Danske Bank Divests More Than 85% of Fossil Fuel Companies Following New Transition Policy

Copenhagen-based Danske Bank Group has announced the divestment of the majority of its holdings in fossil fuel companies through its Danske Invest fund management unit and Danica pension and insurance arm. The move follows the rollout of a new policy designed to evaluate companies’ low-carbon transition strategies.

The updated investment methodology, introduced early last year, focuses on supporting fossil fuel companies with credible transition plans. According to the bank, the approach was developed to reflect its customers’ investment preferences.

Erik Eliasson, Head of Responsible Investment at Danske Bank, stated that the revised fossil fuel investment strategy is consistent with the priorities of most customers, while also demonstrating the bank’s dedication to delivering competitive returns responsibly.

The framework evaluates fossil fuel companies using the bank’s Net-Zero Pathway Framework, which incorporates the Transition Pathway Initiative (TPI) and companies’ own climate goals. The assessment considers two key aspects: management quality, which reviews how companies handle emissions and address the risks and opportunities of the low-carbon transition, and carbon performance, which measures the alignment of companies’ emissions reduction targets with the objectives of the Paris Agreement.

Following the implementation of the new methodology, Danske Bank’s investment universe now includes around 270 fossil fuel-related companies, a significant reduction from approximately 2,000 in 2024.

Despite the reduced number of companies, the bank’s overall exposure to the fossil fuel sector has remained relatively stable. This is due to increased investments in certain companies that remain in the portfolio, balanced against divestments from others. The bank emphasised that it now concentrates on fossil fuel companies actively working to adapt their businesses for future sustainability.

While the policy is primarily aimed at aligning with the majority of customers’ values, Danske Bank noted that some funds remain outside the scope of the methodology to accommodate varied preferences, and others exclude fossil fuel investments entirely.

Thomas Otbo, CIO at Danske Bank Asset Management, said the bank will continue to invest in selected fossil fuel companies to reflect the structure of the global economy and energy supply. However, he added that for most investment products, the bank has chosen to be far more selective, believing this approach best serves the long-term interests of its customers.