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Danske Bank introduces stricter requirements for fossil fuel companies

Danske Bank introduces a new policy for its investment management activities in Asset Management and Danica Pension. The new policy sets stricter requirements for investment in fossil fuel companies to ensure that they have Paris Agreement-aligned transition plans.

80% of the world’s energy supply still comes from fossil fuels, and the International Energy Agency (IEA) estimates that fossil fuels will continue to be part of the global energy supply and economy towards 2050 as we gradually transition to renewable energy.

However, to meet the goal of the Paris Agreement of limiting global warming to no more than 1.5°C is, a gradual phase-out of fossil fuels is essential.  

Danske Bank supports the Paris Agreement and shares the view of the IEA. Consequently, and reflecting the overall economy and global energy supply, we will continue to be invested in fossil fuels companies, but phase out our investments over time, as we work to support the transition of fossil-based energy companies and support a gradual phase-out of fossil fuels from the global economy. 

With our new policy, we are introducing stricter requirements to determine which companies we will invest in.

Erik Eliasson

Head of Responsible Investments, Danske Bank

Significant reduction in fossil fuel investments since 2020 

Since 2020, Danske Bank’s has reduced its total investments within its asset management activities in fossil fuel companies by approximately 30%, and today such investments account for less than 3% of our total investments. This is less than half the level in the international MSCI World equity index, in which fossil fuel companies account for 7.5%. 

To further reinforce our requirements towards fossil fuel companies, we are introducing a new approach to assess fossil fuel companies in a range of our investment strategies.  

Fossil fuel companies will now need to meet an increased number of requirements before we can invest in them on behalf of our customers.

To determine whether a fossil fuel company can be included in the investment strategies covered, we will assess the company using a model based on data and methodologies from the Transition Pathway Initiative (TPI) and science-based data from other data sources. Taken together, the company’s data score will provide us with a fact-based foundation to determine whether the company can be assessed as having a realistic plan for transition in line with the goals of the Paris Agreement, which will be a determining factor for our ability to invest in the company on behalf of our customers.  

Danske Bank already has strict fossil fuel restrictions in place for around 15% of all assets under management. The new approach will cover an additional 70% of total assets, which means that around 85% of all assets will be subject to fossil fuel assessment criteria.  

Applying the new model and restricting investment only to companies that have viable transition plans is expected to result in a significant reduction in the number of companies involved with fossil fuels in our investment universe, from almost 1,900 to around 170.

New policy applies to the entire Danske Bank Group 
The new approach for assessing fossil fuel companies will apply to investment strategies in Danske Invest and Danica Pension.  

“With our new policy, we are introducing stricter requirements to determine which companies we will invest in, and in our investment strategies we are reducing the number of companies that are involved with fossil fuels from around 1,900 to 170. This means that the investment strategies covered invest only in companies that have plans to transition in line with the goals of the Paris Agreement,” says Erik Eliasson, Head of Responsible Investment at Danske Bank. 

The policy will be phased in over the coming years and will initially cover investment strategies provided in Denmark, Sweden, Finland and Luxembourg as well as Danica Balance funds. 

Our updated policy and stricter requirements for companies involved with fossil fuels is expressed in our Position Statement on Fossil Fuels and is aligned with our sustainability strategy and our Climate Action Plan, which covers the entire Danske Bank Group.  

How we assess companies involved with fossil fuels  

The model we are now introducing assesses companies on the basis of two parameters. The first is the company’s greenhouse gas emissions, and the second is the company’s governance, including how well the company handles its greenhouse gas emissions and its transition risks and opportunities. Following this, we assess whether the company’s transition plan is aligned with meeting the goals of the Paris Agreement.

We place companies into one of four categories, in accordance with the Net Zero Investment Framework (NZIF).

  • A company is placed in the ‘Aligned’ category if it is already on a net-zero transition pathway.
  • A company is placed in the ‘Aligning’ category if it is progressing towards achieving a net-zero transition pathway – and by exercising active ownership as an investor, we will closely monitor the company’s transition.
  • If the company’s transition plans are not adequately viable or non-existent, it will be placed in the ‘Committed’ or ‘Not aligned’ categories respectively.



to net-zero pathway

Progress continuously monitored

towards net-zero pathway
Subject to time-bound engagement
towards net-zero pathway
Not aligned
/not transitioning to net zero