Danske Bank Asset Management tightens restrictions on fossil fuels

Going forward, Danske Bank Asset Management will not invest in companies deriving more than 5% of their revenue from thermal coal, tar sands or peat. These enhanced restrictions are part of phasing out investments in these fuel types by 2040 in support of the Paris Agreement.

As part of Danske Bank Asset Management’s commitment to supporting the green transition and to protecting and growing our customers’ investments, we have decided to tighten our current investment restrictions on thermal coal and tar sands and have introduced a new restriction on peat-fired power generation.

Hence, we have implemented stricter investment restriction criteria on thermal coal and tar sands by lowering our threshold from 30% to 5% of revenue. In addition, we will not invest in companies deriving more than 5% of their revenue from peat-fired power generation. Furthermore, we refrain from investing in companies expanding thermal coal mining, coal-fired power generation and peat-fired power generation. These enhanced 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.

“The energy sector is undergoing rapid change, so it is vital we enhance our approach in order to ensure that our customers’ investments are positioned for the green energy transition. The tighter restrictions will essentially strengthen our ability to mitigate risks and unlock opportunities associated with the low-carbon transition. This supports our ambition to invest our customers’ assets in accordance with their values, while delivering attractive returns and supporting society in decarbonizing the economy.” Christian Heiberg, Head of Danske Bank Asset Management

Danske Bank Asset Management’s investment restriction list now consists of 790 companies, with 26 of these being restricted because of tar sands and 343 companies restricted due to thermal coal activities. See the full list here.

Danske Bank Asset Management’s updated investment restrictions

Danske Bank Asset Management does not invest in companies that derive more than 5% of their revenue from:

tar sands extraction.
thermal coal activities, including surface mining/opencast mining, underground mining/deep mining or power generation.
peat-fired power generation.

Danske Bank may make exemptions if a company can demonstrate credible transition targets and meets level 3 criteria of the Transition Pathway Initiative framework.

Supporting the green transition through active ownership

A key element in achieving the climate goals set out in the Paris Agreement is that companies reduce their climate footprint, and as a responsible investor, Danske Bank Asset Management wants to encourage and support companies transitioning from a carbon-intensive business model. Therefore, we can exempt companies from being restricted if they are able to demonstrate their commitment to phasing out thermal coal, tar sands and peat activities in alignment with the Paris Agreement.

“As an investor, we have a vital role to play in driving the low-carbon transition and in shaping tomorrow’s companies. By using the Transition Pathway Initiative framework, we can objectively assess whether companies have credible transition plans and so target our engagement with those companies that are in a transition phase and use our power to support their journey. This enables us to actively foster change and encourage companies to, for example, increase the production and use of renewable energy sources, embrace the business opportunities sparked by the transition and help achieve the climate goals of the Paris Agreement,” concludes Christian Heiberg.

Danske Bank Asset Management can apply exemptions if a company meets the level 3 criteria of the Transition Partway 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. Learn more about the framework and criteria here.

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