Stockholm (NordSIP) – Nordic banks continue to finance fossil fuel companies that are expanding their extraction and production of coal, oil, and gas, thereby contradicting any declared net-zero goals and jeopardising the global targets of the Paris climate agreement. A new report published on 27 January 2025, Banking on Thin Ice – Exposing Nordic Banks’ Ties to Fossil Fuels, is a collaboration between the Nordic Center for Sustainable Finance, Profundo, Fair Finance Guide Sweden, Coal-Free Finland (Hiilivapaa Suomi), the Swedish Society for Nature Conservation (SSNC -Naturskyddsföreningen), BankTrack, and Future is in our hands.
This is the third iteration of a study that is published every two years, examining the loans, credit, and underwriting facilities provided to the fossil fuel sector by the ten largest Nordic banks in terms of assets. Swedish bank SBAB was excluded due to its exclusive focus on domestic residential mortgage provision. The report focuses on Nordea, Danske Bank, SEB, Handelsbanken, DNB, Swedbank, Nykredit, OP Financial Group, and Jyske Bank. In this latest edition, rather than the broader fossil fuel sector, the scope of the analysis has been narrowed according to the Global Oils and Gas Exit List (GOGEL) and Global Coal Exit List (GCEL) curated by the German NGO Urgewald. This helps ensure a focus on the only the most environmentally harmful activities being financed by the Nordic lenders.
Climate leaders and laggards revealed
The nine banks under scrutiny have provided a total of $31 billion worth of financing to fossil fuel companies since the Paris agreement was adopted in 2016, and almost $5 billion in the latest two-year period from July 2022 to June 2024 covered in this report. The individual institutions’ contributions to the overall picture vary considerably, with Swedbank and Handelbanken having stepped away from the sector. The latter has not provided any loans or underwriting to fossil fuel companies since 2019, and the former has reduced its financing to the sector by 90% over the period covered by the report. At the other end of the scale, DNB, SEB, and Nordea account for 95% of the finance provided to oil, gas, and coal expanders in the past two years.
Thanks to the granular data provided by the Urgewald lists, the report is able to highlight the Nordic banks’ funding not only of the main oil and gas majors but also to those sector companies involved in expanding pipelines, providing drilling, mining, and other support services essential to fossil fuel extraction. It also highlights the banks’ financing of particularly damaging projects such as those in the Artic Region, the controversial EACOP pipeline in East Africa, or the proposed major expansion of a coal mine in the Czech Republic. Given its near blanket exclusion from institutional asset management portfolios, it is surprising to see Nordic banks funding ongoing and new thermal coal projects. SEB and DNB alone are behind $1.4 billion worth of such financing over the past two years. Nordea is by far the largest owner of shares and bonds in coal companies, with a portfolio worth almost $1.2 billion.
The report’s authors urge Nordic banks to align their financing and investment activities with 1.5-degree pathways, which according to the International Energy Agency (IEA) strictly prohibit any new fossil fuel expansion. Companies involved in or supporting new coal, oil, and gas extraction should be excluded, and banks should engage closely with the remainder to ascertain whether they have credible transition plans in place. The report advocates for stricter regulations to be implemented by policymakers, effectively banning financial institutions from supporting fossil fuel expansion. They would also like the financing of existing fossil fuel activities to be subject to much more stringent capital requirements to better reflect the climate risk they represent.
