KEF, Alm.del - 2022-23 (2. samling) - Bilag 143: Materiale fra Danske Bank ifm. foretræde den 30/3-23

Klima-, Energi- og Forsyningsudvalget 2022-23 (2. samling)
KEF Alm.del Bilag 143
Offentligt

Danske Bank’s

Climate Action Plan

Our Roadmap to Net Zero

January 2023

KEF, Alm.del - 2022-23 (2. samling) - Bilag 143: Materiale fra Danske Bank ifm. foretræde den 30/3-23

Contents

Message from our CEO

Our role in the green transition

Our plan to achieve net zero

Lending

CLIMATE ACTION PLAN

About this report

Our Climate Action Plan covers the activities of the Danske Bank Group.

The report provides an overview of our targets, actions and initiatives in

relation to our climate efforts.

We have committed to setting science-based targets and have submitted

our targets for validation by the Science Based Targets initiative (SBTi). The

targets may change as a consequence of the validation process.

The Climate Action Plan includes information that is subject to

uncertainties stemming from limitations in underlying methodologies

and data. In our analysis and target-setting, we have deployed estimates

based on various frameworks and methodologies as discussed

throughout the Climate Action Plan and in the appendices. As methods

and data availability is constantly evolving, updates to methodologies and

assumptions may result in different conclusions.

In alignment with net-zero recommendations, targets, actions and initiatives

in relation to our climate efforts requires forward-looking parameters and

longer-term time horizons to account for the nature of climate change. The

forward-looking statements made in this report reflect our current view of

future events and are based on expectations, projections and estimations

that involve large uncertainties and risks, including, but not limited to,

future market conditions, changes in regulation and realisation of plans and

strategic objectives. The forward-looking assessments may therefore be

subject to change and should not be viewed as reliable indicators of future

performance or as complete or accurate accounts of actual performance.

Caution must therefore be exhibited when interpreting this report.

The achievement of our set targets is dependent on the collaboration with

and the initiatives of our customers, investee companies, and international

and domestic governments.

The developments towards our sector may not be linear as development in

technologies and other fundamental circumstances may affect individual

sectors year on year.

This publication has been prepared for information purposes only, and it is

not to be relied upon as investment, legal, tax, or financial advice.

We expect data quality and coverage to increase over the coming years,

driven by increased reporting and disclosure obligations. New and improved

guidance and scientific research is also expected, and Danske Bank

reserves the right to update targets, methodologies and approaches and to

perform relevant restatements of baselines when relevant.

Get in touch

We welcome any comments, suggestions or questions you may

have regarding this report or our performance. Please send an

email to [email protected].

You can stay up to date on the most recent developments at

danskebank.com/sustainability, and you can follow Danske Bank

on Twitter, LinkedIn and Instagram.

KEF, Alm.del - 2022-23 (2. samling) - Bilag 143: Materiale fra Danske Bank ifm. foretræde den 30/3-23

Asset management

Life insurance and pension

Own operations

Looking to the future

Appendix

CLIMATE ACTION PLAN

Contents

Message from our CEO

Our role in the green transition

Our plan to achieve net zero

Danske Bank Group targets

Approach to climate action

Lending – Supporting our customers’ transition

Lending targets

Shipping

Oil and gas

Power generation

Other carbon-intensive sectors (steel and cement)

Commercial real estate

Personal mortgages

Agriculture

Approach to advisory services and solutions

New technologies

Asset management – Enabling investments in the green transition

Asset management targets

Approach to climate investing

Life insurance and pension – Facilitating investments in the green transition

Life insurance and pension targets

Approach to decarbonising our portfolios

Own operations – Reaching net zero

Own operations targets

Approach to reducing our own environmental footprint

Looking to the future

Appendix

Appendix 1 – Lending

Appendix 2 – Asset management

Appendix 3 – Life insurance and pension

Appendix 4 – Own operations

Appendix 5 – Abbreviations

KEF, Alm.del - 2022-23 (2. samling) - Bilag 143: Materiale fra Danske Bank ifm. foretræde den 30/3-23

Contents

Message from our CEO

Our role in the green transition

Our plan to achieve net zero

Lending

CLIMATE ACTION PLAN

We have the

responsibility

and ability

to make a

difference.

KEF, Alm.del - 2022-23 (2. samling) - Bilag 143: Materiale fra Danske Bank ifm. foretræde den 30/3-23

Asset management

Life insurance and pension

Own operations

Looking to the future

Appendix

CLIMATE ACTION PLAN

Dear reader,

Over the coming decades, climate

change will remain the greatest chal-

lenge facing our societies, posing risks to

lives and livelihoods, to business models,

financial assets and to our very way of

life on planet Earth.

Although climate change represents a

profound threat to our societies and the

global economy, the green transition

is also a commercial opportunity for

entrepreneurs and businesses that work

to provide ideas and solutions that make

this transition possible. And the green

transition provides opportunity for all of

us to reinvent our economies to make

them more resilient and sustainable.

A profound responsibility

At Danske Bank, we are committed to

playing a leading role in supporting the

green transition to a low-carbon society.

And as Denmark’s largest bank and one

of the largest financial institutions in the

Nordic countries, we have the respon-

sibility and ability to make a difference

– for our around 3.3 million customers,

and more broadly in the societies we

are a part of. We contribute by providing

specialist financial advice and by financ-

ing our customers’ transition to a more

sustainable future.

The main challenge in fighting climate

change is to transition to a low-car-

bon energy system. Today, the energy

produced from fossil fuels that keeps

our lights on, heats or cools our homes,

transports our goods and fuels their

production accounts for around 75% of

carbon emissions globally. To pivot our

societies away from fossil fuel dependen-

cy, we need to build a resilient and sus-

tainable energy system. To succeed, we

need to significantly expand the supply of

renewable energy while at the same time

making the necessary investments on

the demand side to enable the adoption

of new electric and low-carbon technolo-

gies as well as continuing to drive energy

efficiency.

Danske Bank plays a critical role by

helping households and businesses to

invest in energy efficiency and to transi-

tion towards clean energy sources. We

also support the development of a more

sustainable energy supply by working

with energy utilities and oil and gas com-

panies to finance the development and

expansion of renewable energy, reduce

emissions and speed up the transition to

a low-carbon energy system.

We fully support the transition

The challenge ahead is not merely to

work with companies that are already

green today. As a bank that works

across all areas of the economy, our role

is to engage with our customers and in-

vest in companies that have the potential

– and the commitment – to support the

transition to a low-carbon society.

At Danske Bank, we have made major

strategic commitments to leading inter-

national frameworks, thereby expressing

our commitment to transition our busi-

ness activities to net zero. In 2019, we

became a signatory of the UN Principles

for Responsible Banking, and during

2020 and 2021 we became members

of the Net-Zero Asset Owner Alliance,

the Net Zero Asset Manager Initiative

and the Net-Zero Banking Alliance.

These commitments require us to align

our core strategy, governance, lending

and investments with the objectives

of the UN Sustainable Development

Goals and to set ambitious intermediate

targets in line with the best available

scientific research while continuously

reporting on execution and progress

towards becoming net zero by 2050 or

sooner.

Targets will steer our path towards

net zero

To deliver on the commitments, we

have set intermediate 2030 targets for

carbon emission reductions across our

lending and investment portfolios, includ-

ing for the most high-emitting sectors

within our activities as well as for our

own operations. And to ensure that our

efforts are consistent with the goals of

the Paris Agreement, we have sent our

targets to the Science Based Targets

initiative to validate that our methodol-

ogies are based on the latest scientific

research and that our targets are in

alignment with limiting global warming

to 1.5°C.

We have worked hard to set targets for

our business and develop the tools and

the systems to measure and assess our

climate impact. This includes disclosing

our financed emissions baseline, setting

intermediate net-zero targets, outlining

our strategic actions, and enabling us

to transparently report on our progress

towards achieving the goals we have set

for ourselves, our customers and society.

Creating sustainable progress for

generations to come

At Danske Bank, we unite around our

purpose of releasing the potential in peo-

ple and businesses by using the power

of finance to create sustainable progress

today and for generations to come. As

a leading Nordic bank, we want to play

a key role in the sustainability transfor-

mation. We have a clear ambition to

lead on sustainable finance in the Nordic

countries, and to be the leading bank for

sustainable finance in Denmark.

The challenges ahead are daunting, but

in addressing these challenges we will

continue to play the role that we have

always played. For 150 years, we have

helped our customers adapt and benefit

from new times and opportunities, and

we remain committed to continuing to

do so, as we advance on the journey

towards a low-carbon society.

Carsten Egeriis

Chief Executive Officer

Danske Bank

KEF, Alm.del - 2022-23 (2. samling) - Bilag 143: Materiale fra Danske Bank ifm. foretræde den 30/3-23

Contents

Message from our CEO

Our role in the green transition

Our plan to achieve net zero

Lending

CLIMATE ACTION PLAN

Our role in the green transition

Transforming the global economy to net

zero will require a revolution on the scale

of the industrial revolution and at the

same pace as the digital revolution.

This will call for investments on an

enormous scale, and the financial sector

must therefore play an instrumental role

in helping to raise the capital needed

and in helping to ensure capital is used

constructively and allocated in line with

the objectives of the 2050 net-zero

ambitions.

The International Energy Agency (IEA)

has estimated that the world needs to in-

vest between USD 4 and 5 trillion every

year between now and 2050 to reach

a net-zero economy. This corresponds

to more than USD 120 trillion over the

coming decades, or 25% more than the

current global GDP.

Raising capital is only part of the

challenge

Investments and capital flows on this

scale will offer historic opportunities for

growth, innovation, job creation and com-

mercial progress. But capital investment

of this magnitude also brings signifi-

cant risks of misallocation and wasted

resources.

Raising sufficient amounts of capital to

support the sustainability transformation

is therefore only part of the challenge.

It will be of equal importance to ensure

that this capital is used constructively

and allocated towards projects and ac-

tivities that are socially, environmentally

and commercially sustainable.

Striking this balance by carefully assess-

ing risks and opportunities is exactly

what banks do, which is why the finan-

cial sector must play a crucial role as a

catalyst for the green transition over the

decades to come.

A catalyst for change

For 150 years, Danske Bank has played

a key role in major transformations of

the societies we are part of, and we are

committed to acting as a catalyst for

change and to helping our customers

adjust and benefit from new opportuni-

ties by offering investment, savings and

financing opportunities.

Our portfolio covers most sectors,

including sectors with a material carbon

footprint. This means that Danske

Bank is both part of the current climate

challenge and a catalyst for the needed

transition. As a leading Nordic bank

we see it as our obligation to achieve a

net-zero portfolio through supporting our

customers in their green transitions.

At Danske Bank, we are committed to

ensuring that our financing activities

are aligned with the Paris Agreement

and with the goal of achieving a net-zero

economy by 2050. To avoid any discrep-

ancy between our commitments and our

actual achievements – between ambition

and action – we have set 2030 emis-

sion reduction targets for the four main

impact areas of our business.

Our four impact areas

Lending:

the money we lend to cus-

tomers

Asset management:

the invest-

ments we make on behalf of our

customers

Life insurance and pension activi-

ties:

the pension assets we manage

on behalf of our beneficiaries

Own operations:

the emissions we

generate through daily business

operations

There are several challenges and uncer-

tainties in relation to data and methodol-

ogies when measuring CO

equivalent

(CO

e) emissions,

but according to our

IEA (2021): Net Zero by 2050 - A Roadmap for the Global Energy Sector

See appendix 1, 2, 3 and 4 for methodological considerations, data sources and limitations.

KEF, Alm.del - 2022-23 (2. samling) - Bilag 143: Materiale fra Danske Bank ifm. foretræde den 30/3-23

Asset management

Life insurance and pension

Own operations

Looking to the future

Appendix

CLIMATE ACTION PLAN

Scope 1, 2 and 3 explained

The GHG Protocol Corporate Standard classifies a company’s green-

house gas (GHG) emissions into three ‘scopes’.

• Scope 1

emissions are emissions from company owned or controlled

sources and therefore known as direct emissions, e.g. from vehicles.

• Scope 2

emissions are emissions from the generation of purchased

energy and are therefore known as indirect emissions, e.g. from elec-

tricity.

• Scope 3

emissions occur in the company value chain, including both

upstream and downstream emissions, and are therefore known as in-

direct emissions (not included in scope 2), e.g. from the supply chain.

For financial institutions, the largest source of scope 3 emissions

is financed emissions, which are generated as a result of financial

services, investments and lending. These emissions fall under scope

3 category 15 in the Greenhouse Gas Protocol.

Source: Adopted from the Greenhouse Gas Protocol

Figure 1.1: Danske Bank impact areas and its measured CO

e emissions

Lending

The money we lend to

customers

Measured CO

emissions

18.8 million tCO

(2020)

Scope and coverage

Scope 3

92% of corporate and personal

customers portfolio

Asset management

The investments we make on

behalf of our customers

Life insurance and pension

The pension assets we manage

on behalf of our beneficiaries

Own operations

The emissions we generate

through daily operations

16.6 million tCO

(2020)

5.7 million tCO

(2020)

0.007 million tCO

(2022)

Scope 3

68% of assets under

management

Scope 3

73% of assets under

management

Scope 1, 2, and

selected scope 3

categories

>99.9%

<0.02%

current calculations, our entire carbon

footprint amounts to 41.1 million tonnes

of CO

e emissions across scope 1, 2

and 3 in the Group.

As can be seen from figure 1.1, the vast

majority of our carbon footprint (more

than 99.9%) comes from scope 3 cat-

egory 15 – financed emissions relating

to the emissions of our customers and

companies we invest in. Within scope 3,

we measure the most financed emis-

sions within our lending activities, which

accounts for around 18.8 million tonnes

of CO

e, equalling around 46% of our

carbon footprint. This is followed by our

second impact area, asset management,

where we measure around 16.6 million

tonnes of CO

e emissions, equalling

around 40% of our total emissions. In

our third impact area, life insurance and

pension, we measure 5.7 million tonnes

of CO

e emissions, equalling around

14% of our total emissions.

In comparison, our own direct emissions

are very limited, accounting for only

around 0.007 million tonnes of CO

equivalent to around 0.02% of our total

emissions.

We will therefore be able to achieve

the most significant positive impact in

collaboration with our customers and

investee companies.

As a lender, we offer financing solutions

that allow our customers to invest in

sustainable change – whether it is a

family choosing an energy improvement

loan for a more energy-efficient home, a

business switching to an electrical vehi-

cle fleet or a large corporate taking

a green loan to finance projects that

have clearly defined environmental

benefits.

As an investor that invests on behalf of

our customers and our beneficiaries,

we use our position to influence and

encourage the companies we invest in to

progress in a more sustainable direction.

We also support the long-term develop-

ment and growth of these companies

by engaging in direct dialogue, voting at

general meetings and collaborating with

other investors.

By integrating climate considerations

into everything we do and by acting as a

catalyst for positive change, we intend to

turn challenges into opportunities – for

our customers and for Danske Bank. We

also aim to transform these opportuni-

ties into real sustainable change for the

societies that we are part of.

KEF, Alm.del - 2022-23 (2. samling) - Bilag 143: Materiale fra Danske Bank ifm. foretræde den 30/3-23

Contents

Message from our CEO

Our role in the green transition

Our plan to achieve net zero

Lending

CLIMATE ACTION PLAN

Our plan to achieve net zero

Committed to reaching net zero

Danske Bank has committed to become a

net-zero bank by 2050 or sooner, and this

commitment steers our climate efforts

and the impact we want to have. We

joined the UN-supported Principles for

Responsible Investment (PRI) in 2010,

and following the adoption of the Paris

Agreement in 2015, we have joined

multiple initiatives and alliances that

have helped us develop the framework

and the tools to raise our ambitions and

ensure progress on our net-zero journey

(see non-exhaustive list of initiatives and

alliances, including net-zero alliances, in

the timeline below).

Our Climate Action Plan is anchored in

our purpose of releasing the potential

in people and businesses by using the

power of finance to create sustainable

progress today and for generations to

come. The plan also builds upon many

years of commitment and action, includ-

ing engagement with customers, industry

partners and society that has helped us

shape our course of action and set inter-

mediate net-zero targets.

Building upon years of action and commitment (non-exhaustive list)

2006

First CSR report

published

2007

Joined the UN

Global Compact

2008

First Responsi-

ble Investment

Policy

2009

Began offsetting

carbon emis-

sions from our

own operations

2010

Became a

member of the

UN-supported

Principles for

Responsible

Investment (PRI)

2015

Became an early First sector-

adopter of the

specific position

Paris Pledge for statements

Action

2016

2019

First reporting

according to

the recommen-

dations of the

Task Force on

Climate-related

Financial

Disclosures

2019

Became a

founding

signatory of the

UN Principles

for Responsible

Banking (PRB)

KEF, Alm.del - 2022-23 (2. samling) - Bilag 143: Materiale fra Danske Bank ifm. foretræde den 30/3-23

Asset management

Life insurance and pension

Own operations

Looking to the future

Appendix

CLIMATE ACTION PLAN

What is net zero?

Net zero means reducing greenhouse gas

(GHG) emissions to as close to zero as possi-

ble, with any remaining emissions to be

reabsorbed in a sustainable manner, for exam-

ple by afforestations or engineered solutions.

The Science Based Targets initiative (SBTi)

defines corporate net zero as “Reducing scope

1, 2 and 3 emissions to zero or to a residual

level that is consistent with reaching net-zero

emissions at the global or sector level in

eligible 1.5°C-aligned pathways” and “neutral-

izing any residual emissions released into the

atmosphere thereafter”.

Source: United Nations and Science Based Targets initiative

Danske Bank Group targets will steer our path

As a financial institution, Danske Bank

interacts with the entire economy, includ-

ing multiple sectors that have individual

challenges and transition paths. Conse-

quently, setting sufficient and relevant

climate targets is a complex task. To

ensure that we are steering towards net

zero and to account for this complexity,

we have decided on a comprehensive

and broad range of climate targets.

Our target-setting has taken the follow-

ing aspects into consideration:

• the overall objectives of the Paris

Agreement – near-term (2030) and

long-term (2050)

•

recommendations and methodolo-

gies from leading industry associa-

tions and scientific research

Danske Bank’s overall strategic

direction and Group-wide net-zero

ambition

(WRI) and the WWF that seeks to drive

ambitious climate action in the private

sector by enabling organisations to set

science-based emissions reduction

targets.

The SBTi provides companies with clear-

ly defined pathways and tools to reduce

emissions in line with the goals of the

Paris Agreement. Targets are considered

science based when they align with what

the latest scientific research deems

necessary for limiting global warming to

well below 2°C above preindustrial levels

and pursuing efforts to limit warming to

1.5°C.

•

To validate that our targets are based

on the latest scientific research and are

aligned with the Paris Agreement, we

have submitted our targets for validation

by the Science Based Targets initiative

(SBTi). The SBTi is a partnership between

the CDP (formerly the Carbon Disclo-

sure Project), the UN Global Compact

(UN GC), World Resources Institute

SBTi methodologies

The SBTi framework proposes three different methodologies for target-

setting for financed emissions, which can be used alone or together:

1. Sectoral Decarbonisation Approach

is a method for setting physical

intensity targets using sector-specific convergence of emissions

intensity. For each sector, the CO

e intensity of the portfolio is

measured at a base year, from which a target path to 2050 can be

derived. Portfolio emissions intensity refers to the financed emissions

relative to a specific production output, e.g. tonnes of CO

e per MWh

of energy produced.

2. Temperature Rating Approach

is a method for financial institutions

to determine a portfolio’s current ‘temperature value’ based on the

public emissions reduction targets of the companies they engage

with. Financial institutions can align the portfolio’s temperature value

in a base year with a long-term temperature target.

3. Science Based Targets coverage

is a method to set targets on the

share of customers who themselves are approved by the SBTi as

being in line with the goals of the Paris Agreement.

Source: Science Based Targets initiative

Science Based Targets initiative

2020

Volume targets

set for sustaina-

ble investments

and sustainable

financing

2020

Commitment

to aligning our

lending portfolio

to the climate

goals of the

Paris Agreement

2020

Became a

member of the

Partnership

for Carbon

Accounting

Financials (PCAF)

2020

Danica Pension

joined the Net-

Zero Asset Owner

Alliance

2021

Danske Bank

joined the Net

Zero Asset

Managers

Initiative and

Net-Zero Banking

Alliance

2022

2030 targets set

for reduction of

financed emis-

sions from lending

to sectors with

most impact - as

the first Nordic

bank to do so

2023

Danske Bank

committed to the

Science Based

Targets initiative

– targets pending

validation

2023

Launch of

comprehensive

Climate Action

Plan

KEF, Alm.del - 2022-23 (2. samling) - Bilag 143: Materiale fra Danske Bank ifm. foretræde den 30/3-23

Contents

Message from our CEO

Our role in the green transition

Our plan to achieve net zero

Lending

CLIMATE ACTION PLAN

At Danske Bank we have set comprehensive climate targets for our four impact areas: lending, asset management, life insurance

and pension, and own operations. Please see an overview of our climate targets in figure 3.1 below.

Figure 3.1: Overview of Danske Bank’s decarbonisation targets

Objective

Supporting our customers’ Paris-aligned transitions

Danske Bank has set intermediate decarbonisation targets across core business activities and own operations

Impact

areas

Lending

Our intermediate targets

2030 sector emission intensity

reduction targets

Shipping

Oil and gas -

upstream

Oil and gas -

refineries

Power

generation

Steel

~50%

Asset

management

Life insurance and pension

Own operations

2030 temperature rating

reduction targets

Implied temperature rating

of our investment products

from 2.7°C in 2020 to 2.1°C

(scope 1 and scope 2)

Implied temperature rating

of our investment products

from 2.9°C in 2020 to 2.2°C

(scope 1, 2 and 3)

2030 temperature rating

reduction targets

Implied temperature rating of

our listed equities and credits

from 2.5°C in 2020 to 2.0°C

(scope 1 and scope 2)

Implied temperature rating of

our listed equities and credits

from 2.8°C in 2020 to 2.2°C

(scope 1, 2 and 3)

2030 emissions reduction

targets

Carbon emissions in

scope 1 and 2 from 2019

80%

Carbon emissions in scope

1, 2 and currently measured

scope 3 categories from

2019

60%

50%

25%

50%

30%

2030 carbon intensity reduction

target

Weighted average carbon

intensity of investment

products

50%

2025 sector emission intensity

reduction targets

Real estate

Energy

55%

2025 engagement target

Engagement with the 100

largest emitters

Transportation

Power generation

Cement

Steel

Scope 1, 2 and 3

until 2030

69%

15%

20%

35%

20%

Cement

Commercial

real estate

Personal

mortgages

25%

55%

For more details, see the

lending section and

appendix 1

For more details, see the asset

management section and

appendix 2

For more details, see

the life insurance and pension

section and appendix 3

For more details, see

the own operations section and

appendix 4

Target submitted for SBTi, validation pending

Target not submitted for SBTi validation

Baseline year 2020

Baseline year 2019

Absolute emission reduction targets set

Partly absolute emission reduction targets set

Targets for Commercial Real Estate and Personal Mortgages are based on a weighted portfolio exposure across Denmark, Sweden, Norway and Finland. For Commercial Real Estate Denmark the

target corresponds to 75% reduction by 2030. For Personal Mortgages Denmark the target corresponds to 75% reduction by 2030.

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Asset management

Life insurance and pension

Own operations

Looking to the future

Appendix

CLIMATE ACTION PLAN

Motivation behind our targets

1. Lending:

For our lending portfolio, we

have set 2030 targets for the most cri-

tical sectors. We have chosen individual

sectoral decarbonisation approaches

in sectors where these are available,

as recommended by the SBTi, to most

accurately steer our impact, facilitate

engagement and measure progress.

Most of our lending targets are intensity

based, which enables us to focus on

achieving real economy efficiencies.

However, setting intensity targets may

lead to an increase in absolute financed

emissions if our total exposure grows.

We will continuously work to improve

our financed emissions coverage and set

targets for additional sectors as recogni-

sed guidelines, methodologies and data

becomes available for more sectors.

2. Asset management:

For the in-

vestments we make on behalf of our

customers in our asset management

activities, we have set SBTi-aligned

temperature rating targets and a carbon

intensity reduction target, all of which are

supported by our engagement target.

The temperature rating targets have

been established by utilising the SBTi’s

temperature rating tool, which assesses

the transition plans of the companies we

invest in. For each company, a tempera-

ture value is assigned based on the com-

pany’s climate plans, and these tempera-

ture values are aggregated as a portfolio

temperature value. This value and our

temperature rating targets will ensure

that companies in our portfolio will have

planned actions that are aligned with a

net-zero future, thereby incorporating a

forward-looking element into our target

suite. Our temperature rating targets for

2030 will lead our transition towards

net-zero alignment by 2050 or sooner

as all investee companies will need to

converge towards having 1.5°C-aligned

plans in place by 2040, leaving ten years

for execution.

The portfolio intensity reduction target

(tonnes of CO

e per million of turnover in

DKK for the respective companies in the

investment portfolio) assesses whether

a company’s transition is following the

needed decarbonisation trajectory. The

intensity target measures actual reducti-

ons achieved and therefore incorporates

a backward-looking element to our target

suite.

We also believe that engagement is an

effective and necessary tool to drive

progress in the real economy. Our en-

gagement targets ensure that we take

responsibility in working with investee

companies to encourage them to transiti-

on their business models aligned with a

net-zero economy.

Temperature rating targets and intensity

reduction targets can be seen as com-

plementary, combining both forward- and

backward-looking perspectives.

3. Life insurance and pension:

For our

life insurance and pension assets, we

have also set temperature-rating targets

and carbon intensity reduction targets.

As with our asset management activi-

ties mentioned above, the temperature

rating targets ensure that our portfolio is

aligned with a 1.5°C temperature trajec-

tory and that the companies we invest

in have Paris-aligned transition plans in

place.

We have in addition set intensity reduc-

tion targets for five key sectors within

Danica Pension’s portfolio, and as a

major real estate owner in Denmark

through Danica Pension, we have also

set a specific emission intensity reduc-

tion target for the real estate sector.

Setting both temperature rating targets

and intensity targets combines forward-

and backward-looking perspectives in

our target suite.

4. Own operations:

In our own operati-

ons, emissions generated through our

daily business operations, such as hea-

ting of our buildings and business-related

travel, are covered.

We have set an 80% reduction target by

2030 covering scopes 1 and 2 where

data quality is higher than in scope 3 and

we have more control over the emissi-

ons.

In addition, we have set a 60% reduction

target for all of our scope 1, scope 2 and

currently measured scope 3 categories

in order to capture as broad a scope as

possible. We continue to work on increa-

sing our coverage by obtaining data for

additional scope 3 categories.

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Contents

Message from our CEO

Our role in the green transition

Our plan to achieve net zero

Lending

CLIMATE ACTION PLAN

Approach to climate action

To ensure efficient execution and trans-

parency within our climate efforts, we

have implemented a governance struc-

ture consisting of five elements:

1. Positions

Policies and climate-related

position statements

Our policies govern and guide our

approach to and principles for conduct-

ing our business in a sustainable and

responsible manner, aligned with our

climate targets. We use our policies and

positions statements in our daily work,

and they form the foundation for a con-

structive and forward-looking dialogue

with our customers and stakeholders.

Our Sustainable Finance Policy and posi-

tion statements on climate change, fossil

fuels, forestry, agriculture, and mining

and metals are publicly available.

2. Organisation

Roles and responsibilities

We have set out clear roles and respon-

sibilities for approving, executing, and

monitoring progress on our strategic

direction, including our path towards net

zero and our climate-related policies. Cli-

mate-related issues are anchored at the

level of the Board of Directors (BoD) and

the Executive Leadership Team (ELT).

3. Competences

Training of employees and leadership

in climate-related matters

Building and nurturing competences

within the sustainability area is key

and needs to involve all layers of the

organisation. To embed a culture of

responsible banking and to enable our

colleagues to engage with our custom-

ers on the climate agenda, all employees

receive mandatory annual training within

sustainability, risk and compliance. This

is supplemented with specialised sus-

tainability training for specific business

areas.

4. Processes

Managing climate-related risk

and opportunities

Sustainability issues such as climate

change create new opportunities for our

business and for our customers. At the

same time, we are subject to climate-re-

lated risks from our own operations and

from the activities of our customers and

the companies in which we invest on

behalf of our customers. We take a risk-

based approach in prioritising risk man-

agement efforts for sectors that are likely

to be exposed to transition and physical

risks, and we seek to leverage com-

mercial opportunities for our business

and for our customers by developing

sustainability-related products, advisory

services and partnership offerings.

5. Collaboration

Climate partnerships

Because the net-zero transition is a

collaborative effort across countries, civil

societies, industries and businesses,

ensuring the best possible conditions

for collaborating, sharing knowledge and

best-practices is key – as is influencing

and contributing to the development

of relevant standards. Since 2007, we

have joined and supported a range of in-

ternational sector- and industry-specific

initiatives, such as net-zero alliances, the

Task Force on Climate-related Financial

Disclosures and the Partnership for

Carbon Accounting Financials.

Approach to climate action

1. Positions

Strategic

ambition

Value realisation

towards net zero

5. Collaboration

2. Organisation

4. Processes

3. Competences

For more information on our governance structure and execution, please see our

sustainability website, our annual sustainability report and our TCFD reporting.

https://danskebank.com/sustainability/publications-and-policies

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Asset management

Life insurance and pension

Own operations

Looking to the future

Appendix

CLIMATE ACTION PLAN

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Contents

Message from our CEO

Our role in the green transition

Our plan to achieve net zero

Lending

CLIMATE ACTION PLAN

Lending

– Supporting our customers’ transition

Financing the green transition

At Danske Bank, we want to be a leading

financial partner when it comes to

helping our customers succeed in their

green transition. The net-zero transition

requires major amounts of financing for

companies to invest in new technolo-

gies and solutions, transform business

operations and achieve net-zero supply

chains.

Danske Bank has a broad and diverse

exposure across our markets. Out of

a credit exposure of around DKK 2.73

trillion,

personal mortgages make up

31%, corporate customers

around

33%, and commercial real estate 12%

(see figure 4.1).

While we do engage with heavy-emitting

sectors, these represent a very small

share of our loan portfolio. In total,

shipping, oil and gas, power generation,

cement, and steel constitute only around

3% of our portfolio.

Figure 4.1: Danske Bank loan exposure distribution

Personal Customers

Corporates (LC&I and BC)

Commercial real estate 12%

Public and

ﬁnancial institutions 18%

Personal mortgages 31%

Personal other 6%

Corporates – all other 33%

In order to assess materiality from a

climate perspective, financed emissions

are a helpful tool to measure where we

as a financial institution can have the

largest impact. This also helps stake-

holders make high-level comparisons of

financed emissions between different

financial institutions.

Although our exposure to heavy-emit-

ting sectors is limited, they represent

the vast majority of our total financed

emissions. Shipping is the most material

sector, being responsible for 42% of our

financed emissions, followed by oil and

gas accounting for 15% (see table 4.1).

In contrast, personal mortgages make

up 31% of our total loan portfolio but are

only responsible for 5% of our financed

emissions. In total, we estimate that the

financed emissions from our carbon-

mapped corporate and private lending

Exposure coverage – financed emissions vs emission targets

Our financed emissions as of year-end 2020 are calculated according

to the PCAF methodology, which includes only on-balance exposure.

Within our on-balance exposure, we are currently focusing on our

corporate and private lending portfolios. Financed emissions are

measured for about DKK 1.46 trillion of the on-balance exposure,

equivalent to 92% of our total corporate and personal customers

portfolio. Compared with our disclosures in our annual accounts, we

use on-balance credit exposure to align as much as possible with the

PCAF standard. See appendix 1 for our exclusions details.

Our sector targets are set for both on- and off-balance exposures,

thereby departing from the PACF reporting standard. We include on-

and off-balance exposures to better reflect the commitments made

towards our customers and can therefore also take into account the

risk associated with emission-intensive customers who use products

such as revolving credit facilities or lines of credit.

All numbers are based on our year-end 2020 portfolio as this report sets our 2020 baseline. See our Annual Report 2021 p. 161 for a definition of credit exposure. Total loans account for loans and

credits and the DKK 2.73 trillion deviates from the DKK 1.46 trillion carbon-mapped exposure (see table 4.1) which only accounts for the on-balance exposure according to the PCAF methodology.

Corporate customers include Large Corporates and Institutions (LC&I) and Business Customers (BC)

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Asset management

Life insurance and pension

Own operations

Looking to the future

Appendix

CLIMATE ACTION PLAN

portfolio account for around 18.8 million

tonnes of CO

equivalent (CO

e) per year,

corresponding to an intensity of approx-

imately 13 tonnes of financed CO

e per

million on-balance DKK per year.

The sector distribution of our financed

emissions shows where we can have the

biggest impact by supporting our cus-

tomers’ transitions. By engaging in our

high-emitting sectors, we can contribute

to driving change within global supply

chains, and we can make a positive

difference with a reach that extends

significantly further than just Denmark

and the Nordic region.

Table 4.1: Carbon-mapped portfolio overview, year-end 2020 data

Of which

scope 3

financed

emission

(ktCO

Business

Corporates

Segment

Shipping

Oil and gas

Upstream

Refineries

Other

Utilities and

infrastructure

Power generation

Other

Agriculture

Construction and

building materials

Cement

Other

Commercial real

estate

Metals and mining

Steel

Other

Other corporates

Total - Corporates

On-balance

exposure

(DKK bn)

18.3

6.4

3.2

0.4

2.8

36.5

13.9

22.7

59.2

19.7

0.4

19.3

259.9

3.4

0.5

2.9

220.8

624

833

1,457

Emission

scopes

included

Scope 1+2

Scope 1+2+3

Scope 1+2

Financed

emission

(ktCO

7,878

2,834

1,525

837

471

2,647

949

1,698

2,145

402

219

184

236

145

103

1,506

17,792

Share of

financed

emission

42%

Intensity

(tCO

DKK m)

431

440

473

2,077

167

585

Scope 1&2

data quality

score

1.9

2.5

1.1

4.3

3.4

2.5

4.0

1.0

4.0

4.4

3.6

1.0

4.0

3.8

4.0

4.2

4.1

2,303

1,493

811

15%

14%

11%

2,303

95%

Personal

Customers

Personal

mortgages

Total

Scope 1+2

1,034

18,826

2,303

100%

What to consider when using financed emissions as a measure

Changes in financed emissions can occur due to several factors:

• changes in actual real-world emissions from a company or collateral

• changes in exposure or company/collateral value, e.g. changes

related to the attribution factor

• changes in underlying data sources or estimation methodology

When making a comparison of financed emissions from two different

reporting periods, all three factors of change should be kept in mind.

This is particularly relevant in sectors where a relatively small number

of customers account for the highest concentration of emissions, where

on-balance exposure can vary significantly.

Whereas our approach makes use of several methodologies, our

financed emission calculation is largely based on the Principles for

Carbon Accounting Financials standard (PCAF).

The financed emissions presented in this chapter are estimated using

on-balance exposure only.

See appendix 1 for a description of coverage

The scope 3 data quality score for oil and gas upstream and oil and gas refineries is equivalent to 1.1 for each. Due to limited data availability and high uncertainties in estimation methods for

scope 3, scope 3 emissions are currently only included for the oil and gas upstream and refineries segments, which provide sufficiently good data quality

Other includes for example district heating, water treatment and electricity transmission, -distribution and -trading

Only includes property related exposure

Include amongst others consumers goods, pulp and paper (chemicals), and offshore

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Contents

Message from our CEO

Our role in the green transition

Our plan to achieve net zero

Lending and Financing

Lending

CLIMATE ACTION PLAN

Lending targets

We have updated and expanded our climate targets for our loan portfolio by setting targets for high-emitting sectors, based on

analysis of our loan exposure, our total financed emissions, customer analysis, and the quality of GHG emission data.

Our sector scope is aligned with the list of priority sectors included in the SBTi, the Net-Zero Banking Alliance and the Guidelines

for Climate Target Setting for Banks developed by the UNEP FI, see a summarised overview in table 4.2 below:

Table 4.2: Overview of our lending targets

Emission

scopes

included

Scope 1

2020

target

baseline

3.8%

2030

Target

2030 target

%-reduction

~50%

Share of

financed

measured

emissions loan portfolio

35%

<1%

Target-

setting

method

SDA

Poseidon

Principles

Sector

Shipping

Metric

Alignment

delta as in

Poseidon

Principles

Financed

emissions

million

tCO

Financed

emissions

thousand

tCO

gCO

e/MJ

Oil and gas

(upstream)

Scope

1+2+3

3.3

1.6

50%

SDA

absolute

Oil and gas

(downstream

refining)

Scope 1+2

73.1

54.8

25%

13%

<1%

Sectoral

decar-

bonisation,

projection

Sectoral

decar-

bonisation,

projection

Oil and gas

(downstream

refining)

Scope 3

53.3

25%

Power

generation

Steel

Cement

Commercial

real estate

– Nordic

portfolio

Personal

mortgages –

Nordic

portfolio

kgCO

MWh

tCO

kgCO

Scope 1

50%

SDA

Scope 1+2

1.17

0.64

13.5

0.82

0.48

6.0

30%

25%

55%

<1%

18%

SDA

kgCO

Scope 1+2

14.3

6.4

55%

57%

SDA

Each specific sector target(s) and methodology is detailed in the following sections. Within utilities, we have focused on power

generation, not only because it is one of the most important levers in the transition and has relevance for other sectors such as

commercial real estate and personal mortgages but also because it is a sector where we have good data quality. We have also in-

cluded a section on agriculture – even though we have not yet set a target due to immature technologies, governmental plans and

data quality, it is of critical importance that we address this sector also.

The sections on the specific sectors will be followed by a section explaining how we will support target realisation through our

advisory services and product offerings.

Vessels’ fuel usage

Sectoral Decarbonisation Approach

The target baselines and targets are calculated on basis of both on and off balance credit exposure

Residential and non-residential

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Appendix

CLIMATE ACTION PLAN

Target metrics

For most of our sector targets, we have set a physical intensity metric

(emissions per economic output, e.g. kgCO

/MWh) instead of an

absolute emission metric. This allows us to take into account the

different decarbonisation paces of different industries and helps us

to understand and contextualise the reduction causes in an industry.

For example, are the emission reductions achieved due to a decrease

in production as happened during the COVID-19 pandemic or are

the emission reductions achieved by our customers due to efficiency

gains in the production of, for example, power, cement and steel?

Moreover, it encourages Danske Bank to achieve emission reduction

through customer engagement and support in their decarbonisation

journeys rather than achieving absolute emission reductions through

divestment.

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Contents

Message from our CEO

Our role in the green transition

Our plan to achieve net zero

Lending and Financing

Lending

CLIMATE ACTION PLAN

Shipping

Table 4.3: Our target for the shipping sector

Emission

scopes

included

Scope 1

2020

target

baseline

3.8%

2030

Target

2030 target

%-reduction

~50%

Share of

financed

emissions

35%

Share of

measured

loan portfolio

<1%

Target-

setting

method

SDA /

Poseidon

Principles

Sector

Shipping

Metric

Alignment

delta

With a DKK 18.3 billion on-balance

exposure and corresponding 7.9 million

tonnes of financed CO

e emissions in

2020, shipping is the most material

sector in Danske Bank’s decarbonisation

trajectory.

Shipping is by far the most emission-

efficient way of transporting goods over

long distances. However, shipping is a

hard-to-abate sector due to the lack of

scalable solutions for long freight routes.

Overall, shipping accounts for 2.9% of

global GHG emissions and emissions are

projected to increase by 50% by 2050

under a business-as-usual scenario due

to a large increase in demand.

More-

over, the vast majority of the emissions

in the shipping sector originate from

international shipping, which is not part

of the Nationally Determined Contribu-

tions (NDCs) under the Paris Agree-

ment. Instead, the International Maritime

Organization (IMO) is responsible for

overseeing the decarbonisation of the

sector. In 2018, the IMO adopted an

initial strategy to reduce GHG emissions

from international shipping by at least

50% by 2050 in relation to 2008 levels.

In recognition of these efforts, Danske

Bank is a member of the global Getting

to Zero Coalition and, along with 29

other signatories, is a founding member

of the Poseidon Principles (PP) – an

initiative developed by financial institu-

tions seeking to assess and disclose

the climate alignment of their shipping

finance portfolios with the IMO’s decar-

bonisation ambition. In 2020, over 80%

of Danske Bank’s financed emissions

from shipping were attributed to vessels

engaged in international trade and

therefore were covered by the Poseidon

Principles framework.

Although the Poseidon Principles started

as a reporting initiative, Danske Bank

has used the framework to develop and

set a formal target for our shipping port-

folio as of February 2022. During 2022,

the Poseidon Principles organisation an-

nounced intentions to raise its ambition

and adopt a second reporting emission

reduction trajectory aligned with a maxi-

mum temperature rise of 1.5°C. Danske

Bank supports this ambition, and we

have therefore reviewed our already-set

sector target for the shipping sector.

The Poseidon Principles discloses the

difference between a shipping portfolio

and the needed decarbonisation trajec-

tory. Specifically, it measures each

vessel’s emission intensity, measured as

Annual Efficiency Ratio (AER),

which is

compared against the target ratio based

on the decarbonisation trajectory. This

results in the so-called alignment delta,

which is expressed as a percentage.

The higher the delta, the further away

the vessel or the portfolio is from a

net-zero pathway.

We estimate that in 2020 our alignment

delta for the whole shipping portfolio

against a 1.5°C decarbonisation trajecto-

ry was 3.8% (see table 4.3). We commit

to being fully aligned with the 1.5°C

trajectory by 2030, which translates into

an alignment delta of 0% or lower. The

targeted AER reduction equates to an

estimated emission intensity reduction

of around 50% by 2030 from a 2020

baseline year (see figure 4.2).

The SBTi does not currently have an

approved methodology for shipping that

is directly applicable to financial institu-

tions. Poseidon Principles is also yet to

adopt a 1.5°C trajectory, but because

its methodology is considered to be the

most advanced methodology for financial

institutions currently available, we have

set our targets in accordance with this

methodology.

Figure 4.2: Decarbonisation pathway - shipping

IMO Fourth GHG Study (2020)

The unit of measurement for emission intensity is called the Annual Efficiency Ratio (AER), a carbon intensity metric calculated as gCO

/dwt nm, gCO

/GT nm, gCO

/TEU nm or gCO

/cbm nm,

depending on the ship type

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Appendix

CLIMATE ACTION PLAN

In addition, we promote industry collabo-

ration to advance the decarbonisation of

the shipping sector. Together with indus-

try peers, we were part of developing a

new set of guidelines for transition-linked

financing in shipping, which was launched

in February 2022. Transition-linked

financing aims to improve the borrower’s

environmental profile through assess-

ment of selected indicators on decarboni-

sation over the term of a loan or a bond.

Furthermore, Danske Bank supports

the Responsible Ship Recycling Stand-

ards, which is a standard in all our loan

agreements.

Our shipping target has been submitted

for validation with the Science Based

Targets initiative.

Please see appendix 1 for an overview

of data sources, methodology, target-

setting and scenarios.

A sector embracing decarbonisation

The shipping sector is in the midst

of a regulatory transformation to

promote greater fuel efficiency and

decarbonisation. Policy makers,

shipping companies and the financial

industry are all pushing for greater

and faster transition in the sector.

From 1 January 2023, a new set of

IMO regulations came into force ma-

king it now mandatory for vessels to

calculate and report the EEXI and CCI.

•

Energy Efficiency Existing Ship

Index (EEXI): assesses the energy

performance of existing ships

based on energy consumption

data and other key metrics such

as speed, power, and engine size.

Vessels that receive a low EEXI

rating may be subject to penalties

from the IMO.

Carbon Intensity Indicator (CII):

ranks and monitors the efficiency

of individual ships. This ranking

will become more strict each year,

thereby requiring vessels to con-

tinuously improve their emission

intensity.

aims to optimise the energy efficiency

of each vessel and essentially help in

tracking their CII.

Besides these short term measures,

in 2023 the IMO’s Initial strategy on

the reduction of GHG emissions from

shipping is also being revised. The new

strategy is set to be agreed in July

2023, and there is a high expectation

from market stakeholders that the

IMO might agree to more ambitious

targets in line with net-zero pathway.

Apart from immediate IMO regulatory

developments, regional and national

regulatory developments are also

taking place. As part of the Fit for

55 package, the European Union is

considering a set of directives and

policies looking to push decarbonisa-

tion in shipping. Shipping is likely to

become part of the existing Emissions

Trading System (EU ETS) in 2024,

and the new Fuel EU Maritime Regula-

tion might enter into force in 2025

pushing vessels to use low carbon

fuels.Also of note is the Green Ship-

ping Challenge, launched by Norway

and the US during COP27, which is an

initiative that will push for greater

decarbonisation actions in UN mem-

ber states.

Shipping companies are likewise cal-

ling for more action to transition in the

sector. The Getting to Zero Coalition is

an alliance of more than 200 organi-

sations committed to getting commer-

cially viable deep-sea zero-emission

vessels powered by zero-emission

fuels into operation by 2030. coZEV

is a network of cargo owners pursuing

zero-emission vessels.

Banks that are signatories of the

Poseidon Principles (PP) recognise

that the sector can only transition at

the speed and scale needed with col-

laboration of all market stakeholders.

In 2023, the PP aims to adopt a

reduction trajectory aligned with a

maximum temperature rise of 1.5°C.

The trajectory will also be evaluated

following the expected adoption of the

IMO’s revised GHG Strategy at MEPC

80 in July 2023.

In our lending target, we aim to be

fully aligned with the PP and take into

consideration all the transformation

happening in the industry at present. If

the PP decides on another 1.5°C

trajectory than the one now indicated,

Danske Bank will revise its target and

seek a new validation for this from the

SBTi.

•

It also became mandatory for ships

to have an enhanced Ship Energy Effi-

ciency Management Plan. SEEMP III

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Contents

Message from our CEO

Our role in the green transition

Our plan to achieve net zero

Lending

CLIMATE ACTION PLAN

Oil and gas

Table 4.4: Our targets for the oil and gas sector

Emission

scopes

included

Scope 1+2+3

2020

target

baseline

3.3

2030

Target

1.6

2030 target

%-reduction

50%

Share of

financed

emissions

Share of

measured

loan portfolio

Target-

setting

method

SDA, absolute

Sector

Oil and gas

(upstream)

Oil and gas

(Downstream

refining)

Oil and gas

(Downstream

refining)

Metric

Financed

emissions

million tCO

Financed

emissions

thousand

tCO

gCO

e/MJ

Scope 1+2

73.1

54.8

25%

13%

<1%

Sectoral dec-

arbonisation,

projection

Sectoral dec-

arbonisation,

projection

Scope 3

53.3

25%

The oil and gas sector consists of up-

stream (exploration and production) and

downstream (refining and distribution

of oil products). The IEA and other

agencies have made it clear that oil and

gas need to be gradually phased out of

the global energy system to meet the

commitments of the Paris Agreement.

During the phase out, oil and gas will

continue to play a role in the global

energy mix.

At Danske Bank, we want to support

the transition of the oil and gas sector

but also want to limit providing capital to

companies and activities that lock-in in-

creased fossil fuel production. We have

therefore been reducing our exposure

to fossil-heavy industries, and in 2020

our exposure to upstream oil and gas

production was down to less than 0.2%

of our on-balance exposure, equivalent to

DKK 3.2 billion. Even with a limited expo-

sure in our lending book, the oil and gas

exploration and production (E&P) sector

is highly relevant in terms of our financed

emissions, constituting 1.5 million tCO

(scope 1, 2 and 3).

Our financing exposure for the upstream

segment is largely to companies that

are either operating in the North Sea,

predominantly the Norwegian and

Danish Continental Shelves, or to oil and

gas companies owned by Nordic entities.

We do not currently have any long-term

lending to companies that have uncon-

ventional oil or gas production or produc-

tion in frontier areas. Furthermore, we

provide financing to Nordic refiners and

distributors, many of whom are actively

transitioning to biofuels.

Oil and gas production is an energy-

intensive activity with the potential of

significant GHG emissions in the produc-

tion phase (scope 1 and 2). However, the

majority of emissions occur at the end

use stage of oil and gas products, i.e.

scope 3 emissions. In February 2022,

we set a target to reduce our credit

exposure to oil and gas exploration and

production business (E&P) by 50% by

2030 against a 2020 baseline. We

chose an exposure target instead of an

activity-based target as there is current-

ly no clear standard for measuring the

transition of E&P companies.

We continue to assess that the 50%

reduction by 2030 reflects the decline in

investment needs of the Nordic oil and

gas production companies as defined in

key net-zero scenarios. We have there-

fore maintained the ambition level but

have amended it to reflect a reduction in

absolute emissions.

To further clarify our policies, we have

updated our position statement on fossil

fuels to make it clear that we do not offer

financial services (long term lending,

guarantees, primary debt and equity

capital markets activities) to oil and

gas E&P companies that do not set a

credible transition plan in line with the

Paris Agreement. In line with the IEA’s

Net Zero Emissions by 2050 Scenario,

we will not offer new long-term financing

or refinancing to E&P companies that

intend to expand supply of oil and gas

beyond what was approved for develop-

ment by 31 December 2021. We could

still support any E&P company in their

transition provided that the financing

is for ring-fenced renewable energy or

carbon capture, utilisation and storage

(CCUS) activity.

To bolster our targets, we have now also

included targets for downstream refining

following projections of decarbonisation

in the Nordic countries. We have set two

targets, where the first focuses on re-

ducing our absolute financed emissions

in scope 1 and 2 by 25% by 2030, and

the second focuses on reducing the

emission intensity by 25% in scope 3

emissions.

All our oil and gas targets have been

submitted for validation by the Science

Based Targets initiative.

Please see appendix 1 for an overview

of data sources, methodology, target-

setting and scenarios.

The baseline for oil and gas (E&P and refining) is calculated on the basis of both on- and off-balance credit exposure, why the baseline of 3.3 mtCO

e deviates from the PCAF measured on-balance

financed emission of 1.5 mtCO

For more information, please see our fossil fuel position statement: https://danskebank.com/sustainability/publications-and-policies

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Asset management

Life insurance and pension

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Appendix

CLIMATE ACTION PLAN

Power generation

Table 4.5: Our target for the power generation sector

Emission

scopes

included

Scope 1

2020

target

baseline

2030

Target

2030 target

%-reduction

50%

Share of

financed

emissions

Share of

measured

loan portfolio

<1%

Target-

setting

method

SDA

Sector

Power

generation

Metric

/MWh

Aligned with the SBTi list of priority

sectors, the Net-Zero Banking Alliance

and the UNEP FI Guidelines for Climate

Target Setting for Banks, we have focu-

sed our efforts on power generation in

the target-setting process. Globally,

power generation is responsible for

approximately 25% of all GHG emissi-

ons

and is therefore one of the most

important sectors for enabling the world

to reach net zero. The Nordic region

is characterised by a high degree of

low-carbon electricity supply and a high

coverage of district heating networks.

In relation to other world economies,

Nordic economies have generally pro-

gressed further with the decarbonisation

journey of the power generation sector.

Over the past decade, emissions have

already fallen by one-third.

By 2020, our power generation portfolio

amounted to DKK 13.9 billion on-balan-

ce exposure and corresponding 0.95 mil-

lion tonnes of financed CO

e emissions.

We remain fully committed to supporting

the continued decarbonisation journey

within the power generation sector and

to reducing the emission intensity of the

sector in our portfolio, in close collabo-

ration with our customers. Moreover,

emission reductions in other sectors

also require a shift to renewably sourced

electricity, which increases the need to

support the decarbonisation path of our

power generation customers. Therefore,

we have decided to increase our ambiti-

on and raise our reduction target of CO

intensity per unit of energy produced

from 30%, set in February 2022, to

50% by 2030 from a 2020 baseline

(scope 1).

By executing on this target, we will in

2030 remain well below the needed

decarbonisation trajectory indicated by

the SBTi, with an emission intensity of

36 kgCO

/MWh (see figure 4.3).

This is a very low emission intensity,

which reflects the fact that Danske

Bank’s exposure to the sector is now

almost exclusively to power production

in the Nordic countries. The customers

forming the power production portfolio

for which our target is set include those

companies that have power or heat

production as their main area of opera-

tions. All of our customers in the power

generation portfolio have ambitious

2030 targets.

Power and heat production by industri-

al companies and grid operators are

excluded from the target and baseline

calculation, in accordance with the

SBTi’s sectoral decarbonisation appro-

ach sector definition.

Our target for the power generation sec-

tor has been submitted for validation by

the Science Based Targets initiative.

Furthermore, Danske Bank follows

general trends, challenges and oppor-

tunities related to the energy transition,

including the use of natural resources

such as biomass, for energy applications

to achieve carbon neutrality. It will be

crucial in relation to our targets that we

continuously assess changes to what

constitutes a renewable energy mix and

how our customers’ transitioning activiti-

es are progressing.

Please see appendix 1 for an overview

of data sources, methodology, target-

setting and scenarios and further details

about energy mix limitations.

Figure 4.3: Decarbonisation pathway - power generation

kgCO

/MWh

500

400

300

200

2020

SBTi 1.5°C scope 1

2021

2022

2025

2030

100

Portfolio average scope 1

Source: How high-emitting sectors are embracing climate science to build a low-carbon future - Science Based Targets initiative

Industrial companies are covered by their own sector targets, and grid companies are excluded as they do not generate but merely distribute electricity

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Contents

Message from our CEO

Our role in the green transition

Our plan to achieve net zero

Lending

CLIMATE ACTION PLAN

Other carbon-intensive sectors (steel and cement)

Table 4.6: Our targets for the steel and cement sectors

Emission

scopes

included

Scope 1+2

2020

target

baseline

1.17

0.64

2030

Target

0.82

0.48

2030 target

%-reduction

30%

25%

Share of

financed

emissions

<1%

Share of

measured

loan portfolio

<1%

Target-

setting

method

SDA

Sector

Steel

Cement

Metric

As part of setting targets for the

high-emitting sectors, we have also

set targets for the steel sector and the

cement sector, both of which are fossil-

intensive sectors. Our credit exposures

to these sectors are not significant, in

combination accounting for less than 1%

of our on-balance credit exposure, but

the transition of these sectors is

important for the transition of our

society.

The steel and cement sectors both serve

critical purposes in our society, providing

materials for buildings, bridges and cars

etc., and both are so-called hard-to-abate

sectors. Low-carbon alternatives are

limited, expensive and will typically need

complete overhauls of existing plants

and improved technological develop-

ment. In particular, hydrogen-based steel

production and carbon capture storage

will need to be further matured and sca-

led up before these solutions are ready

for full-scale commercial roll-out.

Steel

With an average carbon intensity of

1.17 tCO

/t in 2020, our customers in

the steel sector are among the leading

companies in relation to carbon emissi-

ons, having a lower emission intensity

than the international average of 1.6

tCO

/t in 2020 (see figure 4.4).

To support our customers on the needed

trajectory, our target has been set to

reduce emission intensity by 30% from

1.17 tCO

/t in 2020 to 0.82 tCO

/t in

2030 (measured as tonne of CO

per

tonne of steel), which will keep us well

below the 1.5°C trajectory set by the

Transition Pathway Initiative (TPI) in

2030 (see figure 4.4).

Figure 4.4: Decarbonisation pathway - steel

tCO

2.0

1.5

1.17

1.0

0.96

0.82

2022

2025

2030

0.5

0.0

2020

2021

TPI - 1.5°C world scope 1+2

Portfolio average scope 1+2

Cement

Cement is one of the most challenging

sectors to decarbonise given the existing

technological and economic maturity of

technological solutions.

We have a limited exposure to the

cement sector, accounting for less than

0.03% of our on-balance loan credit

exposure, and our portfolio currently has

an emission intensity on par with the glo-

bal average. All of our current customers

in the cement sector have set ambitious

emission reduction targets that have

been validated by the Science Based

Targets initiative, and they have com-

mitted to achieving net-zero emissions

by 2050 through their adoption of the

Business Ambition for 1.5°C.

In order to support our customers’ de-

carbonisation in the cement sector, we

have set an emission intensity reduction

target of 25% (measured as tonne CO

per tonne cement) by 2030. The target

has been set by applying our current

intensity for the portfolio to the SBTi

1.5°C trajectory tool, resulting in a target

intensity of 0.48 tonnes of CO

per tonne

of cement by 2030.

Targets for both the steel and the ce-

ment sectors have been submitted for

validation by the Science Based Targets

initiative.

Please see appendix 1 for an overview

of data sources, methodology, target-set-

ting and scenarios.

Figure 4.5: Decarbonisation pathway - cement

tCO

0.8

0.64

0.63

0.48

0.7

0.6

0.5

0.4

2020

2021

2022

2025

2030

SBTi 1.5°C scope 1+2

Portfolio average scope 1+2

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Asset management

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Own operations

Looking to the future

Appendix

CLIMATE ACTION PLAN

Commercial real estate

Table 4.7: Our target for commercial real estate

Emission

scopes

included

Scope 1+2

2020

target

baseline

13.5

2030

Target

6.0

2030 target

%-reduction

55%

Share of

financed

emissions

Share of

measured

loan portfolio

18%

Target-

setting

method

SDA

Sector

Commercial

Real Estate –

Nordic

portfolio

Metric

kgCO

Our property-related commercial real

estate on-balance exposure amounted to

DKK 260 billion as of year-end 2020, of

which DKK 133 billion (51%) is related

to properties in Denmark and DKK 121

billion (46%) to properties in the other

Nordic countries.

Commercial real

estate is the second-largest sector in

our loan portfolio, but despite its sizeable

share of our measured on-balance loan

exposure (18%), financed emissions are

quite small in comparison with the fossil-

intensive sectors.

We estimate that our financed emissi-

ons from commercial real estate amount

to around 0.24 million tonnes of CO

per year (scope 1 and 2), equivalent to

about 1% of our total financed emissi-

ons. Emissions for our Danish properties

are calculated using energy performance

certificates (EPCs), which express the

property’s expected energy usage for

heating, and emission factors for the

corresponding primary heating source.

Emissions for other countries are calcu-

lated by extrapolation. Figure 4.6 shows

the distribution of EPC labels on the na-

tional stock of commercial real estate in

Denmark compared with the distribution

of the part covered with an actual EPC

label in Danske Bank’s portfolio. This

illustrates that our portfolio’s EPCs are

on par with the national stock.

We have set a target for our Nordic

commercial real estate activities of a

55% reduction in the emission inten-

sity by 2030 from a baseline of 2020,

covering residential and non-residential

purposes. The target is Nordic-based on

a weighted portfolio exposures across

Denmark, Sweden, Norway and Finland.

In Denmark, we expect reductions of

around 75% in line with the governmen-

Figure 4.6: EPC distribution commercial real estate

A2020

A2015

A2010

Denmark

Danske Bank

tal plan for emission reductions of the

utility sector and infrastructure.

Our commercial real estate portfolio has

an emission intensity that is already

below the 2030 target for the global

average emission intensity trajectory

from the IEA for the below-2°C scenario.

This is due to the relative advanced state

of transition for the Nordic real estate

sector in relation to the global sector.

Our current average emissions intensity

in our commercial real estate portfolio

is 13.5 kgCO

, and our target of a

55% reduction will lead to an intensity

of 6 kgCO

, which is below both of

the SBTi 1.5°C trajectories for residen-

tial and non-residential commercial real

estate (see figure 4.7).

Our reduction targets are dependent on,

and to a large extent driven by, devel-

opments in policy and transition in the

utilities sector. We expect continued

conversion of fossil-fuel heating sour-

ces into electricity-powered heating or

district heating, leading to emission re-

ductions in properties transitioning away

from fossil fuel-based heating.

Our Nordic commercial real estate target

has been submitted for validation by the

Science Based Targets initiative.

Please see appendix 1 for an overview

of data sources, methodology, target-set-

ting and scenarios. and further details

about energy mix limitations.

Figure 4.7: Decarbonisation pathway - commercial real estate

13.5

kgCO

6.0/-55%

2020

2021

2022

2023

2024

2025

2026

SBTi 1.5˚C trajectory (Residential DB est. baseline)

SBTi 1.5˚C trajectory (Non-residential DB est. baseline)

2027 2028

DB CRE

2029

2030

Residential and non-residential

The remaining part of our commercial real estate exposure is related to other activities, e.g. Northern Bank

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Message from our CEO

Our role in the green transition

Our plan to achieve net zero

Lending

CLIMATE ACTION PLAN

Personal mortgages

Table 4.8: Our targets for the personal mortgages sector

Emission

scopes

included

Scope 1+2

2020

target

baseline

14.3

2030

Target

6.4

2030 target

%-reduction

55%

Share of

financed

emissions

Share of

measured

loan portfolio

57%

Target-

setting

method

SDA

Sector

Personal

mortgages –

Nordic portfolio

Metric

The on-balance exposure of our portfolio

of loans secured by private properties

in scope for the accounting of financed

emissions amounts to DKK 833 billion

as of end 2020, of which DKK 498 billion

(60%) is related to properties in Denmark

and DKK 309 billion (37%) is related to

properties in the other Nordic countries.

This makes personal mortgages the sing-

le-largest sector in our total loan portfolio.

We estimate that our financed emissi-

ons from personal mortgages amount to

around 1 million tonnes CO

e per year

(scope 1 and 2), equivalent to about 5%

of our total financed emissions. Emis-

sions for our Danish and Norwegian

personal mortgages are calculated using

energy performance certificates (EPCs),

which express the property’s expected

energy usage for heating, and emission

factors for the corresponding primary he-

ating source. Emissions for other countri-

es are calculated based on extrapolation

and relevant national metrics. Figure 4.8

shows that our Danske Bank distribution

of EPC labels is very much similar to

the national stock of private properties

in Denmark, which is well in line with us

having large market shares and being a

mirror of Danish society.

We have set a target for our portfolio of

personal mortgages of a 55% reduction

in the emission intensity in 2030 from a

baseline of 2020. The target covers our

entire Nordic portfolio based on a weigh-

ted portfolio exposure across Denmark,

Sweden, Norway and Finland. For Den-

mark specifically, our emission reduction

expectations are 75% by 2030, in line

with the Danish government’s plans

for emissions reduction in utilities and

infrastructure.

As can be seen from figure 4.9, a reduc-

tion in the emission intensity of 55% will

Figure 4.8: EPC distribution private single-family homes

A2020

A2015

A2010

Denmark

Danske Bank

take us from an estimated baseline of

14.3 kgCO

in 2020 to an intensi-

ty of 6.4 kgCO

in 2030, which is

well below a 1.5°C trajectory using the

Science Based Targets initiative tool for

residential buildings.

Reaching our ambitious emission

intensity reduction target for personal

mortgages will be highly dependent on

the reduced use of fossil fuels for property

heating and electricity. Consequently, our

reduction targets are dependent on, and

to a large extent driven by, developments

in policy and transition in the utilities se-

ctor. In Denmark, we support the Danish

government’s planned reductions of fossil

fuels in power and heat production and

the continued conversion of fossil-fuel

heating sources into electricity-powered

heating or district heating, leading to

emission reductions in properties transiti-

oning away from fossil fuel-based heating.

Our Nordic target for personal mortga-

ges has been submitted for validation by

the Science Based Targets initiative.

Please see appendix 1 for an overview

of data sources, methodology, target-

setting and scenarios and further details

about energy mix limitations.

Figure 4.9: Decarbonisation pathway - personal mortgages

kgCO

6.4/-55%

2028 2029 2030

14.3

2020

2021

2022

2023

2024

2025

2026

2027

SBTi 1.5°C trajectory (DB estimated baseline)

DB personal mortgage

The remaining part of our personal mortgages exposure is related to other activities, e.g. Northern Bank

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Asset management

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Own operations

Looking to the future

Appendix

CLIMATE ACTION PLAN

Agriculture (Denmark)

Agriculture is essential for food pro-

duction across the world. A stable and

sustainable agricultural production is

vital to ensure a sufficient food supply for

a growing global population.

One of the key challenges for the in-

dustry is its impact on the climate. As

much as 25% of global GHG emissions

can be attributed to agriculture,

with

percentages ranging from 14% in Swe-

den

to 25% in Denmark

and 27% in

Northern Ireland

. Agriculture also con-

tributes to the land use, land-use change

and forestry (LULUCF) sector activities,

which represent a significant part of the

EU’s 2030 climate goals and which will

form the basis for national climate plans

and regulations.

As of year-end 2020, Danske Bank’s

agriculture portfolio stood at around DKK

59 billion in on-balance exposure and

was primarily concentrated in Denmark.

It is estimated that our agriculture

customers emit in total approximately

5 million tonnes of CO

(see contributi-

on distribution by source and purpose

in figure 4.10). The carbon footprint of

our customers is the sum of all farming

activities reported for a given business in

2020.

We focus on total carbon emis-

sions rather than financed emissions

alone to better understand our custo-

mers’ transition status. Certain farming

activities (and thus their emissions) are

difficult to link to the specific financial

products that we offer to our customers.

It is therefore important to consider all

of the farming operations of a given

company as whole.

Our actions and expectations for this se-

ctor are aligned with climate targets and

policies put forward in Danish and EU

climate actions plans and with leading

research on lowering emissions from

agriculture.

In October 2021, the Danish govern-

ment agreed that Denmark’s agricultural

and forestry sector should reduce GHG

emissions by 55-65% by 2030 against

a 1990 baseline.

The Danish govern-

ment has set aside more than DKK 27

billion to enable the transition, with the

majority being earmarked for incentives

for adapting to less carbon-intensive

systems of production.

While some high-emitting sectors are

dominated by large companies already

working with sustainability, the agricul-

ture sector consists of many smaller

operations with limited designated sus-

tainability resources. We are financing

and engaging with our customers on

demonstrated technologies and new

processes that are ready to be deployed,

which will result in emission reductions.

Our expectations and support to reduce

emissions from our agriculture port-

folio will follow the rate to achieve the

Danish government’s policy objective of

reducing GHG emissions in the Danish

agricultural and forestry sector by 55-

65% by 2030. However we are not

ready to use this or set specific targets

for Agriculture due to numerous new

technologies and pending roadmap for

Denmark.

For more information on our work with

agricultural customers, please see our

position statement on agriculture.

Please see appendix 1 for an overview of

data sources and methodology.

Figure 4.10: Carbon emission-related sources in the Danish agriculture portfolio

(scope 1 and 2)

Million tCO

2.0

1.5

1.0

0.5

Other

agricultural

activities

Growing

of crops

Mixed

farming

Raising

of cattle

Rasing of pigs

and piglets

Seed and

feeding

Crop- and ﬁeld-related sources

Animal-related sources

Climate Watch, the World Resources institute (2020)

Sweden’s National Inventory Report (2021)

Denmark’s National Inventory Report (2021)

Northern Ireland Greenhouse gas inventory (2020)

It is not limited to farming activities directly or indirectly funded by the bank. The carbon footprint includes both primary agricultural activities and LULUCF activities (excl. forestry).

The Danish Ministry of Finance, ‘Aftale om grøn omstilling af dansk landbrug’ (2021)

https://danskebank.com/sustainability/publications-and-policies

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Contents

Message from our CEO

Our role in the green transition

Our plan to achieve net zero

Lending

CLIMATE ACTION PLAN

Approach to advisory services and solutions

Our approach

To achieve our targets, we collaborate

closely with our customers and actively

provide financial advice and solutions.

The transition to a low-carbon economy

requires significant new investments in

low-carbon production facilities, infra-

structure and transportation as well as

energy-efficiency improvements. At the

same time, it requires limiting invest-

ments in technologies that lock our

societies into high-carbon economies.

These investment decisions are made

by companies, private individuals and

the public sector, namely our customers.

At Danske Bank, we can influence our

customers’ investment decisions by ma-

naging access to capital and the cost of

capital and by providing customers with

sound financial advice.

Assessment of transition plans for

large corporate customers

We want to support our customers

in their own transitions to becoming

net-zero businesses by facilitating

access to capital intended for activities

that support the net-zero transition and

by limiting access to capital for activities

that contribute a high-carbon economy.

To enable us to do this, we have devel-

oped a range of advisory services and

products to help our customers financing

their own net-zero transitions, for examp-

le green loans, green and sustainable

bonds, and sustainability-linked loans.

In order to identify customer needs and

assist us in planning our customer

engagement approach, we in 2022

developed a new methodology to assess

our corporate customers’ transition

plans. The assessments cover the cust-

omers’ current performance and their

short-, medium-, and long-term ambiti-

ons and plans to meet their decarbonisa-

tion strategies and targets. The asses-

sment also evaluates the customer’s

risk of being unable to execute on their

strategies due to external factors, such

as technology and government support,

thereby affecting their ability to succeed

with their transitions.

The outcome includes a transition plan

assessment score in one of four catego-

ries: transitioned, transitioning, start of

transition, and lagging transition. These

scores are then used to inform our enga-

gements with our customers.

In 2022, our initial assessment of custo-

mers subject to high transition risk in the

shipping, oil and gas, and utilities sectors

showed that the exposure to the lagging

transition category is limited.

From 2023, we will continue to carry

out transition plan assessments for

relevant corporate customers in high-risk

portfolios as part of the regular credit

application and renewal processes.

Access to capital for a green economy

As part of our aim to help our customers

access capital for activities that support

the green transition, we facilitate green

loans and bonds, which are used to

raise capital for specific sustainable

projects and activities with environmen-

tal objectives. Green loans and bonds

are important tools for creating trans-

parency of the green credentials of the

activity that is being funded. In the case

of green loans, this transparency allows

us to better allocate capital and moni-

tor the environmental benefits of the

activities being financed. In November

2022 we published our updated Green

Finance Framework, which outlines

the eligibility criteria for green loans. In

the case of green bonds arranged for

our customers, the same transparency

allows our customers better access to

capital from institutional investors with

dedicated green investment mandates.

We have set a target of facilitating DKK

300 billion in sustainable financing by

2023.

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Asset management

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Looking to the future

Appendix

CLIMATE ACTION PLAN

Figure 4.11: Examples of solutions provided to support sustainable progress

Green loans and energy improvement loans

Danske Bank and Realkredit Danmark’s green loans

are aligned with our framework for green finance and

are therefore earmarked for specific green projects.

In 2022, Danske Bank introduced attractive energy

improvement loans for homeowners in Denmark, for

example to finance replacing gas or oil heating.

Green fleet

Through Asset Finance, we offer our GreenFleet70

concept, which helps businesses in Denmark and

Sweden reduce their road transportation emissions.

The concept includes an extensive selection of electric

vehicle models and a number of tools. In 2022, we in-

cluded a tool to report on the fleet’s carbon emissions.

Sustainability-linked loans

Danske Bank’s sustainability-linked loans link the

financing costs of the loan to the corporate customer’s

sustainability performance. For example, in 2022 we

structured the sustainability link for a EUR 500 million

credit facility between the global bioscience company

Chr. Hansen and an international group of banks. Chr.

Hansen’s financing costs are now linked to the com-

pany’s ability to reach its Paris aligned climate targets,

circular management of bio waste and share of revenue

contributing to three selected SDGs.

Sustainable bonds arranged for customers

Sustainable bonds are green bonds, social bonds,

sustainability bonds, and sustainability-linked bonds.

Sustainability-linked bonds are used to finance the

sustainability strategy of the issuer, and the other bond

types are use-of-proceed bonds that exclusively finance

projects that have a positive environmental and/or

social impact. For example, Danske Bank in 2022

supported the EU in issuing a EUR 6 billion green bond

for investments in a greener and more resilient Europe

as part of the NextGenerationEU funding programme.

At Danske Bank, we restrict access

to capital intended for activities that

hinder the transition to a low-carbon

economy. Our specific restrictions are

defined in our position statements and

they set clear expectations for, among

other things, the worldwide phase-out of

coal-fired energy production from our len-

ding portfolios by 2030. Also defined are

our restrictions on financing for oil and

gas companies that continue to expand

production into new fields, which is just

one example of how our restrictions

support the journey towards net zero.

Although some of our financing can be

earmarked for green or sustainable

activities, a significant part of financing

for our large corporate customers is

used to finance the companies’ overall

activities and is not project-specific.

We have therefore set clear indicators

and transition objectives for the most

carbon-intensive sectors, and access to

financing from us is guided by adherence

to these objectives. We want to support

our customers in transitioning to net zero

– particularly customers operating in

carbon-intensive sectors – by providing

them with financing. We want to support

our customers in transitioning – especial-

ly those in carbon-intensive sectors – by

providing them with financing, provided

that we understand their transition

pathway and that it is consistent with the

science-based decarbonisation targets

we have set.

Advisory services

Corporate Customers

We want to be a trusted financial adviser

to our customers, also when it comes

to the green transition. Advisory con-

cepts vary across customer segments

depending on the maturity level and

transition needs of our customers. Our

large corporate customers are generally

well aware of the need to transition and

of the investments that are required to

succeed. For this customer segment,

our financial advisory services revolve

mostly around whether the company’s

business strategy and the transparency

of their plans is sufficient to meet the

financial market’s requirements to

access capital, both from us as a bank

but also from capital markets. Our

approach to our advisory services can

be described with the Sustainable

Finance Wheel illustrated on the next

page, which we use in our dialogues with

our large corporate customers.

For more information on our position statements visit:

https://danskebank.com/sustainability/publications-and-policies

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Contents

Message from our CEO

Our role in the green transition

Our plan to achieve net zero

Lending

CLIMATE ACTION PLAN

Figure 4.12: Danske Bank’s sustainable finance corporate advisory offering

Extensive analysis and advisory services across areas of Sustainable Finance – market analysis, product execution, ESG profile refining

Climate transition analysis

Support in strategic transitioning

• Transition analysis

• Capital allocation

• Credible transition strategy

• Transition financing

Market and regulation overview

Understand the evolving sustainable

finance market

• Taxonomy

• Impacts on access & cost of capital

• Sustainable capital flows

• CSRD

ESG profile enhancement

Enhance your sustainability profile

• Material areas

• Reporting formats

• Investor expectations

• Business strategy

Danske Bank’s

Sustainable

Finance Wheel

Sustainable debt product consulting

Choose the right products

• Green & Social

• Sustainability linked

• Holistic Strategy

• Greenium

ESG risk assessment

Tailored ESG risk assessment

• ESG risk scoring

• Materiality

• Peer comparison

• Where to improve?

ESG rating advisory

Understand and improve ESG ratings

• Importance of ESG ratings?

• Peer comparison

• Which rating to select?

• Gap analysis

Sustainable debt execution

Succeed in execution

• Selecting KPIs

• Communication

• Writing a framework

• Process flow

For mid-sized and small business

customers, our advisory services typical-

ly also include inspiration and guidance

on how to transition and the investments

required. Because many such busines-

ses often have limited dedicated sustai-

nability resources, we offer sparring on

specific actions and initiatives that may

support the customers’ green transition

and most importantly provide financial

advice on how to best finance the

required investments.

Personal customers

We want to make the sustainable choice

easy for our personal customers by

encouraging sustainable behaviour and

change. Our offerings therefore aim to

provide our customers with knowledge,

tools and convenience to enable and

support their green transitions.

Partnerships have and will play a vital

role in our climate and energy offerings

for our personal customers. We colla-

borate with partners that enhance our

climate impact and support sustainabi-

lity goals. Through our chosen partners,

we can offer our customers value-adding

services that help remove barriers they

may face in succeeding with their transi-

tion towards net zero.

One such example is encouraging green

retrofits, where we collaborate with

energy and climate partners to help our

personal customers determine the most

beneficial energy improvement invest-

ments for their homes.

As a financial institution, Danske Bank

plays an important role in offering

financing options for personal customers

looking to make sustainability-related

transitions in the two main areas of hou-

sing and personal mobility (vehicles and

related infrastructure).

Financing for personal customers

•

Energy improvement loans:

In-

creased climate awareness and

soaring energy prices are fuelling a

growing demand for energy-

efficiency home improvements

among our customers. We help

homeowners to increase the

energy-efficiency of their homes by

offering attractive loans specifically

for this purpose. However, financing

through traditional home mortgages

and loans is also a relevant option

for many customers. Key to this is

our ability to provide our customers

with qualified advice about solutions

that match their personal needs and

preferences.

•

Green home loans:

To support our

customers in financing energy-effi-

cient homes, we offer green home

loans with an attractive processing

fee. We are able to provide these

loans because we secure the loan

against homes that have a valid

energy performance certificate (EPC)

rating of A or B, dependent on the

year of construction.

Electric and plug-in hybrid car loans:

Our customers are becoming more

climate-conscious, and many are

looking to replace their petrol or

diesel car with an electric or plug-in

hybrid car. We offer an attractive

interest rate on electric and plug-in

hybrid car loans.

•

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Asset management

Life insurance and pension

Own operations

Looking to the future

Appendix

CLIMATE ACTION PLAN

Example of advisory services within agriculture

We support our agriculture customers in managing their

transition to a low carbon economy through our advisory

services. We help our agriculture customers understand

their carbon footprint and how they can manage the

climate risk affecting their business, amongst others, by

financing green practices such as machinery and equip-

ment that support the shift towards net zero.

Due to the predominance of smallholders in our portfolio,

we have developed a tailored approach for assessing and

monitoring individual customer transition. This allows us to

focus on action-oriented improvements, including but not li-

mited to: [1] introduction of livestock manure management

practices to reduce methane and nitrous oxide emissions,

[2] optimisation of animal feed for lower environmental im-

pact, [3] promotion of carbon sequestration and soil quality

via sustainable land management practices, [4] preserva-

tion of nature and biodiversity via peatland restoration and

land conservation initiatives.

In addition, we work closely with our customers in the

agricultural industry to understand their individual needs

and challenges. We take a material approach and start

with larger customers with higher emissions, and expect

them to take the following actions, amongst others, where

appropriate:

•

monitor scope 1and 2 (and preferably 3) emissions

commitments and targets to reduce emissions

identify the required investments and adjustments to

their business model and engage with the bank on the

required financing

New technologies

Financing large-scale commercialisation

of break-through climate technologies

The transition to net zero also requires

investments in technologies that are still

developing or that are not yet commer-

cially viable. Many of these projects and

activities are not currently at a stage

where traditional bank financing would

be warranted. A way to mitigate these

risks is through cooperation between the

public and the private sector.

An example of such a cooperation is

Danske Bank’s financing for the Finnish

food technology company Solar Foods,

which has a mission to revolutionise

global food production with a protein

manufactured without using arable land,

photosynthetic plants or animals. The

financing for the first production facility

is being provided by Danske Bank with a

guarantee from Finnvera, and Denmark’s

Export Credit Agency (EKF) which are

both specialised financing companies

owned by the States of Finland and

Denmark.

The transition will, however, also require

massive investments in capital-intensive

technologies such as carbon capture,

utilisation and storage (CCUS) and

Power-to-X, supported by substantial

new renewable electricity generation.

Currently, a large number of such

projects are being developed and tested

on a small scale in the Nordic countries

and across the rest of Europe.

The large-scale investments and com-

mercialisation needed to utilise these

technologies will benefit from clear, long-

term, national and EU policies as well as

from initial public sector support to redu-

ce the risk in such projects. This calls for

an opportunity to explore alternatives to

the traditional financing models of banks,

for example in collaboration with public

funds and/or other sources.

With our lending activities, we take a

responsibility in reducing CO

e emissions

in the societies that we are part of

– thereby facilitating our customers’

sustainable transitions towards net zero

and contributing further to the necessary

green transition. We will continue our

work of setting 2030 targets for more

sectors and we will strengthen our advi-

sory services and solutions to continue

being a trusted financial adviser on the

green agenda for our customers.

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Contents

Message from our CEO

Our role in the green transition

Our plan to achieve net zero

Lending

CLIMATE ACTION PLAN

Asset Management –

Enabling investments in the green transition

A significant part of our business con-

cerns investing capital on behalf of our

customers. Our customers expect us to

invest and manage their assets respon-

sibly, and responsible investment is an

integral part of our ambition to grow and

protect our customers’ assets. Incorpo-

rating sustainability and climate consid-

erations into our investment processes,

products and advisory services has been

a key aspect in meeting our customers’

requirements over the past years: we

have built strong processes for including

companies based on the right analysis,

we engage with companies on issues

such as climate-related matters, and

we are prepared to exclude companies

whenever we deem it necessary from a

sustainability perspective.

Alongside our responsibility to protect

our investments from the risks asso-

ciated with climate change, we also have

an obligation to use the opportunity to

engage and influence the companies we

invest in. As an asset manager, Danske

Bank encourages companies to progress

with their own net-zero transitions, and

we support our customers in adjusting

their portfolios to their needs. Ultimately,

we believe our most effective way of

making a positive impact on the climate

is to stay invested and foster change

through active ownership.

Our total assets under management

(AuM) amounted to DKK 860 billion as

of year-end 2020 (baseline year). Our

measured financed emissions amounted

to 16.6 million tonnes CO

e, covering

around 68% of our total AuM with good

data coverage for listed equities and

corporate credits, while sovereign debt

and the majority of unlisted equities

remains to be a data challenge.

As can be seen from figure 5.1, the

materials, utilities, energy, and indus-

trials sectors are the main contributing

sectors, collectively accounting for

81% of our measured financed emis-

sions.

Figure 5.1: Sector contributions to financed emissions by year-end 2020

Consumer discretionary 2%

Utilities 19%

Other 12%

Consumer staples 3%

Energy 16%

Industrials 14%

Financials 1%

Materials 32%

See appendix 2 for description of data, methodology and coverage

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Asset management

Life insurance and pension

Own operations

Looking to the future

Appendix

CLIMATE ACTION PLAN

Asset Management Targets

Danske Bank Asset Management joined

the global Net Zero Asset Managers

Initiative in March 2021, committing to

reaching net-zero emissions by 2050 or

sooner across all assets under manage-

ment, in line with the Paris Agreement.

To support this commitment, we last

year set a concrete emission intensity

reduction target for our investment prod-

ucts (investment funds, managed ac-

counts and pooled investment vehicles).

This year, we have also set temperature

rating targets for listed equities and

credits within our investment products

to further guide our efforts and enhance

transparency on our progress. We have

started with these products with the ex-

plicit aim of increasing the proportion of

AuM covered, until 100% of our assets

are included.

Our targets related to our asset manage-

ment activities are summarised in table

5.1 below:

Table 5.1 Overview of our asset management targets

Coverage

Listed equities

and credits

within our

investment

products

Listed equities

and credits

within our

investment

products

Investment

products

Target

Align portfolio

temperature score by

invested value from

2.7°C to 2.1°C

Metric

°C

Emission

boundary

Scope 1+2

Baseline year

2020

Target year

2030

Target setting method

Temperature rating

methodology

Align portfolio

temperature score by

invested value from

2.9°C to 2.2°C

°C

Scope 1+2+3

2020

2030

Temperature rating

methodology

50% reduction of the

weighted average

carbon intensity

Weighted average

carbon intensity

(tCO

e / DKK m

revenue)

Scope 1+2

2020

2030

Net Zero Investment

Framework and UN

Net-Zero Asset Owner

Alliance Target Setting

Protocol

Net Zero Investment

Framework and UN

Net-Zero Asset Owner

Alliance Target Setting

Protocol

Investment

products

Engagement with the

100 largest emitters

Engage with all 100

companies

N/A

2020

2025

Firstly, we have set temperature rating

targets. Our SBTi-based temperature

rating targets are set for our listed

equities and credits within our invest-

ment products, covering 37% of our

total AuM, and will help identify compa-

nies that have Paris-aligned transition

plans in place by providing a single

number to assess companies’ transi-

tion plans. The approach is a method to

determine a portfolio’s current ‘temper-

ature value’ based on the emissions

reduction

targets of the invested companies.

The set 2030 temperature rating

targets 2.1°C (scope 1 and 2) and 2.2°C

(scope1, 2 and 3) will lead our transi-

tion from our baseline in 2020 towards

1.5°C by 2040 (see figure 5.2), leaving

a decade for the invested companies

to execute on their plans and achieve net

zero by 2050 or sooner.

Secondly, as part of our commitment to

the Net Zero Asset Managers Initia-

tive, we in 2021 set a carbon weighted

Figure 5.2: Temperature rating - Asset management portfolio

Scope 1&2

Scope 1 3

°C

3.0

2.2

2.1

1.50

2.5

2.0

1.5

1.0

0.5

2020

2025

2030

2035

2040

0.0

Funds, managed accounts, pooled investment vehicles

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Contents

Message from our CEO

Our role in the green transition

Our plan to achieve net zero

Lending

CLIMATE ACTION PLAN

average intensity target (tonnes of CO

per million turnover in DKK within the

respective investee companies) for our

investment products, covering 54% of

our total AuM, in order to continuously

be able to assess whether our transition

is progressing according to plan.

The

weighted average carbon intensity of

our investment portfolio was around 14

tonnes of CO

e per million of turnover in

DKK as of year-end 2020.

Thirdly, in relation to our net-zero

commitments, we have also set an

engagement target through which we

commit to engaging with the 100 largest

emitters in our investment portfolios by

2025. Our engagement roadmap steers

our approach and builds on many years

of previous engagement and includes

aspects relating to, for example, net-zero

alignment criteria, time-bound com-

pany-level objectives, and escalation

processes.

How do we assess our investee

companies?

We focus on the following in our as-

sessments of alignment in line with the

Net Zero Investment Framework (NZIF).

1. Ambition

2. Targets

3. Emission performance

4. Disclosure

5. Decarbonisation strategy

6. Capital asset alignment

7. Climate policy engagement

8. Climate governance

9. Just transition

10. Climate risks and accounts

Approach to climate investing

As a responsible investment manager,

we are mindful of how climate-related

factors impact investment performance

(financial materiality) and how our

investments may have positive and/or

negative impacts on the climate (impact

materiality). We refer to this as double

materiality considerations. We believe

that attentiveness to climate dimensions

when investing is a cornerstone of our

fiduciary duty to create value for custom-

ers and to create a responsible invest-

ment product offering that supports the

transition to a more sustainable society.

For a climate factor to be considered

financially material, it needs to have the

potential to translate into investment

performance and have a negative (or

positive) impact on either the revenue,

expenses, value of assets, value of

liabilities or the cost of capital for the

company. By analysing climate factors in

conjunction with other financial factors,

it is possible to gain greater insights into

the investments and thereby identify

climate risks and climate investment

opportunities. We believe that climate

risk exposures should be well managed

and influence decisions on whether to

either increase, maintain or decrease

weightings. Climate risks also steer our

active ownership activities and can lead

to full divestments.

We analyse and assess the negative

and positive impacts of our investments

to address these aspects in accordance

with the needs of our customers. As

one of the largest asset managers in the

Nordic region, we have both the ability

and the determination to be part of find-

ing solutions to the climate challenges

our planet and societies are facing.

and these considerations influence our

investment decisions. As a minimum

standard, PAIs are managed through ex-

clusions and active ownership activities.

However, this may be supplemented by

inclusion criteria that further addresses

specific climate-related PAIs.

Principal adverse impacts

We also identify positive

Carbon emissions, car-

climate impacts

bon footprint,

from investments

fossil fuel expo-

by screening

sure, and

How investments

issuers and

greenhouse

impact climate

companies for

gas intensity

best-in-class

are examples

operations

of so-called

and positive

principal

contributions

adverse im-

Investment

Climate

to climate

pacts (PAIs)

objectives

related to cli-

as part of

mate that are

How climate-related

our sustaina-

considered in

factors impact

ble investment

our investment

investment

assessment, or

processes. We

through the promoting

prioritise the manage-

of sound environmental

ment of these impacts

stewardship through certain

at a Group level in accordance

investment products

as integrated in

with our position statements and other

sustainability-related policies, strategies

investment strategies and portfolios for

and commitments.

a variety of our investment products.

The PAIs are identified through our

screening of environmental and social

impact materiality. From an investment

product perspective, the management

and prioritisation of PAIs related to

climate are defined by the given strate-

gy and investment portfolios/activities

EU’s climate benchmarks

We also have index products that track

either of the two EU climate benchmarks

– the Climate Transition Benchmark or

the Paris-Aligned Benchmark – enabling

our investors to invest in companies

engaging in the climate transition.

We have chosen to adopt the IPCC SR1.5 P2 pathway as the underlying scientific framework, supported with IEA’s Net Zero by 2050 pathway

The weighted carbon intensity is measured based on the portfolio where carbon data is available, see appendix 2 for details on data and methodology

As defined in the SFDR Annex in the prospectus for each of these funds.

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Asset management

Life insurance and pension

Own operations

Looking to the future

Appendix

CLIMATE ACTION PLAN

What are the EU’s climate benchmarks?

The two benchmarks provide a robust and consistent framework for investors to incorporate specific objectives related to greenhouse

gas emission reductions and the transition to a low-carbon economy through the selection and weighting of underlying investments.

The benchmarks are based on the Paris Agreement target of limiting global warming to well below 2°C and ideally 1.5°C by the end of the

century, and the goal is to help further mobilise and move investor capital towards activities that contribute to fighting climate change.

Table 5.2: Overview of EU climate benchmarks

EU Climate Transition Benchmark

Minimum carbon intensity reduction compared

against investable universe

Year-on-year self-decarbonisation of the

benchmark

Exposure constraints

30%

EU Paris-Aligned Benchmark

50%

At least 7% on average per annum: in line with or beyond the decarbonisation trajectory from the

UN’s Intergovernmental Panel on Climate Change 1.5°C scenario

Minimum exposure to sectors highly exposed to climate change issues is at least equal to equity

market benchmark value

Investment products may in that respect,

for instance, apply inclusion to invest fully

or partially in sustainable investments

or in investments aligned with the EU

Taxonomy’s criteria for environmentally

sustainable economic activities. We man-

age investment products with different

levels of sustainability ambitions, enabling

our customers to select the products best

designed to cater for their sustainability

preferences. For further information on

how we incorporate adverse impacts

and positive impact considerations into

responsible investment products, see

pre-contractual documentation and re-

porting for these investment products.

It is important to differentiate between

achieving net zero in the real world

versus in an investment product. In order

to reach the climate goals in the Paris

Agreement, real-world decarbonisation

is needed. An investment portfolio can

be decarbonised by reducing or eliminat-

ing exposure to companies in carbon-

intensive sectors such as aviation,

cement, steel and utilities; however, it is

not certain that such an approach will

yield impacts in the real world. As also

discussed in the section on lending,

companies in high-emitting sectors need

financing and also investor capital to

be able to innovate, decarbonise and

transition.

Therefore, it is important that we as in-

vestors consider all tools available when

working towards net zero. Investors can

shape tomorrow’s companies by taking

a forward-looking view and choosing to

invest into companies that are on an

ambitious and credible transitional path-

way. Such companies can have a high

e emissions legacy profile, but as

investors, we are owners of companies

and can together with other investors

influence the companies and encourage

them to embark on a net-zero transition

pathway. Alternatively, if companies are

unwilling to transition, we can divest and

reduce their funding options.

We believe that it is important to

consider inclusion, active ownership and

exclusion when optimising real-world

climate impacts, taking into account our

fiduciary duty.

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Contents

Message from our CEO

Our role in the green transition

Our plan to achieve net zero

Lending

CLIMATE ACTION PLAN

Inclusion

We work with a) financially material climate

issues and consider them as factors in the

investment process along with financial

factors and b) climate perspectives from an

impact materiality perspective.

Active ownership

We engage with selected companies –

either directly or in collaboration with other

investors and stakeholders – and seek to

influence them to manage their climate

issues and reduce their contribution to

climate change. We voice our opinion at

general meetings.

Exclusion

We exclude certain companies that

are involved in activities, practices or

products that materially contribute to

climate change.

For each of the three areas outlined above, we have launched a number of initiatives aimed at bringing our assets in line with a 1.5°C

scenario over time.

Inclusion

Assessing how companies manage

climate issues and participate in the

green transition is a key consideration

when we invest our customers’ assets.

In this way, we can better invest our

customers’ assets in companies that are

proactively addressing climate issues,

thereby reducing the customers’ contri-

butions to climate change and embracing

green growth opportunities.

Climate risk considerations are included

in the selection of investments in the

same way as other risk considerations.

Appreciating that investments have

different characteristics and are affected

differently by sustainability factors, the

investment team tailors the inclusion of

sustainability factors potentially leading to

sustainability risks to the specific invest-

ment strategy and asset class. Over time

we will further formalise Inclusion criteria

related to net zero on individual products

considering our fiduciary duty.

where companies might not transform,

we exercise active ownership through

three channels.

1. Individual engagement

We engage on a regular basis with

investee companies about material

climate-related matters to seek impro-

vements in performance and processes.

The aim is to enhance and protect the

value of our customers’ investments

while also creating a positive impact on

society. Reasons for engaging in climate-

related dialogue can for example be to:

•

inform about voting decisions and

guidelines related to climate

clarify publicly disclosed climate

information from companies

conduct climate research

identify and assess the quality of

available climate data

understand performance and identify

potential vulnerabilities related to

climate issues

develop insights into climate-related

risks and opportunities

identify potential climate-driven

regulatory developments and impacts

•

Climate Change (IIGCC)

Montréal Carbon Pledge

Partnership for Carbon Accounting

Financials (PCAF)

CDP (formerly the Carbon Disclosure

project)

Read more about our

collaborative

engagement here.

3. Voting

Voting at annual general meetings is a

way of influencing and supporting com-

panies to escalate their activities related

to climate matters, thereby improving

their long-term value creation. We vote

on numerous proposals related to

climate issues, and we coordinate our

voting activities with our engagement

activities to maximise our ability to in-

fluence and support companies’ climate

strategies.

Our voting guidelines outline our general

approach to climate accountability and

particularly focus on emissions. Our

guidelines include:

•

Carbon emissions: Set and publish

targets for greenhouse gas emis-

sions aligned with the goals of the

Paris Agreement and be transparent

in communicating efforts to mitigate

and combat climate change.

Carbon footprint: Companies should

have a clear reporting framework for

their climate change contribution and

greenhouse gas emissions, including

future targets, carbon intensity and

an estimation of the company’s

carbon footprint.

•

Active ownership

By actively engaging with companies, not

only do we gain better insight but we can

also influence and support them in cur-

bing their contribution to climate change

and encourage them to participate in the

transition to a net-zero economy. We be-

lieve that by leveraging active ownership

activities, our investments will be able

to better address climate-related issues

and subsequently contribute to a positive

societal development. In situations

2. Collaborative engagement

We are members of numerous investor

initiatives and alliances, through which

we together with other investors seek to

influence companies to take action on

climate issues, curb carbon emissions

and contribute to green transformations.

We are members of:

•

Climate Action 100+

Institutional Investors Group on

•

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Asset management

Life insurance and pension

Own operations

Looking to the future

Appendix

CLIMATE ACTION PLAN

Our engagement with ExxonMobil led to exclusion

Background

Due to lack of progress within its contribution to the sustainable transition of

society, Danske Bank decided in 2021 to exclude ExxonMobil from our invest-

ment universe. The reason was lack of progress in the company’s contribution

to the sustainability area, specifically including questionable lobbying methods

that according to our analysis a) lacked substantially in terms of transparency

while also b) working against the green transformation of society.

Decision

We would have preferred to be active owners and try to influence the compa-

ny into a more sustainable transition. In the months leading up to the decision,

our efforts to establish a constructive dialogue around the specific issues

with ExxonMobil proved unsuccessful, and as a consequence we decided to

exclude.

XXX

•

Energy consumption: Energy con-

sumption and energy intensity should

be reported, including the breakdown

of energy consumption by type of

renewable or non-renewable source

of energy. Companies should have

an emissions reduction target, in line

with Paris Agreement targets, as well

as information about multi-year green-

house gas emissions development.

Stranded carbon assets: Com-

panies with large investments

in carbon-based energy sources

should have a clear risk assessment

framework in reference to the Paris

Agreement targets.

Exclusions

We exclude certain companies to reduce

investments in activities resulting in sig-

nificant negative impact on the climate,

including investments in companies

where thermal coal, tar sands and pe-

at-fired power-generation is a significant

part of the business model. We strive

to impose similar commitments on our

external managers.

Apart from revenue-driven climate-

related exclusions, we also exclude com-

panies from a climate perspective based

on our Enhanced Sustainability Standards

analysis. Currently, more than 40 com-

panies are restricted within the sub-

category Climate Change Contribution.

For certain products, the climate-related

exclusions are expanded to also cover

fossil fuels with a revenue threshold of

5%. Over time, we will develop additional

exclusion categories to further accom-

modate the decarbonisation agenda

towards our strategic aim of achieving

net zero by 2050 or sooner.

For more information on exclusion defini-

tions, activities, criteria, scope and thres-

holds employed by Danske Bank Asset

Management, please see our

exclusion

instruction.

We have started on our journey towards

net zero by 2050 or sooner and must act

firmly and prudentially to achieve what

our customers ask from us: support for

the green transition whilst delivering

strong investment performance. We

will continue to enhance our investment

processes to ensure that we actively

contribute to society and the green tran-

sition in cooperation with our customers

and the companies we invest in.

You can see how and where we vote

at annual general meetings (AGMs)

through our

Voting Guidelines

and intera-

ctive

Proxy Voting Dashboard.

Table 5.3: Climate-related investment restrictions applying to all fund investments

Type

Tar sands

Activity

Surface mining

In-situ recovery

Thermal coal

Surface mining/‘opencast mining’

Underground mining/’deep mining’

Power generation

Peat-fired power generation

Enhanced Sustainability Standards

Power generation

Climate change contribution

Criteria/Threshold

5% revenue

n/a

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Contents

Message from our CEO

Our role in the green transition

Our plan to achieve net zero

Lending

CLIMATE ACTION PLAN

Life insurance and pension

– Facilitating investments in the

green transition

Contributing to society’s green transition

while simultaneously delivering attractive

returns for our customers is at the core of

our life insurance and pension activities

through Danica Pension, which is a wholly

owned subsidiary of Danske Bank.

Our ambition is to contribute to the

transition to a carbon-neutral society and

invest in line with the Paris Agreement’s

goal of limiting global temperature rise to

a maximum of 1.5°C.

For companies, the green transition

brings with it a number of climate-related

risks and opportunities that may affect

our customers’ investments. Conse-

quently, the climate agenda plays a

central role when we invest our cus-

tomers’ pension savings with the aim of

creating the best possible returns. By

analysing, assessing and managing the

climate-related risks and opportunities

of our investments, we can protect the

value of our customers’ investments and

ensure that investments contribute to

the green transition.

Our total assets under management

(AuM) in our Danica Pension portfoli-

os amounted to DKK 454 billion as of

year-end 2020. The measured financed

emissions amounted to 5.7 million

tCO

e, covering around 73% of our

total AuM, with good data coverage for

listed equities and corporate credits,

while sovereign debt and the majority of

unlisted equities remains to be a data

challenge.

As can be seen from the figure 6.1,

the sectors that contribute most to our

financed emissions are the materials,

industrials, utilities, and energy sectors,

collectively accounting for 74% of our

financed emissions.

The weighted average carbon intensity

of Danica Pension’s investment within

the above-mentioned coverage was 9.8

tonnes of CO

e per million of turnover

DKK within the respective investee

companies as of year-end 2020.

Figure 6.1: Sector contributions to financed emission by year-end 2020

Consumer discretionary 4%

Utilities 16%

Consumer staples 3%

Energy 12%

Healthcare 1%

Industrials 18%

Other 17%

Materials 28%

Information technology 2%

See appendix 3 for description of data, methodology and coverage

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Life insurance and pension

Own operations

Looking to the future

Appendix

CLIMATE ACTION PLAN

Life insurance and pension

targets

Through our membership of the UN-

convened global investor initiative

Net-Zero Asset Owner Alliance, Danica

Pension has committed to achieving a

net-zero investment portfolio by 2050

or sooner in line with the Paris Agree-

ment and to limiting global temperature

increase to a maximum of 1.5°C.

We have set a number of climate targets

to support this commitment, in align-

ment with guidelines from the Science

Based Targets initiative and the Net-Zero

Asset Owner Alliance.

Our targets related to our life insurance

and pension activities are summarised in

table 6.1 below.

Table 6.1: Overview of life insurance and pension targets

Coverage

Listed equities

and credits

Target

Align portfolio

temperature score by

invested value from

2.5°C to 2.0°C

Align portfolio

temperature score by

invested value from

2.8°C to 2.2°C

Reduce carbon

emission intensity in

real estate portfolio by

69%

Reduce carbon

emission intensity in

our investments in the

energy sector by 15%

Reduce carbon

emission intensity in

our investments in the

transportation sector

by 20%

Reduce carbon

emission intensity in

our investments in the

utilities sector by 35%

Reduce carbon

emission intensity in

our investments in the

cement sector by 20%

Reduce carbon

emission intensity from

our investments in the

steel sector by 20%

Metric

°C

Emission

boundary

Scope 1+2

Baseline year

2020

Target year

2030

Target-setting method

Temperature Rating

Methodology

Listed equities

and credits

°C

Scope 1+2+3

2020

2030

Temperature Rating

Methodology

Real estate

portfolio

e/m

Scope 1+2+3

2019

2030

Portfolio target

Energy

gCO

e/MJ

Scope 1+2+3

2019

2025

Sector target

Transportation

Shipping:

gCO

e/tKM

Automotive:

gCO

e/km

Aviation:

gCO

e/RTK

tCO

e/MWh

Shipping/

Aviation:

Scope 1

Automotive:

Scope 3

Scope 1

2019

2025

Sector target

Utilities

2019

2025

Sector target

Cement

tCO

e/tCement

Scope 1

2019

2025

Sector target

Steel

tCO

e/tCrude Steel

Scope 1+2

2019

2025

Sector target

Firstly, we have set temperature rating

targets to ensure that investee compa-

nies have Paris-aligned transition plans

in place. The temperature rating targets

for 2030 will guide our transition from

our baseline in 2020 to 1.5°C by 2040,

leaving 10 years for execution, within our

investments in equities and corporate

credits covering around 32% of our total

AuM.

Secondly, as a major real estate owner,

we find it important to also have a spe-

cific emission intensity reduction target

for our real estate portfolio, which we

have set to 69%, based on a 1.5°C

trajectory model from CRREM (Carbon

Risk Real Estate Monitor).

Thirdly, we have set a number of emis-

sion intensity reduction targets for five

key sectors in Danica Pension’s portfolio,

namely energy, transportation, utilities,

cement, and steel. These targets have

been set as part of our commitment

to the Net-Zero Asset Owner Alliance.

The sector targets for energy, trans-

portation, utilities, cement, and steel

were set in March 2021, accounting for

approximately 35% of the total portfolios

measured CO

e emissions, are in align-

ment with the 1.5°C goal of the Paris

Agreement. We are working proactively

through a number of actions to engage

with companies in these sectors, as

outlined in the following section.

Our temperature rating targets for our

life insurance and pension activities and

our real estate portfolio target have been

submitted for validation by the Science

Based Targets initiative.

Please see appendix 3 for an overview

of data sources, methodology, target-

setting and scenarios.

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Contents

Message from our CEO

Our role in the green transition

Our plan to achieve net zero

Lending

CLIMATE ACTION PLAN

Approach to decarbonising our portfolios

To further reinforce our commitment to supporting the green transition and investing in line with the Paris Agreement, we have

launched a number of initiatives aimed at bringing our life insurance and pension portfolio in line with a 1.5°C scenario over time.

Our initiatives and actions are structured around three areas:

Investing in the green transition

Our ambition is to invest DKK 50 billion

in the green transition by 2023 and

DKK 100 billion by 2030.

Active ownership

We engage with selected companies – either

directly or in collaboration with other investors

and stakeholders – and seek to influence them

to manage their climate issues and reduce

their contribution to climate change. We voice

our opinion at general meetings.

Exclusion

We exclude certain companies that

are involved in activities, practices or

products that materially contribute to

climate change.

Investing in the green transition

At Danica Pension, our ambition is to

invest at least DKK 50 billion in the

green transition by the end of 2023

and DKK 100 billion by 2030 at the

latest. This ambition helps to create

attractive returns for our customers

and contributes to our climate

commitments.

Danica Pension’s investments in the

green transition amounted to DKK 37

billion at the end of September 2022

(see figure 6.2). Whereas investments

have been affected by a decline in

market prices for equities and bonds,

the value of sustainability-certified real

estate and green bonds is pulling in the

opposite direction.

Active ownership

As part of our efforts to advance the

transition, we use our pension assets

to encourage and influence investee

companies to commit to reducing their

carbon emissions and aligning their

business with the goals of the Paris

Agreement.

By actively engaging with companies,

not only do we gain a more comprehen-

sive insight but we can also support

the companies in curbing their contri-

bution to climate change – and support

their participation in the transition to a

net-zero economy. We exercise active

ownership through the following three

channels:

1. Individual engagement

We engage directly with company man-

agement and/or boards to gain greater

insight into the company’s climate

strategies. We discuss how companies

can replace fossil energy with greener

alternatives or reduce the climate impact

of their products. Through dialogue, we

can help shape the companies of the

future and encourage them to commit to

contributing to global climate goals.

In 2022, Danica Pension focused on

active ownership and dialogue with

energy companies, discussing the balance

between mitigating the energy crisis and

increasing the contribution made by these

companies to the green transition. In ad-

dition, we held in-depth discussions with

our steel sector customers to significantly

boost climate action through new solu-

tions such as green hydrogen, steel-built

electric trains powered by renewable ener-

gy and facilities to capture and store CO

More information about our active own-

ership activities is available in our

active

ownership report.

2. Collaborative engagement

Danica Pension is a member of numer-

ous investor initiatives and alliances,

through which we together with other

investors seek to influence companies to

take action on climate issues, curb car-

Figure 6.2: Investment in the green transition progress and targets

DKK billion

100

10.3

2019

Progress

2022

Targets

2023

2030

Source: Danica Pension (2022)

Danica Pension will adhere to the EU Taxonomy from 2024 at the latest when setting future targets for investments in the green transition. When and how this will happen depends on further

maturation of the taxonomy criteria and improved data quality to assess whether activities meet the taxonomy. In addition, government bonds are not currently covered by the taxonomy. This is a

challenge to be addressed in the future objective.

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Life insurance and pension

Own operations

Looking to the future

Appendix

CLIMATE ACTION PLAN

Investments that support the green transition include:

Green infrastructure

Green infrastructure investments cover infrastructure projects related to renewable energy

such as wind, solar, biomass and hydropower. These investments are made through funds

managed by Copenhagen Infrastructure Partners, Global Infrastructure Partners and others.

For example, Danica Pension has invested in the US offshore wind farm Vineyard Wind I,

which provide renewable energy to cover the annual energy consumption of 400,000

households. In addition, Danica Pension has invested in the Scottish offshore windfarm

Beatrice, which is the fourth largest offshore windfarm in the world and covers the annual

energy consumption of up to 450,000 households.

Green bonds

Green bonds finance solutions and products in areas such as renewable energy, pollution

control, clean water, waste and wastewater management, and energy efficiency. For

example, Danica Pension has invested in green bonds issued by the governments of the

Netherlands, Belgium and Ireland.

Equity and bond investments in the green transition

This covers investments in companies that provide products, technologies or solutions that

focus on areas such as energy efficiency and renewable energy. Examples include equity

and corporate bond investments in Vestas, Ørsted and Rockwool.

Sustainable real estate

We work to ensure that the properties we own have a healthy indoor climate, positive

social qualities, and low climate and environmental impact. As part of this work, we have

sustainability-certified properties that meet high standards. This contributes to the green

transformation and results in attractive properties that provide stable and future-proof

investment returns. Among other things, we use sustainability certifications from DGNB.

bon emissions and contribute to green

transformations. One way we do this is

through the investor-led Climate Action

100+ initiative.

A list of the companies we are in dia-

logue with via Climate Action 100+ is

available

here.

3. Voting

Voting at company general meetings

is a way of influencing and supporting

companies to increase and improve their

work with climate-related matters, there-

by improving the companies’ long-term

value creation. We vote on numerous

proposals related to climate issues, and

we coordinate our voting activities with

our engagement activities to maximise

our ability to influence and support com-

panies’ climate strategies.

In 2022, the focus of Danica Pension’s

voting activities included putting pres-

sure on US banks to contribute to the

green transition. In line with the objec-

tives set out in the Paris Agreement,

Danica Pension supported proposals

made at general meetings to stop banks

from financing new gas, coal or oil

projects.

Details of how and where we vote at

investee company general meetings is

available through our

interactive dash-

board.

Exclusions

Companies must show that they have

plans or the intention to transition to a

green pathway in alignment with the

Paris Agreement. We expect compa-

nies to set climate targets and put in

place specific action plans that create

significant progress in reducing carbon

emissions. If they do not adapt quickly

enough, we may choose to adjust our

investments or ultimately exclude them.

A number of companies have been

excluded for failing to meet our climate-

related expectations. A list of excluded

companies is available

here.

Our work will continue

We will continue to build on our strong

processes to ensure we actively contri-

bute to society and the green transition

though our life insurance and pension

activities in cooperation with our pension

customers and the companies we

invest in.

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Contents

Message from our CEO

Our role in the green transition

Our plan to achieve net zero

Lending

CLIMATE ACTION PLAN

Own operations – reaching net zero

Although the largest proportion of our

overall carbon footprint can be attributed

to our lending and investment activities,

it is important that we also minimise the

environmental footprint from our own

operations to achieve our goal of becom-

ing a net-zero bank by 2050 or sooner.

And only by minimising the environmen-

tal footprint from our own operations,

can we take a lead on sustainable

finance and inspire our customers and

other stakeholders in their own transition

journeys.

Within Danske Bank’s business

operations, our focus is to make emis-

sion reductions across all scopes in

line with best-practice and industry-

recognised frameworks.

Our emissions

Our operational carbon emissions across

scopes 1, 2 and 3 in 2022 constituted

6,979 tonnes CO

e. The emissions

cover the actual consumption from all

countries across the Group’s opera-

tions

The categories with the highest

emissions in 2022 were air travel,

purchased electricity and heating,

and working from home. Emissions

from purchased electricity accounted

for 5,840 tonnes CO

e, which were

Figure 7.1:

Carbon emissions from own operations in tonnes across

scope 1, 2 and 3 in 2022 (market-based)

Renewable electricity: 0

Working from home: 1,342

Paper: 187

Purchased heating: 1,871

On-site heating: 235

Company cars: 231

Air travel: 2,346

Employee cars: 766

Source: Danske Bank carbon emission calculations

We extrapolate – based on FTE figures – for those countries where we do not yet have actual data. The reporting period for the year 2022 runs from Q4 2021 to Q3 2022. We report our CO

emissions based on the Greenhouse Gas Protocol.

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Own operations

Looking to the future

Appendix

CLIMATE ACTION PLAN

compensated for with the purchase

of guarantees of origin for renewable

electricity and are, as such, reported as

zero when market-based accounting is

applied.

Our work to increase the transparency

and scope of our reporting with the aim

of measuring all of our relevant scope 3

categories is ongoing, and throughout

2022 we expanded our reporting to

include emissions from working from

home. We will continue to work on

establishing emissions from other key

categories such as employee commut-

ing, waste and our supply chain.

By 2030, we aim to have reduced our

combined scope 1, 2 and scope 3 car-

bon emissions by 60%. This target has

been set to capture as broad a scope

as possible. We will continue to include

additional scope 3 categories as data

availability improves.

We have also set an 80% reduction

target in 2030 for scopes 1 and 2 only,

ensuring that higher ambitions reflect the

greater level of control and influence we

have over these categories.

Our absolute emission target of 80% for

scopes 1 and 2 of our own operations

has been submitted for validation by the

Science Based Targets initiative.

Please see appendix 4 for an overview

of data sources, methodology, target-

setting and scenarios.

Table 7.2: Overview of own operations emission reduction targets

Own operations targets

Target

Scope

Scope 1, 2 and

currently measured

scope 3 categories

Metric

tCO

Target-setting

method

Absolute emission

reduction

In addition to our long-term target of

becoming net zero by 2050 or sooner,

we have set intermediate 2030 targets

to steer our transition path within our

own operations. These intermediate tar-

gets have been set based on an analysis

of our operational footprint and are in line

with a Paris-aligned pathway. Danske

Bank’s own-operations targets are sum-

marised in table 7.2.

Reduce carbon

emissions in own

operations by 60%

from 2019 to 2030

Reduce carbon

emissions in Scope 1

and 2 by 80% from

2019 to 2030

Scope 1 and 2

tCO

Absolute emission

reduction

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Table 7.1

Contents

Message from our CEO

Our role in the green transition

Our plan to achieve net zero

Lending

CLIMATE ACTION PLAN

Approach to reducing our own environmental footprint

We have several initiatives across our business operations to reduce our emissions. These range from ongoing efficiency measures

to one-off transitions towards low-carbon alternatives. With these measures, we will work towards reducing our scope 1, 2 and 3

emissions in accordance with our targets.

Table 7.1: Overview of emission reduction initiatives

Target

SCOPE 1

Electric vehicles

Transition to 100% electric company

vehicles

On-site heating

Transition from gas and oil to electric

heating across Northern Ireland portfolio

Scope

The Danske Bank Group

Metric

In progress

Emissions impact

100% emissions

reduction from fuel

100% emission reduction

Danske Bank Northern

Ireland

In progress

In 2022, transition to

electricity was completed

across 100% of free-

standing branch network

In discussions with

landlords

On-site heating

Transition to district heating across

Denmark Portfolio

On-site heating

100% biogas solution for Denmark

Four sites in Denmark

portfolio currently with

on-site gas heating

For those sites where

a transition to district

heating is not possible

or is delayed, purchase

of guarantees of origin

for biogas to neutralise

emissions

The Danske Bank Group

100% reduction of scope

1 emissions, emissions

from district heating

reported in scope 2

100% emission reduction

Ongoing from 2022

onwards

SCOPE 2

Purchased electricity

100% renewable electricity across portfolio

Purchased heating

Footprint management – energy-efficient

buildings and efficient use of office spaces

Ongoing

100% emission reduction

in market-based reporting

Emissions savings

dependent on project

Ambition to cut air travel

emissions 70% by 2030

in relation to 2019

Ensure that products and

services are produced

responsibly

Emissions from paper use

declined 50% since 2019

baseline year

Impact not currently

tracked

Emissions impact for

waste category not

tracked due to lack of

historical data

SCOPE 3

Air travel

Active management of business travel

Supplier assessment

All active suppliers to be ESG assessed by

new supplier ESG assessment process by

2023

Paper use

Continued focus on digitalisation and tools

to reduce printing

Employee cars

EV charging infrastructure at Danske Bank

sites

Waste in operations

Implementation of Winnow food waste

reduction technology

The Danske Bank Group

Ongoing

The Danske Bank Group

Ongoing

The Danske Bank Group

Ongoing

The Danske Bank Group

In progress

Danske Bank Finland,

Denmark and Lithuania

In progress

Reducing as much as we can and offsetting the rest

Our highest priority is to make reduc-

tions within our emissions categories

and to reduce as much as we can to

minimise our own operational footprint.

However, some emissions are unavoida-

ble, and Danske Bank has been offset-

ting remaining operational emissions

annually since 2009.

Our offsetting practices have evolved

over the years, and in 2022 we set

increased ambitions informed by current

best practices and leading authorities,

such as the SBTi Net-Zero methodology

and the Oxford Offsetting Principles.

As from 2022, we purchase 100%

carbon removal offsets for our internal

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Life insurance and pension

Own operations

Looking to the future

Appendix

CLIMATE ACTION PLAN

operations, ensuring that every tonne

is compensated for by 1 tonne of CO

removed from the atmosphere. The

majority of our offset portfolio in the near

future will be built on nature-based remo-

val solutions such as reforestation or

afforestation projects. We will also invest

a smaller proportion of our offsetting into

new technology-based solutions in order

to promote investment and development

in new solutions and innovations in

carbon removal, which are necessary

to enable us to achieve the scientific

net-zero scenarios.

To ensure the quality and additionality

of our actions, 100% of our emissions

from our own operations are offset

through ICROA-approved certified

projects.

Suppliers

In addition to our targets, we have set

an objective that all our active suppliers

will be ESG assessed by 2023, including

all suppliers in active tendering process-

es. As well as safeguarding that the

products and services we purchase are

produced responsibly, our procurement

processes also help our suppliers to

improve their ESG performance.

Footprint management

Energy saving initiatives in our premises

Energy represents one of our biggest CO

contributors within our internal opera-

tions and is therefore an ongoing area of focus. We are switching to LED lights,

installing automatic or motion sensors and turning off unnecessary lighting across

our premises in the Nordic countries, India and Lithuania. To minimise heating, we

are running initiatives to reduce the temperature in our offices and are upgrading

ventilation, insulation and cooling operating systems.

Managing and reducing the carbon footprint of our premises to increase space

efficiency also has a large impact on our scope 2 energy consumption.

Impact of initiative

In 2022, energy saving initiatives enabled us to reduced emissions from purchased

heating by 39% in relation to 2021.

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Contents

Message from our CEO

Our role in the green transition

Our plan to achieve net zero

Lending

CLIMATE ACTION PLAN

Looking to the future

Climate as our guiding principle

Danske Bank’s Climate Action Plan, Our

Roadmap to Net Zero, sets out Danske

Bank’s ambitions for reaching net zero

by 2050 or sooner.

Several years of work with sustainability

and the climate agenda has made the

publication of this plan possible, and it

sets out our direction based on what we

know today and how we hope the world

to progress.

As a large financial institution, Danske

Bank plays an important role in society

and therefore has a responsibility to

make a positive impact on the climate.

We do so through four impact areas:

•

Lending:

the money we lend to

customers

•

Asset management:

the invest-

ments we make on behalf of our

customers

•

Life insurance and pension activi-

ties:

the pension assets we manage

on behalf of our beneficiaries

•

Own operations:

the emissions we

generate through daily business

operations

This plan sets out specific targets for

our most important sectors and activi-

ties. Our targets are based on the latest

scientific research and will ensure our

continuing progress towards achieving

our net-zero ambitions.

In addition, we have outlined the activ-

ities and actions we are undertaking

to support our targets. By integrating

climate considerations into our products,

our advisory services and our risk

management systems and processes,

we are able to address the Group’s entire

portfolio, which in turn will support our

customers in adapting to and benefitting

from the green transition.

Investing in the sustainable future

and transformation

Across many sectors, breakthrough

climate technologies will help transform

our society and energy systems – both

in terms of providing green energy

to industries and also in terms of

providing new sustainable business

solutions.

Financing of and investing in such

developing technologies is essential,

examples of which include new ways

of farming and producing food, new

developments of renewable electricity

production and technologies such as

Power-to-X, carbon capture and power

storage technologies.

Danske Bank will be part of the large-

scale investments and commercialisa-

tion needed to utilise and benefit from

these technologies. In addition to relying

on clear, long-term, national and EU poli-

cies, we will also rely on initial public sec-

tor support to minimise the risk involved

with such projects. In our dialogues with

policy makers and societal stakeholders,

we will advocate for balancing the need

for support with the opportunities in

new financing models in public-private

partnerships.

Interconnected crises

Our climate action plan addresses our

climate actions and targets. However,

the climate crisis is interconnected with

other crises such as the loss of biodiver-

sity and the persistent global inequality.

Our economy and our businesses

depend on the natural environment and

its resources. The loss of ecosystems

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Own operations

Looking to the future

Appendix

CLIMATE ACTION PLAN

will have as significant an impact on the

world as climate change, and we need

to address the matter urgently to avoid

negative repercussions for our eco-

systems, our livelihoods, our communi-

ties and ultimately our global economy.

For Danske Bank, preserving biodi-

versity is a high priority, and we have

already begun to assess and incorpo-

rate biodiversity into our business and

risk assessments. However, we require

more knowledge and more data, and this

remains a challenge we need to address.

One solution is science-based indicators,

which will help us to channel capital

towards activities that have a positive

effect on biodiversity. Similarly, we also

need data on how businesses and activi-

ties affect biodiversity.

Our work in this area is already under

way, and we signed the Finance for Bio-

diversity Pledge and committed to The

Partnership for Biodiversity Accounting

Financials (PBAF) in 2022. Through

our commitments, we can develop the

framework and tools necessary to enable

us to address the biodiversity crisis.

Reporting and transparency

We will report on our climate-related

commitments and emission reduction

targets so that our stakeholders can

transparently monitor our progress. This

reporting will be done with an outset in

our baselines and as methodologies and

models improve, our data will be updated

accordingly.

We communicated our first climate-

related disclosure in our TCFD report as

part of our Sustainability Report 2019,

and we have strengthened our reporting

in line with the commitment we made

when we set our net-zero target and

developed our first Sustainable Finance

Policy in 2021.

In addition to detailing the steps we have

taken so far to align with the TCFD’s

recommendations, our TCFD disclosure

also explains how we incorporate

climate-related risk and impact consider-

ations into our financial decision-making

processes and embed climate considera-

tions into our core business operations.

We will increase the amount and

granularity of the information disclosed

year-on-year as our approach matures,

as supporting data improves, and as

our TCFD journey continues. Most

significantly, we will from 2023 include

reporting on our targets set out in this

climate action plan in our TCFD report-

ing, which will be integrated into our

Annual Report.

We will continue to support our

customers in the green transition

We are committed to being a leading

Nordic bank for sustainable finance and

will help our customers to navigate the

transition. We have a profound respon-

sibility to support and advise our cus-

tomers in the transformation of the real

economy, and we will strive to provide

the best financial products to make

becoming a frontrunner and winner

of the green transition an aspirational

objective.

The task ahead of us is enormous and

the timeframe is limited. This is the

challenge we face as a bank, and it is a

challenge that we must address together

as societies.

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Contents

Message from our CEO

Our role in the green transition

Our plan to achieve net zero

Lending

CLIMATE ACTION PLAN

Appendix 1 – Lending

Key methodological considerations

Our sectorial target-setting methodo-

logy and scope are aligned with the list

of priority sectors included in the SBTi,

the Net-Zero Banking Alliance and the

Guidelines for Climate Target Setting for

Banks developed by the UNEP FI.

Financed emissions

Data quality:

Data quality scores can

differ between scopes on a single cust-

omer, hence Scope 1&2 data quality

score (see table 4.1 Carbon-mapped

portfolio, p. 15) is calculated by first

picking the worst score of scope 1 and

2 per customer and then calculating an

exposure-weighted average for the seg-

ment. An exception from this approach is

shipping exposures where the emission

estimates are based on the actual ships

used as collateral (this is the case for

14.4 out of the DKK 18.3 billion on-ba-

lance exposure in the shipping segment).

Here, the quality score is always based

on scope 1, which by far makes up most

of the total scope 1 and 2 emission.

Carbon-mapped portfolio coverage:

The reported numbers (end 2020 data)

cover the following segments:

•

Corporate portfolio: Credit exposure

in core markets related to credits,

loans, and guarantees. Excluding

non-property-related exposure

Commercial Real Estate portfolio.

Covers 87% of total on-balance

corporate credit exposure (main

uncovered part – about 10% – comes

from excluding leasing and holdings)

Personal customer portfolio: Credit

exposure collateralised by proper-

ties. Covers 95% of total on-balance

personal customers’ credit exposure.

•

Private housing co-ops. & non-profit

associations

Non-core and other areas (i.e.

everything not in LC&I, PC, BC, or

Northern Ireland)

in production as happened during the

COVID-19 pandemic or are the emission

reductions achieved by our customers

due to efficiency gains in the producti-

on of, for example, power, cement and

steel? Moreover, it encourages Danske

Bank to achieve emission reduction

through customer engagement and

support in their decarbonisation journeys

rather than achieving absolute emission

reductions through divestment.

Our sectorial portfolio intensity averages

are based on intensities reported by

customers and are exposure-weighted.

As we progress and mature calculation

methodologies, and as data sources

become more valid, we will continue to

improve the quality of our estimates.

Reference scenarios/pathways: Our

2030 targets use as reference well-re-

cognised 1.5°C-aligned sector pathways

that are regularly updated. Moreover,

they are built on top of IEA Net Zero by

2050 data, with the addition that they

also calculate scope 2 emissions for

relevant sectors (e.g. cement and steel)

whereas IEA NEZ 2050 data refers to

scope 1 only.

See information on specific scenarios in

the following table: High-level overview of

sources and methodologies.

Product/exposure types not covered:

• Leasing

• Holdings

• Offers

• Trading facilities

• Non-property-related exposure

the Commercial Real Estate portfolio

(about 6% of on-balance CRE

exposure)

• Non-property-related exposure

in the Personal Customer portfolio

(about 3.5% of on-balance PC

exposure)

Financial scope:

Our financed emissi-

ons were calculated according to PCAF

methodology and guidance from Finance

Denmark’s Framework for Financed

Emissions Accounting and hence look at

on-balance exposure at year-end 2020.

Our sector targets focus on both on- and

off-balance exposures, hence departing

from reporting standard. We look at both

on- and off-balance exposures to better

reflect the commitments made towards

our customers and allow us to also

account for the risk of emission-intensive

customers making use of products such

as revolving loans or line of credit faciliti-

es. Furthermore, the financed emissions

are ‘absolute’ whereas most targets are

intensity based. These two differences

mean that our financed emissions can

increase even if our intensity decrease.

Target metric:

For most of our sector

targets, we have set a physical inten-

sity metric

(emissions per economic

output, e.g. kgCO

/MWh) instead of an

absolute emission metric. This allows

us to take into account the different

decarbonisation paces of different indu-

stries and helps us to understand and

contextualise the reduction causes in an

industry. For example, are the emission

reductions achieved due to a decrease

•

Carbon-mapped portfolio exclusion:

Segments in credit portfolio not carbon

mapped:

Customer segments not covered:

• Financial institutions

• Public institutions

For commercial real estate and Personal Customers we treat all exposure collateralised by a property to be property-related exposure, even if some of it is not directly used to finance the property.

For the oil and gas sector, we have decided to set targets that are a mix of absolute emissions and emissions intensity metrics.

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Asset management

Life insurance and pension

Own operations

Looking to the future

Appendix

CLIMATE ACTION PLAN

High-level overview of sources and methodologies

Emission data

sources

Segment

Methodology Summary

Financed emissions

Portfolio’s weighted emission

intensity and target-setting

Our shipping target focus solely

on vessels in Poseidon Principles

(PP) scope (83% of the shipping

portfolio).

PP alignment delta refers to the

distance of a vessels emission

intensity (AER, expressed as emis-

sions per tonne nautical mile) from

the target AER in a 1.5˚C trajectory

For calculating our AER in 2020 we

used UMAS aggregated upstream

emission factors for marine fuels

based on primary energy sources

(UMAS, 2022)

Scenario

Shipping

Poseidon Principle,

IMO

CDP, ISS, PCAF

emission factor

database

Depending on data availability, and

share of exposure on a custom-

er-group level going to shipping

activities, one of two approaches

are applied:

1. Emission reported through the

Poseidon Principles on actual

vessels. Attribution factor based

on market value of ship at reporting

date.

Where possible, emissions on

small vessels outside the Poseidon

Principles are estimated based on

IMO data.

2. Business-loan approach from

PCAF standard.

The intensity reduction is calcu-

lated based on the preliminary

Poseidon Principles 1.5˚C

developed by UMAS.

Danske Bank seeks to align its

methodology with the Poseidon

Principles (PP).

Should the PP decide on anoth-

er 1.5˚C trajectory than the now

indicated UMAS 1.5, Danske

Bank would revise its target and

seek a new validation for this

from the SBTi.

Oil and Gas

Manually col-

lected disclosed

emissions or own

assessments

CDP, ISS, PCAF

emission factor

database

Emissions are calculated according

to PCAF methodology.

Business-loan approach from PCAF

standard. Upstream and Refiner-

ies are mainly based on manually

collected disclosed emissions,

whereas ‘Other’ is mainly covered

by revenue and assets factors from

the PCAF database.

Our upstream absolute scope 1, 2,

3 financed emission reduction tar-

get covers on and off-balance credit

exposure of E&P customers.

Our downstream portfolio inten-

sity average follows intensities

reported by customers and is

exposure-weighted. It covers on and

off-balance credit exposure of oil

refining customers.

Our downstream refining absolute

scope 1, 2, financed emission

reduction target covers on and

off-balance credit exposure of

refining customers.

Our target follows projections

of how the oil and gas sector

will decarbonise in the Nordic

countries. We seek to update

our approach once a Sector

Decarbonisation Approach

pathway and a Paris Aligned

science-based methodology for

the sector are available.

Power

generation

Manually col

lected disclosed

emissions or own

assessments

CDP, ISS, PCAF

emission factor

database

Emissions are calculated according

to PCAF methodology.

Mainly based on own collection of

reported numbers. In some cases,

if there are no disclosed emissions

from the customer, and all exposure

is towards purely renewable power

generation, scope 1 and 2 emission

has been set to 0.

Our power generation portfolio

intensity average follows intensi-

ties reported by customers and

is exposure-weighted. It covers

on- and off-balance credit exposure

of customers involved with power

production.

Our portfolio’s weighted emis-

sion intensity in kgCO

/MWh

is compared against the 1.5˚C

scenario (world) developed by

the SBTi to serve as reference

to our target.

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Message from our CEO

Our role in the green transition

Our plan to achieve net zero

Lending

CLIMATE ACTION PLAN

Segment

Emission data

sources

Methodology Summary

Financed emissions

Portfolio’s weighted emission

intensity and target-setting

Our steel portfolio intensity average

follows intensities reported by cus-

tomers and is exposure-weighted.

It covers on- and off-balance credit

exposure of customers involved with

steel production.

Scenario

Steel

Manually collected

disclosed emis

sions CDP, ISS,

PCAF emission

factor database

Emissions are calculated according

to business-loan approach from

PCAF methodology.

Our portfolio’s weighted

emission intensity in tCO

/t is

compared against the 1.5˚C

scenario (world) developed by

Transition Pathway Initiative

(TPI) to serve as reference to

our target.

The SBTi is currently developing

a methodology and pathway

for the steel sector. Once it is

available, we will review our

pathway choice.

Cement

Manually collected

disclosed emis

sions CDP, ISS,

PCAF emission

factor database

Emissions are calculated according

to business-loan approach from

PCAF methodology.

Our portfolio’s emission intensity for

the cement sector is derived from

intensities reported by customers

and is exposure-weighted. It covers

on and off-balance credit exposure

of customers involved with cement

production.

Targets are set in alignment with

the SBTi 1.5°C trajectory tool for the

cement sector.

SBTi’s 1.5˚C scenario (world)

developed (scope 1+2) serves

as reference to our target.

CRE (DK)

EPC data, Energi

styrelsen, publicly

available property

data

Scope 1 and 2 emission calculated

related to heating. Energy consump-

tion estimated from EPC labels,

or distribution of EPC labels from

properties with similar character-

istics, combined with energy and

emission factors related to primary

heating source.

Following the guidance from Finance

Denmark’s Framework for Financed

Emissions Accounting

Emissions intensity calculated for

Danish residential and non-residen-

tial portfolio.

2030 projection for DK residential

and non-residential taken from the

SBTi 1.5°C tool.

DK portfolio emissions intensity

baseline and projection calculated

by 2020 exposure weighted aver-

age of the DK residential and DK

non-residential emissions intensity

numbers.

DK portfolio emissions intensity and

projection is incorporated into the

whole CRE portfolio by attribut-

ing according to 2020 exposure

weighed average of the DK portfolio

in the total CRE portfolio exposure.

Total CRE portfolio (Denmark,

Finland, Sweden, Norway) target

set based on setting ambition

level above combined 2030 CRE

projections.

CRREM1.5˚C global decarbon-

isation pathway SBTi 1.5˚C

scenario (world) for residential

and non- residential properties.

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Asset management

Life insurance and pension

Own operations

Looking to the future

Appendix

CLIMATE ACTION PLAN

Segment

Emission data

sources

Methodology Summary

Financed emissions

Portfolio’s weighted emission

intensity and target-setting

Emissions intensity taken from

PCAF database for different building

types per country. Where building

types are not represented in the

database, a simple average of all

building types emissions intensity

was applied.

2030 projection for building type

per country (done separately for

each country – Finland, Norway,

Sweden) taken from CRREM

pathway.

Country portfolio emissions intensity

baseline and projection calculated

by the 2020 exposure weight-

ed average of the building type

emissions intensity within the total

2020 country exposure numbers

(done separately for each country –

Finland, Norway, Sweden).

Country portfolio emissions intensity

and projection is incorporated into

whole CRE portfolio by attributing

according to each country’s (Finland,

Norway, Sweden) 2020 exposure

weighted average in the total CRE

portfolio exposure.

Total CRE portfolio (Denmark,

Finland, Norway, Sweden) target

set based on setting ambition

level above combined 2030 CRE

projections.

Scenario

CRE

(Nordic

countries)

Simple extrapo

lation

Due to data limitations, estimation

is currently based on simple extrap-

olation from average intensities from

Denmark.

Attribution factors are based on

property value at reporting date.

This deviates from the PCAF stand-

ard’s property value at origination.

This is currently applied for ease of

technical implementation.

CRREM 1.5˚C global decarboni-

sation pathway

SBTi 1.5˚C scenario (world). for

residential and non- residential

properties.

Personal

mortgages

(DK)

EPC data, Energi

styrelsen, publicly

available property

data

Scope 1 and 2 emissions calculated

related to heating. Energy consump-

tion estimated from EPC labels, or

distribution of EPC labels from prop-

erties with similar characteristics,

combined with energy and emission

factors related to primary heating

source. Following the guidance from

Finance Denmark’s Framework for

Financed Emissions Accounting

Emissions baseline calculated using

energy performance certificates

(EPC), which express the property’s

expected energy usage for heating

and emission factors from its prima-

ry heating source.

For properties without EPCs, emis-

sions are estimated based on prop-

erties with similar characteristics.

Danish expectations are determined

based on projected decrease in

emission intensities given expecta-

tion on future policy-driven energy

mix combined with households

converting from fossils fuels to

greener energy sources or energy

renovation of the least energy effi-

cient properties, i.e. properties with

EPC E, F or G.

SBTi 1.5˚C scenario (world) for

residential properties

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Message from our CEO

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Our plan to achieve net zero

Lending

CLIMATE ACTION PLAN

Segment

Emission data

sources

Methodology Summary

Financed emissions

Portfolio’s weighted emission

intensity and target-setting

Emissions baseline for Norway is

calculated using energy per-

formance certificates (EPC) of

properties and applying national

e emission factor for power gen-

eration and average energy factor

based on heating source mix.

For properties without EPCs, emis-

sions are estimated based on the

properties with similar character-

istics.

Emission baseline for FI has been

calculated based on published

emissions factor for electricity

sources and applying the energy mix

intensity to our portfolio for property

emissions intensity.

Emissions baselined for SE has

been estimated by comparison to

property characteristics from the

DK portfolio, and adjusting for SE

according to market and country

estimates due to lack of similar data

sources.

Targets have been set based on

expectations on the DK portfolio

together with European Environment

Agency’s projections of emissions

reductions from energy usage in

buildings and from energy sector.

Scenario

Personal

mortgages

(Nordic

countries)

Norway: EPC data,

Miljø-direktoratet,

Statistics Norway,

NVE

Finland: Statistics

from Finland Long-

term renovation

strategy 2020-

2050

Sweden: Averages

from Denmark,

Norway, Finland

Northern Ireland:

EPC reports

Norway: Same general methodol-

ogy as used for Denmark, except

for using one common average

emission factor (based on distri-

bution of heating sources in the

Norwegian building stock) instead

of heating-source specific factors. A

Nordic energy mix was used for the

emission factor for electricity.

Finland: Emission statistics from the

total Finnish building stock split on a

property-type and construction-year

level, and then applied to Danske

Bank’s portfolio.

Sweden: Based on average

emission intensities from the other

Nordic countries.

Attribution factors are based on

property value at reporting date.

This deviates from the PCAF stand-

ard’s property value at origination.

This is currently applied for ease of

technical implementation.

SBTi 1.5˚C scenario (world) for

residential properties

Agriculture

(DK)

ConTerra data

Extrapolations

based on custom

ers matched with

ConTerra data

Emission from ConTerra’s farm-level

estimates based on size of farm-

land, crop type, animals, fertiliser

use, manure management, etc.

Same methodology and emission

factors as used in the National

Inventory Report.

Attribution factors follow PCAF’s

business-loan approach.

Agriculture

(rest)

Intensity factors

derived from

(Danish) custom

ers matched with

ConTerra data

Extrapolated from intensity factors

derived from the Danish agriculture

portfolio where ConTerra data has

been applied. Split on main agricul-

tural activity.

Limitations related to biomass as an

energy source:

Biomass is an energy

source based on organic material such

as straw and residues from forestry or

urban and agricultural waste. In

Denmark, biomass accounts for almost

two-thirds of the production of renewable

energy and primarily supplies heat to the

district heating system.

According to the national climate ac-

counting guidelines, energy based on

biomass (bioenergy) that is used for

heating and electricity generation is

accounted as carbon neutral. This ad-

heres to the UN’s rules for calculation for

greenhouse gas inventories, which apply

worldwide. Greenhouse gases – unlike

wind, solar, or hydro energy – are emitted

during the energy production process;

for example, when biomass is combu-

sted in heat and power plants, CO

discharged into the atmosphere, which

negatively affects the climate. However,

is absorbed again as plants grow,

as a part of the natural biogenic carbon

cycle.

Biomass is a limited resource that can

be used for many purposes, but the

global energy demand cannot be met

with bioenergy. Therefore, the resource

must be used sensibly and to a limited

degree and in accordance with highest

sustainability standards. We are aware

of the possible additional social and

ethical dilemmas related to energy based

on biomass, and as a financial instituti-

on, we need to take this into account and

incorporate this into our assessment of

the companies that have biomass in the

business model.

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Asset management

Life insurance and pension

Own operations

Looking to the future

Appendix

CLIMATE ACTION PLAN

Appendix 2 – Asset management

Key methodological considerations

Our sectorial target-setting methodo-

logies and scopes are aligned with

guidelines from the SBTi, the Net Zero

Asset Manager Initiative (NZAM) and

recommendations of the Task Force on

Climate-related Financial Disclosures

(TCFD).

To fulfil the NZAM commitments,

Danske Bank Asset Management has

leveraged the latest scientific climate

research, as represented by the IPCC,

the IEA net-zero energy system pathway,

and the most relevant and industry-

recognised target-setting methodologies

available.

Assets under management:

Reporting

principles for assets under management

(AuM) are included in the Annual Report

2021.

Financed emissions methodology, data

and coverage:

The financed carbon

emissions of our AuM in Asset Manage-

ment are calculated by measuring scope

1, 2 and 3 greenhouse gas emissions

from the companies in the investment

portfolios weighted by our share of

investment. For carbon emission data,

we are using ISS ESG as our data

provider. ISS ESG has a high coverage of

companies worldwide, but not all our in-

vestments are covered by their dataset.

For example, the lack data for sovereign

debt and unlisted companies is larger

than the lack of data for listed compa-

nies. When applying ISS Methodology

for carbon emissions, 68% of our AuM

is covered, amounting to around DKK

600 billion by year-end 2020. If we

look at our listed equities and credits in

isolation, we have a strong coverage of

93%. Out of the covered 68% we have

reliable and reported emission data on

approximately 83% of the holdings. For

the remaining part, ISS ESG have applied

modelled emissions data.

Temperature Rating Approach target

Definition:

Temperature rating metho-

dology allows the global temperature

rise associated with corporate ambition

to be compared. Being a forward-looking

metric, temperature rating targets sup-

plement the engagement and intensity

targets set for both asset management

and life insurance and pension.

Target coverage:

The Asset Manage-

ment temperature rating targets cover

37% of all assets under management,

which stood at DKK 860 billion by year-

end 2020 (baseline year). The coverage

includes our listed equities and credits

within our Investment funds, mana-

ged accounts and pooled investment

vehicles. Our ambition is to include more

of our total assets under management

into our target; at present, however, only

listed equities and corporate credits are

included, and AuM under discretionary

mandates on behalf of our customers

are excluded from the temperature rating

targets. The reason for omitting discreti-

onary mandates with asset owners at

this stage is that it must be based on

specific customer demands and a con-

tractual agreements for each mandate.

In line with our commitment we will over

time engage with asset owners on this

topic

Even though 37% of our portfolio is

covered by our temperature target, 63%

of the AuM in scope currently receive a

default score when using the SBTi tool

and methodology. This is due to the fact

that only limited and trusted data sour-

ces are allowed, and that not all compa-

nies have yet set intermediate emission

reduction targets. The data quality is

expected to improve over time as more

companies set intermediate targets and

make these public through well-recogni-

sed and trusted data sources.

Methodology:

The SBTi currently

recognises one temperature rating

methodology, developed collaboratively

by CDP and WWF. The CDP-WWF tem-

perature rating methodology translates

companies’ greenhouse gas emission

reduction targets into a single metric.

The methodology is open source and

has gone through a separate consulta-

tion process. The methodology includes

three steps: 1) a target protocol, which

converts individual emissions targets to

temperatures, 2) a company protocol,

which aggregates these targets into an

overall company score, and 3) a portfolio

protocol, which weights these company

scores across an investment portfolio.

To convert individual emissions targets

into temperatures, the target protocol

uses the best-available scientific climate

scenarios from the IPCC Special Report

on 1.5°C (2018) scenario database. It

generates simple regression models for

estimated warming in 2100 from clima-

te scenarios with short-, medium- and

long-term trends in absolute emissions

or emissions intensities.

Because companies have multiple

targets, the data is aggregated into

company-level scores. Minimum quality

criteria define a quality of target that can

be included. At the portfolio level, these

company scores are weighted to assess

an index or portfolio of companies, such

as in the context of financial portfolios.

Companies that do not have relevant,

publicly disclosed emissions targets

are by the SBTi tool assigned a default

temperature score which assumes a

business-as-usual temperature pathway.

This enables company-by-company and

portfolio comparisons. SBTi criteria for

setting targets to align the temperatu-

re rating of corporate debt and equity

portfolios with the ambition of the Paris

Agreement include:

•

Aligning portfolio scope 1 and 2

temperature score with a minimum

well-below 2°C scenario, and in addi-

tion aligning portfolio to a minimum

2°C scenario for the scope 1, 2 and

3 by 2040. Alignment with more

ambitious scenarios is encouraged.

At Danske Bank, we have chosen a

1.5°C trajectory.

Committing to reducing portfolio

temperature scores so that the bank

is on a linear path to the sated goal

by 2040.

•

Weighted average CO

intensity target

Definition:

The net-zero target for asset

management is tied to weighted average

carbon intensity (WACI). WACI measu-

res the carbon emission normalised by

the revenue of the company, and on ag-

gregated levels it discloses our exposure

towards carbon intensive companies. As

of now, this calculation is performed by

including the scope 1 and scope 2 emis-

sions and dividing this by the revenue ge-

nerated by the investee companies. From

2023, asset management will also take

scope 3 emissions into consideration.

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Target coverage:

The asset mana-

gement WACI target covers 54% of

all assets under management, which

amounted to DKK 464 billion by year-

end 2020 (baseline year). The coverage

includes our Investment funds, mana-

ged accounts and pooled investment

vehicles. Our ambition is to include more

of our total assets under management

into our target; however, discretionary

mandates on behalf of our customers

are not currently included in the net-zero

target. The reason for omitting discretio-

nary mandates with asset owners at this

stage is that it must be based on specific

customer demands and a contractual

agreements for each mandate. In line

with our commitment we will over time

engage with asset owners on this topic.

Even though 54% of our total AuM are

covered by our target, we are not able

to calculate the WACI based on all of

those assets. The reason for this is a

lack of reliable emission data for a part

of our investment product portfolio

mainly relating to sovereign debt and

unlisted equities. As a result, our WACI

is calculated based on 41% of our total

AuM, amounting to DKK 357 billion by

year-end 2020, where our ESG data pro-

viders have coverage of actual emissions

or estimated data.

Methodology:

IPCC provides four

plausible scenarios each consistent

with net-zero emissions in their Special

Report on Global Warming of 1.5˚C

(2018). Each scenario has distinct

pathways following different assumpti-

ons about technological, economic and

societal progress. The Sustainable De-

velopment scenario is the most aligned

with the principles of systemic transition

to a sustainable future, characterised by

broad focus on sustainability, including

energy intensity, human development,

economic converge and international

cooperation, and enabled by shift tow-

ards sustainable and healthy consump-

tion patterns, low-carbon technology

innovation and well-managed land

systems with limited societal accepta-

bility for carbon capture. Danske Bank

Asset Management supports a broadly

focused sustainability transition, and our

weighted average carbon intensity target

is therefore anchored with this scenario.

The Sustainable Development scenario

implies an approximate 50% reduction

of CO

emissions by 2030. We have

therefore set a 2030 target of reducing

scope 1 and 2 WACI in our investment

products with 50% by 2030.

Engagement target

Definition:

Engagement builds on

evaluating companies’ climate transiti-

on strategies and communicating our

expectations to close potential gaps. To

strengthen actions in the real economy,

Danske Bank Asset Management has

also established a Net-Zero Engagement

Roadmap describing clear sector-speci-

fic and time-bound expectations.

Methodology:

One of the key corner-

stones of the NZAM commitment is to

“prioritise the achievement of real eco-

nomy emissions reductions within sec-

tors and companies in which we invest”.

A strong stewardship and engagement

strategy is in our opinion a credible and

effective way of achieving real world

impact. 100 companies contribute to

around three-quarters of Danske Bank

Asset Management portfolio’s measured

financed scope 1, 2 and 3 emissions.

Within those 100 companies, five sec-

tors account for approximately 80% of

emissions. In order to achieve effective

real-economy emissions reductions,

Danske Bank has set a target of enga-

ging, either individually or collectively,

with the top 100 emitters in our portfolio

by 2025.

To evaluate companies’ alignment with

the Paris Agreement, Danske Bank

Asset Management leverages the Net

Zero Investment Framework built by

the Paris Aligned Investment Initiative.

The framework describes a methodo-

logy for classifying companies along

a Paris-alignment maturity scale. The

methodology evaluates companies in a

holistic manner using ten criteria. The

criteria are well aligned with those of

Climate Action 100+, which can be seen

as the gold standard for evaluating and

engaging with companies on climate. The

methodology allows Danske Bank Asset

Management to identify company-spe-

cific gaps in their climate strategies as

basis for effective net-zero engagement,

and as such encourages companies to

climb the alignment maturity scale.

To further strengthen evaluation of

companies’ alignment with the Paris

Agreement by the Net Zero Investment

Framework, Danske Bank Asset Mana-

gement defines minimum sector-specific

expectations against certain criteria

based on the IEA’s Net Zero by 2050

roadmap. For example, power generation

is expected to transition first, as an enab-

ler for many other sectors to transition,

as demonstrated by requirement for the

sector in advanced economies to reach

net-zero emissions by 2035, phasing out

all unabated coal plants by 2030 and

renewables generation accounting for

60% of energy mix by 2030.

Appendix 3 – Life insurance and pension

Our sectorial target-setting methodology

and scope are aligned with guidelines

from the SBTi, the Net-Zero Asset Owner

Alliance (NZAOA) and recommendations

of the Task Force on Climate-related

Financial Disclosures (TCFD). Target-

setting under NZAOA follows the

Alliance’s Target Setting Protocol (TSP),

which defines why, how and which tar-

gets members are required to set, track,

review and report. Specifically, TSP calls

for members to set at least three targets

out of the four different target areas

covering engagement targets, sub-

portfolio targets, sector targets and

financing transition targets.

Financed emissions methodology, data

and coverage:

The financed carbon

emissions of our AuM in life insurance

and pension is calculated by measuring

scope 1, 2 and 3 greenhouse gas

emissions from the companies in the

investment portfolios weighted by our

share of investment. For carbon emis-

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Asset management

Life insurance and pension

Own operations

Looking to the future

Appendix

CLIMATE ACTION PLAN

sion data, we use ISS ESG as our data

provider. ISS ESG has a high coverage

of companies worldwide, but not all

our investments are covered by their

dataset. For example, the lack of data

for sovereign debt and unlisted compa-

nies is larger than for listed companies.

When applying ISS Methodology for

carbon emissions, 64% of our AuM

are covered, amounting to DKK 291

billion by year-end 2020. If we look at

our listed equities and corporate credits

in isolation, we have a large coverage

of 81%. Out of the covered 64%, of our

AuM, we have reliable and reported

emission data of approximately 86% of

the holdings, and for the remaining part,

ISS ESG have applied modelled emissi-

ons data.

Temperature Rating Approach target

Target coverage:

The life insurance

and pension temperature rating targets

presented in this report covers 37% of

all assets under management, amoun-

ting to DKK 168 billion by end of 2020

(baseline year). This includes our listed

equities and credits. Our ambition is to

include more of our total assets under

management into our temperature

targets when data and methodologies

allow.

Even though 37% of our portfolio is

covered by our temperature target, 68%

of the AuM in scope currently receive a

default score when using the SBTi tool

and methodology. This is due to the fact

that only limited and trusted data sour-

ces are allowed, and that not all compa-

nies have yet set intermediate emission

reduction targets. The data quality is

expected to improve over time as more

companies set intermediate targets and

make these public through well-recogni-

sed and trusted data sources.

Methodology and definition:

Same as

described above in appendix for asset

management methodology (p. 51)

Real estate target

Definition:

Fully and jointly owned

commercial and residential buildings.

Target includes both landlord controlled

and tenant-controlled areas in line with

the Carbon Risk Real Estate Monitor

(CRREM) 1.5°C national pathways, and

is measured as total financed CO

e/m

annum.

Methodology:

TSP recommends that

members set emissions reduction

targets on fully and jointly owned real

estate portfolios in commercial and

residential buildings, in line with either

the overall sub-portfolio target or Carbon

Risk Real Estate Monitor (CRREM)

1.5°C national pathways. Danica Pen-

sion, as part of its real estate sustaina-

bility strategy, decided to set targets to

reduce CO

e emissions in its real estate

portfolios by 37% by 2025 and 69% by

2030, against a 2019 baseline. These

targets are more ambitious than the CR-

REM pathways required for buildings in

Denmark, highlighting Danica Pension’s

focus on decarbonisation.

Sector target

Definition:

Intensity-based reductions on

Alliance priority sectors (oil and gas, uti-

lities, steel, and transport (aviation, ship-

ping, heavy and light duty road). Scope 3

to be included wherever possible. Sector

specific intensity KPIs recommended.

Sectoral Decarbonisation Pathways

used to set targets.

Methodology:

TSP encourages mem-

bers to set sector targets to help link

portfolio-level emission reductions to the

energy-efficiency requirements and re-

al-world outcomes. Furthermore, sector

targets are useful in informing stewards-

hip, policy and allocation activities in

these sectors. Sector-specific targets

reflect the specifics of each sector, their

respective energy transition trade-offs

with other sectors, and the role they

are expected to play in the transition to

a net-zero economy. In order to sup-

port real economy progress with high

ambition, Danica Pension decided to

set targets on engagement, financing

transition and sectors.

TSP identifies four priority sectors for

sector targets – oil and gas, utilities,

steel manufacturing, and transportati-

on. Danica Pension identified cement

manufacturing as an additional priority

sector to set targets on, given its relati-

vely high share of emissions in Danica

Pension’s portfolio. TSP advocates using

intensity-based KPIs, including scope 3

emissions wherever possible, and using

Sectoral Decarbonisation Pathways

to set targets. TSP allows using any

credible, science-based sectoral model

for setting targets, but specifically

encourages leveraging the One Earth

Climate Model (OECM). OECM breaks

down global carbon budget consistent

with 1.5°C warming to various sectors.

However, at the time of target-setting, it

only covered CO

e emissions on scope

1 and 2. Some of the priority sectors,

such as automobiles within transport,

have a high share of overall CO

emissions attributed to scope 3. For this

reason, Danica Pension looked for data

and models that better reflect the con-

centrations of emissions within scopes

across sectors.

The Transition Pathway Initiative (TPI)

is considered by many to be one of the

most advanced approaches in that

respect. Among other things, TPI calcu-

lates sector-specific emission reduction

pathways for priority sectors, following

IEA energy transition scenarios. TPI also

calculates company-specific carbon

intensities against these pathways for

highest emitting companies, to evaluate

the alignment of companies’ emissions

profiles and emission reduction targets.

Danica Pension leveraged TPI scenari-

os and company data to guide setting

and calculating baseline for its sectoral

targets. While sectoral pathways by

TPI are somewhat different to those

calculated by OECM, they are concep-

tually aligned with representing sectoral

dynamics to reach certain temperature

outcomes. Finally, in order to set final se-

ctor targets, Danica Pension compared

its baseline figures against requirements

by OECM and TPI scenarios and set

targets that were overall both reflective

of realities within portfolio, scientific

requirements and societal capabilities to

transition to net zero by 2050.

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Contents

Message from our CEO

Our role in the green transition

Our plan to achieve net zero

Lending

CLIMATE ACTION PLAN

Appendix 4 – Own operations

Reporting principles and key

methodological considerations

Environmental data covers the actual

consumption from the Group’s ope-

rations in Denmark, Finland, Ireland,

Northern Ireland, Norway, Sweden, Lit-

huania and India, and it also covers the

estimated consumption from the Group’s

remaining operations without registered

data. The reporting period for the year

2022 runs from Q4 2021 to Q3 2022.

We report our CO

e emissions based

on the Greenhouse Gas (GHG) Protocol

and numbers are rounded to the closest

integer.

e emissions scope 1:

Scope 1

comprises CO

e emissions from heating

using oil and gas and from the usage

of company cars. The emissions from

heating are calculated on the basis of he-

ating consumption, using either specific

emission factors from energy companies

or average emission factors for heating

for the country from International Energy

Agency (IEA) and the Department of

Environment, Food and Rural Affairs (DE-

FRA). In accordance with the Greenhou-

se Gas Protocol Guidance, the emissions

from gas consumption in Denmark were

omitted owing to the purchase of biogas

certificates of origin. For transport by

company cars, the emissions are calcu-

lated on the basis of the mileage and

emission factors from DEFRA.

e emissions scope 2:

Scope 2 com-

prises CO

e emissions from heating and

electricity supplied by external suppliers.

The emissions from heating and cooling

are calculated on the basis of heating

consumption, using either specific emis-

sion factors from energy companies or

average emission factors for heating for

the country from IEA and DEFRA. Simil-

arly, emissions from district cooling are

calculated on the basis of district cooling

consumption and the specific emissions

factor used for district heating. Scope 2

emissions are reported in accordance

with the market-based and location-ba-

sed methodology from the Greenhouse

Gas Protocol Guidance. For the locati-

on-based approach, the emission factors

from electricity consumption are calcula-

ted using a mix of emission factors from

energy companies or average emission

factors for the country from the IEA.

For the market-based methodology, the

emissions from electricity consumption

were omitted owing to the purchase

of renewable electricity certified by

Guarantees by Origin and International

Renewable Energy Certificates.

e emissions scope 3:

Scope 3

comprises CO

e emissions from paper

usage, business travel by employee cars

and flights and emissions from emplo-

yees working from home (WFH). The

emissions from paper are calculated

based on paper consumption and the

emission factors from DEFRA. For trans-

port by employee cars, the emissions are

calculated on the basis of the mileage

and emission factors from DEFRA. The

emissions from air travel are reported

directly by our travel agency, American

Express. Emissions from WFH are calcu-

lated using EcoAct methodology and

emissions factors used are the same as

for scope 1 and 2 energy calculations.

WFH emissions are calculated using

methodology specified in Ecoact Home-

working Emissions Whitepaper. FTEs

homeworking per quarter is established

using VPN data per country. This is

multiplied by average consumption data

for a homeworking setup per country as

specified in the Ecoact methodology. For

the Nordic countries and Lithuania, only

electricity consumption for a standard

desk set up is incorporated. For India,

electricity consumption for an average

ceiling fan is included for the summer

months. For Ireland and Northern Ire-

land, gas central heating consumption as

specified in the Ecoact methodology is

included for the winter months. Emissi-

ons factors for heat and electricity are

the same used for all scope 1 and 2

(location-based) emissions calculations.

Estimated CO

e from operations with-

out registered data:

For operations that

do not have any measured consumption,

we estimate CO

e emissions on the

basis of the average number of full-time

employees as provided by Group Finance

and the average emissions per employee

in the Group. These estimates are distri-

buted across the three scopes based on

the share of the individual scope.

Energy consumption:

Data for energy

consumption from electricity and heat is

either based on automatic data transfers

from smart meters or quarterly meter

readings, or it is calculated on the basis

of statements received regularly during

the year from energy companies and

lessors. Data on electricity consumpti-

on is calculated mainly on the basis of

statements from energy companies, and

heat consumption figures for our head

offices are similarly based on actual

readings taken by the energy companies.

If no reading or statement is available,

we estimate consumption based on the

average electricity or heat consumption

per square meter for the country unit.

Data on floor space covers all properties

used by the Group and its subsidiaries,

including the Group’s own premises

and leased premises, for own opera-

tions in various countries. In Sweden,

heat consumption data is calculated on

the basis of information from boverket.

se (energy labelling of buildings). The

consumption figure is calculated on the

basis of the Group’s share of floor space

in the buildings in Sweden. Similarly,

data on heat consumption at properties

without actual consumption in Finland

is calculated by using the key figures for

Sweden because consumption patterns

for locations in Finland are similar to

sites in Sweden.

Renewable energy share scope 1 and 2:

Renewable energy share within scope

1 and 2 is calculated on the basis of

the total energy consumption and the

amount of renewable electricity certified

by guarantees of origin and internatio-

nal renewable energy certificates. The

calculation does not include fuel use

from company cars. With limited data on

the energy mix for heating, it is assumed

that the energy mix is made up of a

variety of different fossil sources. This is

a conservative approach.

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Asset management

Life insurance and pension

Own operations

Looking to the future

Appendix

CLIMATE ACTION PLAN

Appendix 5 – Abbreviations

AER

AuM

AGM

BoD

CCUS

CDP

CII

COP

CRE

CRREM

coZEV

DEFRA

Annual Efficiency Ratio

Assets under management

Annual general meeting

Business Customers

Board of Directors

Carbon capture, utilisation and storage

Carbon Disclosure Project

IEA

Carbon Intensity Indicator

IIGCC

Carbon dioxide

Carbon dioxide equivalent

Conference of the Parties

ISS

Commercial real estate

Carbon Risk Real Estate Monitor

Cargo Owners for Zero Emission Vessels

Danske Bank

Department of Environment, Food and

Rural Affairs

Green Building Council Denmark

Denmark

Danish krone

Energy Efficiency Existing Ship Index

Denmark’s Export Credit Agency

Executive Leadership Team

Energy performance certificates

MEPC

ESG

ETS

E&P

gCO

/MJ

Environmental, social and governance

Emissions Trading System

Exploration and production (oil and gas)

Finland

Gram

Gram of carbon dioxide per megajoule

MWh

Marine Environment Protection

Committee

Megajoule

Megatonne

Megawatt

Megawatt-hour

Square metre

kgCO

e/m

kgCO

e/MWh

kWh

KPI

LC&I

LED

LULUCF

mDash®

Kilogram of carbon dioxide equivalent per

square meter

Kilogram of carbon dioxide equivalent per

megawatt hour

Kilometre

Kilowatt-hour

Key performance indicator

Large Corporates & Institutions

Light-emitting diode

Land-use, land-use change and forestry

Danske Bank proprietary sustainability

research platform

Kilogram

Institutional Shareholder Services

IPCC

Institutional Investors Group on Climate

Change

Intergovernmental Panel on Climate

Change

International Energy Agency

gCO

e/MJ

GDP

GHG

ICROA

Gram of carbon dioxide equivalent per

megajoule

Gross domestic product

Greenhouse gas.

International Carbon Reduction and

Offset Alliance

gCO

/tnm

Gram of carbon dioxide equivalent per

tonnes nautical mile

DGNB

DKK

EEXI

EKF

ELT

EPC

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Contents

Message from our CEO

Our role in the green transition

Our plan to achieve net zero

Lending

CLIMATE ACTION PLAN

NDC

NZAM

NZAOA

NEZ 2050

National Determined Contribution

Norway

Net Zero Asset Managers Initiative

Net-Zero Asset Owner Alliance

The IEA’s Net Zero Emissions by 2050

scenario

Other effective area-based conservation

measures

Partnership for Biodiversity Accounting

Financials

Partnership for Carbon Accounting

Financials

Poseidon Principles

Principles of Responsible Banking

Principles for Responsible Investment

Science Based Targets initiative

Sectoral Decarbonisation Approach

Task Force on Climate-related Financial

Disclosures

Tonnes of carbon dioxide

Tonnes of carbon dioxide equivalent

Tonnes of carbon dioxide per tonne

Transition Pathway Initiative

Target Setting Protocol

United Nations Environment Programme

- Finance Initiative

United Nations Global Compact

Weighted average carbon intensity

World Resources Institute

OECM

PBAF

PCAF

PRB

PRI

SBTi

SDA

TCFD

tCO

TPI

TSP

UNEP FI

UN GC

WACI

WRI

KEF, Alm.del - 2022-23 (2. samling) - Bilag 143: Materiale fra Danske Bank ifm. foretræde den 30/3-23

Asset management

Life insurance and pension

Own operations

Looking to the future

Appendix

CLIMATE ACTION PLAN

KEF, Alm.del - 2022-23 (2. samling) - Bilag 143: Materiale fra Danske Bank ifm. foretræde den 30/3-23

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