Danske Bank Implements New Fossil Fuel Investment Method

Danske Bank has completed the implementation of a new methodology for investments in fossil fuel companies across its Danske Invest and Danica investment products. This new approach, announced in February 2024, focuses on companies with credible transition plans to support a shift toward a more sustainable society.

The bank's investment strategy is now more selective, reducing its investment universe of fossil fuel-related companies from approximately 2,000 in 2024 to around 270. Erik Eliasson, Head of Responsible Investment, Danske Bank, said the new methodology aligns with the preferences of most customers while aiming for competitive returns. The bank stated that while a number of fossil fuel companies have been divested, its overall exposure to the sector remains largely unchanged due to increased investments in other companies.

The new methodology assesses fossil fuel companies using a Net-Zero Pathway Framework model based on data from the independent Transition Pathway Initiative (TPI) and the companies' own climate targets. This model evaluates two dimensions: management quality, which assesses how companies manage emissions and related risks, and carbon performance, which measures emissions reduction targets against Paris Agreement goals.

Thomas Otbo, CIO, Danske Bank Asset Management, stated that the bank will continue to invest in fossil fuel companies to reflect the global economy and energy supply but will do so more selectively for most of its investment products. The methodology affects a small portion of the bank's total investments, as fossil fuel companies constitute a limited share of its portfolios.