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Screening and restrictions

Identifying the risks related to environmental, social, governance (ESG) and norms that can affect the financial performance of investments and have a negative impact on society is an integral part of our responsible investment processes. At Danske Bank, screening and investment restrictions are applied to all our investment solutions, which supports our ambition to reduce sustainability risks and to select investments that can deliver attractive and long-term returns.

Creating value for the investment process and for customers

Investments are screened on an ongoing basis, and it is an important tool for our investment teams. Screening is used both in the analysis of an investment’s ESG factors and in the investment teams’ active ownership activities. Screening gives our investment teams a deeper knowledge of how companies are working with ESG, and it enables the teams to mitigate investment risks. At the same time, screening can help identify positive investment opportunities for the benefit of our customers.

You can read more about our integration of sustainability risk in our Responsible Investment Policy

Nobina regards the transition to a green economy as a business opportunity and a way of strengthening its market position – and also as a way to minimise the risk of being insufficiently future-proofed. Many cities already require that busses be powered solely by green energy, and we expect more cities to impose similar or stricter requirements on bus transportation in the future. That’s why it is important that Nobina future-proofs its busses at an early stage.

Joel Backesten

Portfolio Manager

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 ’.

Screening in the investment process

Based on data from a number of ESG data providers, the investments are screened to identify business-critical sustainability risks. Screening also helps assess whether companies comply with international norms and standards for corporate social responsibility. Screening is based on, among other things, the principles set out in the UN Global Compact and the OECD Guidelines for Multinational Enterprises. Moreover, screening helps us to identify companies that, for example, contribute to climate change, have harmful environmental practices or inadequate labour and human rights standards.

On the basis of screening, investment analysis and dialogue with companies, investment teams may choose to increase, reduce or divest themselves of specific investments. We may also choose to impose an investment restriction on individual companies.

Systematic monitoring

Our risk department works independently of our investment teams and helps the teams to have a structured process for managing, addressing and mitigating relevant risks – including sustainability risks. The department includes sustainability specialists who, for example, spar with investment teams about whether sustainability risks are sufficiently integrated into investment decisions or how active ownership can contribute to mitigating risks.

The sustainability specialists also discuss how investment teams can promote environmental or social characteristics of our ESG investment products.

A systematic process to assess and monitor sustainability risks is a key element in ensuring that we constantly look after customers’ interests and meet their expectations.

Christian Vestergaard Paulsen

Head of Portfolio Risk Advisory

Restricting companies

To manage and mitigate the sustainability risks that can affect the value of investments, Danske Bank imposes investment restrictions on a number of companies, which also help to reduce adverse sustainability impacts. The investment restrictions include equity and corporate bonds for the investment universe.

  • Thermal coal and tar sand are two of the energy sources with the highest levels of CO2 emissions. Tar sand is one of the most CO2-intensive ways to produce crude oil, and it emits three times as much CO2 as conventional oil. Thermal coal also emits a high level of other pollutants. We do not believe that increasing activity related to these forms of energy is a responsible way of dealing with climate risks – and such activity is detrimental to the environmental and contributes significantly to global warming. Because of this, we do not invest in companies that derive more than 5% of their revenue from thermal coal mining, thermal coal energy or a combination of these. Nor do we invest in companies that derive more than 5% of their revenue from the extraction of oil from tar sands or peat-fired power generation.

    These restrictions are part of our commitment to phasing out investments in companies involved in the three fossil fuel types by 2030 in the EU and OECD and by 2040 in the rest of the world, in line with the requirements of the Paris Agreement.

    We may make exemptions if a company can demonstrate credible transition targets for coal and meets level 3 criteria of the Transition Pathway Initiative framework. This includes setting quantitative targets for reducing GHG emissions, disclosing scope 3 GHG emissions and being transparent about lobbying activities related to the climate agenda.  

    These restrictions are based on Danske Bank’s Sustainability Position Statements.

    See excluded companies

  • Danske Bank does not invest in companies with direct or indirect involvement in controversial weapons, i.e. weapons that are prohibited by international law or considered to be controversial because of the arbitrary damage they cause. Such weapons include cluster munitions, anti-personnel mines, biological and chemical weapons and nuclear weapons. These restrictions are based on Danske Bank’s Sustainability Position Statements.

    See excluded companies

  • Danske Bank does not invest in companies that derive more than 5% of their revenue from growing, processing or producing tobacco products. This includes products that are wholly or partly based on leaf tobacco and so-called next-generation tobacco products such as electronic cigarettes and snus.

    See excluded companies

  • Danske Bank excludes companies that are involved in ESG-related controversies and activities that our customers and Nordic societies consider to be unethical and contrary to their norms. Any decision we make to exclude companies in relation to breaches of norms is based on multiple factors: data from ESG data providers; screening against international norms, such as the UN Global Compact and the OECD Guidelines for multinational enterprises; dialogue with customers; and input from investment teams and other relevant stakeholders.

    For example, we exclude companies that act in a way that is detrimental to the climate, damage biodiversity, contribute to water pollution, violate human rights, have inadequate labour standards or are involved in corruption.

    See excluded companies

Restrictions adapted to customer needs

Our customers have different needs and values, which is why we also offer investment products that have additional restrictions for certain sectors, activities or products. These can include restrictions on, for example, alcohol, gambling, pornography, fossil fuels and military equipment.