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Sustainability risks are incorporated into investment decisions

At Danske Bank, our ambition is to provide attractive, risk-adjusted returns for our customers. To help us achieve this, we analyse environmental, social and governance (ESG) factors for all our investment products. We believe that this is the way to systematically mitigate sustainability risks and to create the most value for our customers. Additionally, we have products that promote ESG characteristics. You can read more about our integration of sustainability risk in our Responsible Investment Policy

Creating value for the investment process

Our investment teams are responsible for incorporating sustainability risks into their investment analyses and investment decisions. By analysing ESG factors in conjunction with financial factors, our teams gain greater insights into their investments and can identify sustainability risks and investment opportunities. We believe this approach provides the greatest value because it enables our investment teams to make the best possible investment decisions for the benefit of our customers.

ESG investment products

We offer a range of investment products that not only incorporate sustainability risks but also promote environmental or social characteristics and ensure good governance practices (ESG). We call these ESG investment products. These products promote ESG by, for example, investing in companies that focus on climate and employee conditions, diversity or anti-corruption activities. They can also work actively to influence companies to become more sustainable or to refrain from investing in companies with a significant and detrimental climate impact.

Our ESG investment products comply with Article 8 of the EU’s ‘Sustainable Finance Disclosure Regulation’.

Funds with a sustainable investment objective

We offer products that in addition to considering sustainability risks also have one or more sustainable investment objectives. We call these funds with a sustainable investment objective. These products invest in activities that contribute to solving some of the earth’s challenges and creating a more sustainable society. They can, for example invest in companies that work towards the green transition or work to tackle climate change, ensure clean drinking water, prevent pollution, protect the environment, promote biodiversity, ensure greater social equality or contribute to the UN Sustainable Development Goals in other ways. Moreover, these investments do no significant harm on sustainable objectives.

Our funds with a sustainable investment objective comply with article 9 of the EU’s ‘Sustainable Finance Disclosure Regulation ’.

Tailored sustainability analyses

Investments have different characteristics and are affected differently by ESG factors. For this reason, the individual  investment team tailors the ESG analysis to the specific investment strategy and asset class in order to create value for investment decisions. This is something that we do for all our customers’ investments.


Working systematically with sustainability risks

Investment teams identify and assess the sustainability factors that pose risks and potentially have a negative impact on the return potential of investments, and as part of the process, companies are analysed to evaluate if they meet international norms and standards for corporate social responsibility (read more here). By having a structured process in place to analyse sustainability factors, investment teams can systematically manage and mitigate the potential sustainability risks of investments.

Lars Erik Moen

In future, the climate-related demands on companies will only increase, and this will affect companies’ business models and financial results alike. For this reason, portfolio manager Lars Erik Moen monitors the carbon footprints of companies and follows the initiatives these companies are taking to reduce their climate impact. By doing, he is able to mitigate the potential risk that a company is incorrectly valued in relation to the climate challenges it faces.

Read the story on page 12

One of the key challenges in the construction and real estate sector is to report and manage the sustainability work of sub-contractors. Portfolio manager Emelie Holmstöm focuses specifically on this area – not least because of the increasing demands on the supply chain in this sector. 

Read the story on page 18

Risks and opportunities within the climate agenda

Climate change and the green transition generate a wide range of risks and opportunities that affect companies and their future value creation. How a company handles climate-related aspects determines whether or not the company is an attractive investment. Our investment teams analyse this to identify and manage climate-related risks and opportunities for the companies in which they invest. 

Danske Bank’s ‘Climate: Our Climate Approach’ report provides examples of work undertaken by our investment teams on climate issues in the paper industry, the energy and finance sector, and the copper and transport sector.

Sustainability analyses based on a strong foundation

Investment teams use a number of ESG tools to systematically identify and analyse sustainability risks.
  • We have developed our proprietary ESG analytical tool – mDASH® – which identifies companies’ sustainability risks and opportunities in relation to ESG factors. mDASH® organises and categorises data from companies and external data providers so that our investment teams can cut through ‘information noise’ and identify and analyse business-critical sustainability factors. The tool helps our investment teams assess how specific companies are managing and progressing with sustainability risks and ESG factors in order to protect customer investments and deliver attractive returns.

    Learn more about mDASH® here

  • To ensure a systematic incorporation of sustainability risks and ESG factors, our investment teams use our data platform consisting of high-quality ESG data. This platform consists of more than 8,000 data points on companies’ ESG aspects from 11 different ESG data providers. Our investment teams use this data to analyse and evaluate how companies handle ESG aspects, which provides the teams with deeper insight into their investments. The platform provides investment teams with a holistic understanding of each company’s sustainability risks and ESG-related opportunities, all of which the teams incorporate into their investment analysis.

    Read more the ESG data platform

  • By screening the investment universe to identify and understand the companies’ sustainability risks and opportunities, our investment teams are able to mitigate risk or identify investment opportunities. Screening is also used to identify companies that potentially are in breach with international norms and standards.

  • We have a team of ESG specialists who support our investment teams in systematically analysing and identifying business-critical ESG aspects and in incorporating sustainability risks into the investment process.

  • Our investment teams and ESG specialists are trained on an ongoing basis to strengthen their skills within the area of ESG. This ensures that we can constantly improve and develop the work of incorporating ESG and sustainability risks into the investment process. The investment teams and ESG specialists receive training programmes from external certification institutions, and many have received, for example, EFFAS Analyst certification.

ESG Integration Council

Our ESG Integration Council guides the implementation of the strategy for responsible investments and discusses issues relevant to the entire investment organisation across asset classes and investment strategies. For example, the council discusses and evaluates sustainability risks and dilemmas, discusses investment restrictions or decides on new active ownership initiatives. The ESG Integration Council consists of chief portfolio managers and investment heads.

Sustainability risks are reflected in our remuneration policy

Sustainability risks are included in the overall risk parameters for the remuneration policy. In addition, the remuneration policy takes into account the fact that when investment teams invest on behalf of customer they do not have a financial incentive to take inappropriate sustainability risks that may lead to negative consequences for customers’ returns.

Learn more