Danske Bank has completed the rollâout of a new methodology for investing in fossil fuel companies across its Danske Invest and Danica investment products, as first announced in February 2024. The approach aims to prioritise firms with credible, dataâdriven transition plans towards net zero.
Under the revised strategy, the number of fossil fuelârelated companies in the bankâs investment universe has been reduced dramaticallyâfrom around 2,000 in 2024 to roughly 270 by midâ2025.
Erik Eliasson, Head of Responsible Investment at Danske Bank, emphasised the alignment with customer values: âOur new fossil fuels investment approach aligns with the preferences of the majority of our customers while underscoring our commitment to achieving competitive returns on a responsible basis.â
Thomas Otbo, CIO at Danske Bank Asset Management, added that while fossil fuel companies remain a component of the global economy and energy supply, the bank has chosen to adopt a more selective approach: âWe will continue to invest in companies working in the fossil fuel sector to reflect the global economy and global energy supply. However, we have become even more selective for most of our investment products, and we firmly believe this is in the best longâterm interest of our investment customers.â
The bank employs a NetâZero Pathway Framework, informed by the independent Transition Pathway Initiative (TPI), to assess companies based on two key dimensions:
- Management quality, considering governance, policy integration, disclosures, and board oversight
- Carbon performance, evaluating emissions targets and alignment with the Paris Agreement goals
While this methodology has led to divestment from a number of fossil fuel firms, overall exposure to the sector remains modest, reflecting the bankâs strategy of balancing sustainability and financial performance.
