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Sustainable lending

When we grant loans to our business customers, we enter into a long-term commitment. Because of this, we always carry out a thorough evaluation so that we fully understand the financial situation of each and every business customer. It is in the interest of both the customer and ourselves that we only grant credit when a customer is able to fulfil its obligations to us and when the customer understands the risk connected with taking out a loan.

Our ambition is to help drive the development of sustainability in the societies we operate in. This transition requires investments and funding, and it is here that Danske Bank can play an important role. We have therefore begun to incorporate environmental, social and governance (ESG) factors into our lending process and customer dialogue. As a bank, we want to support our customers in the process of transforming to a more sustainable business model.

Glenn Söderholm

Head of Personal & Business customers

Foundation for sustainable lending

From training our colleagues in sustainability to defining certain sectors that we consider to have an elevated level of risk – we have started to build the foundation for our sustainable lending. We have taken small but important steps, and we know that there is a lot more to be done. By integrating environmental, social and governance (ESG) considerations into our credit processes, we are integrating ESG even further into our core business.

 

ESG can be turned into a business opportunity

If companies do not take ESG factors into consideration as part of their business strategy, they may find themselves exposed to risks such as reputational damage and poor financial performance. However, when properly integrated into the business strategy, ESG factors can be turned into business opportunities. 

One example of a potential environmental risk is waste management. If managed improperly, waste management could have a negative impact on a company. Globally, a third of all food is wasted, which is detrimental to the environment. For supermarkets, throwing away food that has passed its expiry date it is costly and it could also damage the supermarket’s reputation with the public. To tackle this issue, several Nordic supermarkets are working to minimise waste by reducing the price of food that is near its expiry date or by using this food in their cafeterias.

The chemical industry is an industry subject to several ESG risks. In this industry, social factors such as product safety and the health and safety of the employees are particularly important ESG factors to be taken into consideration. Companies need to have the relevant environmental permits and processes in place for handling toxic gasses properly. Risk can be mitigated by ensuring that all employees involved in the production of chemicals have received appropriate training and know how to deal with accidents. By doing this, companies can turn risk into a business opportunity, which may ultimately help attract and retain employees.

Bringing ESG into our everyday work

We started incorporating ESG into our credit policy in 2015, and today we are working on integrating ESG into all lending processes for business customers.

This means we have to gain an understanding of each customer’s business model and understand how our customers work with and address sustainability. We also need to understand how a customer would handle any ESG dilemmas or controversies that may arise. By looking at every aspect of a company, and through our normal business interaction, we can evaluate the extent of a company’s own ESG integration. We do this in the same way as we assess the risks and opportunities facing our customers when we lend to them. 

Our customers expect us to have a solid understanding of their company and to safeguard their financial interests. When we talk to our customers about ESG, we work on creating a shared understanding of risks and opportunities – and on the impact these risks and opportunities can have for our customers. By doing so, we believe that we can bring value to our customers and help them systematically integrate sustainability into their business. And this will enable them to prosper. 

Christel-Marie Edvardsen

Branch Manager, Business Center
SE

Our ESG principles

We do not grant loans to customers who we believe disregard or deliberately violate UN-based principles on environmental protection, human rights, labour rights and anti-corruption. Our credit policy forms the basis for the lending process and includes our principles for ESG. These principles are enforced when we carry out screening and conduct customer assessments.

Policy


Our Credit Policy highlights ESG as one of the key principles in the credit assessment process. The Credit Policy and supporting instructions specify the specific requirements of ESG risk management in the daily credit process.

ESG Assessments


We perform in-depth ESG analysis similar to how we assess financial key figures. By gathering information from customers, data providers, publicly available data and others, we are able to examine a company's past performance, regulatory compliance and sustainability commitment. The ESG assessments also evaluate customers’ alignment to the Group’s position statements.
Read our Publications & policies

Training our ESG skills 

Training is an essential aspect of our work with ESG. By building up our ESG skills and knowledge, we are able to create a shared understanding with our customers of their ESG risks and opportunities. We use real cases and dilemmas in our training sessions to encourage good discussions and to improve our own skills. 

Training is just one part of our work to integrate ESG factors alongside financial factors into our lending process. Others elements include developing an IT-supported scoring tool, developing supplementary training and improving our sector guidelines even further.