Oslo, Bergen and Trondheim, and the Sami National Day.

KLP strives to provide an active internal labour market, where employees have the opportunity to develop and find new career paths within the organisation. Through 2023, we had many employees who moved into new positions where they are building careers in-house. We have taken measures taken to publicise vacant positions with tips and advice on the interview process, and articles on the intranet on various positions and the working environment in the company have produced good results.

We receive many applications for vacant positions in KLP, but it has been challenging to attract enough qualified external applicants in certain areas, particularly women. In order to attract more qualified applicants, we have participated in various training fairs, run promotions in a wide range of channels, and adapted the language and message in our ads. In 2023, we ran an internship programme in Technology and KLP Kapitalforvaltning, which gives us access to well-qualified students and is also a good tool to get women interested in KLP and the financial services industry. We also find that this programme helps us to reach out to younger workers, and it is important for us to be able to showcase our exciting projects and our social mission to be an attractive employer for students and young employees.

KLP engages in strategic competence management by identifying needs, planning, performing, and evaluating competence initiatives intended to ensure that the company, the individual manager and employee have the competence needed to attain defined goals.

We facilitate a number of internal and external competence-enhancing measures. KLP has developed its own management development programme in collaboration with an external provider. This has received good feedback. We also offer several topical and strategic leadership development activities. Staff appraisals are an important forum in which to discuss past performance and focal areas for the year ahead and to give and receive mutual feedback. These meetings are a good management and leadership tool. In 2024, we will finish implementing a new HR system with a development and learning module, which will provide new tools for measurement, insight, learning and follow-up.

Employees who wish to pursue further studies linked to their individual development plan can receive financial support for further training and education. To reinforce the message on lifelong learning and ensure that seniors have the same development opportunities as everyone else in the Group, funds have been earmarked for the provision of educational support for seniors.

In 2023, one large and two shorter employee surveys were conducted to measure job satisfaction and loyalty. The results show that we have high job satisfaction and loyalty in KLP. Employees up to age 30 show in the survey that there is increasing job satisfaction after targeted measures such as the establishment of networks, social events and professional development. Managers present their unit’s results to the employees, and measures are developed jointly. Sending out a quarterly survey has made it easier to monitor developments and adjust improvement measures along the way. Units with lower scores are followed up specially. The survey results are presented and discussed with the employee representatives and health and safety officers, who also have the opportunity to propose measures. Overall, this provides a good insight and is an important process for continuous development of a good working environment.

KLP wants employees of all ages and we work actively to attract and to retain younger employees who are developing and enjoy a good working environment. We have implemented several measures in these areas, and for 2024 this target group will be included in the main objectives.