With global emissions and temperatures continuing to increase, climate change remains an urgent challenge. At Danske Bank, we recognise our role as a leading Nordic financial institution in enabling the climate transition through the financing we provide to our customers.

In the evolving landscape of sustainable finance, the traditional approach has mainly involved allocating funds to specific projects or activities through use-of-proceeds financing or, more recently, sustainability-linked loan facilities. This practice has also been followed by Danske Bank. However, moving forward, we will adopt a broader approach to climate transition financing for companies in high-carbon-emitting sectors such as power and heat, steel, cement, and transportation, as well as for companies critical to enabling the climate transition of the economy.

A more holistic approach to transition financing
With our new approach, we are moving from solely sustainability-labelled transactions, such as green bonds and loans, to also financing the transition based on comprehensive company-level assessments of entire transition plans.

“By evaluating transition plans at the company level, we will be better equipped to support companies in high-emitting sectors with a more strategic, long-term approach to climate transition, thereby promoting systemic change rather than just project-level adjustments,” says Samu Slotte, Head of Sustainable Finance at Danske Bank.

Our new approach also encompasses the financing of companies in transition-enabling value chains. This includes, among other things, value chains within renewable energy technologies, battery technologies, energy transmission and storage, and low-carbon transport, covering everything from the extraction and input of raw materials to manufacturing and end-of-life handling of equipment.

“At Danske Bank, we see an increasing need for facilitating capital to customers in these value chains to support the scaling of technologies and practices that support climate transition,” says Samu Slotte.

In other words, with our new approach, we do not view transition finance as a specific financial product. Instead, it encompasses any financial services provided to support customers in executing their climate transition strategies at an entity level, as well as financial services for customers within transition-enabling value chains.

Better aligned with customers’ needs
As Joachim Alpen, Head of Large Corporates & Institutions at Danske Bank, describes it, our new approach is better aligned with our customers' needs.

Many large companies want to transition to net-zero carbon emissions or scale their low-carbon business solutions, aiming to increase their chances of achieving long-term financial success through managing the risks or opportunities the climate transition presents. However, transitioning or scaling can pose the risk of losing competitiveness in the short term.

"As a bank firmly dedicated to serving large organisations in the Nordics, it is crucial that we utilise the power of finance to facilitate climate transition. When our customers commit themselves to credible, long-term transitions, we commit to support them in managing the short-term challenges,” says Joachim Alpen.