Stockholm (NordSIP) – Danske Bank Asset Management takes a significant step toward aligning its investment products with the goals of a low-carbon economy by completing the implementation of a new methodology for evaluating fossil fuel companies. The update, announced on 12 August 12 applies to the bank’s Danske Invest and Danica investment offerings and results in a dramatic reduction in the number of fossil fuel companies eligible for investment, from approximately 2,000 in 2024 to around 270 today.
The bank’s revised approach shifts the focus from simple sector-based exclusions to a more nuanced, forward-looking assessment. According to the announcement, Danske Bank will now only invest in fossil fuel companies that are “already on – or progressing towards – a net‑zero transition pathway.” This change reflects growing demand from clients for credible action on climate while still aiming to ensure long-term financial performance.
Erik Eliasson, Head of Responsible Investment at Danske Bank, explained that the new methodology “aligns with the preferences of the majority of our customers while underscoring our commitment to achieving competitive returns on a responsible basis.” At the same time, the bank acknowledges that not all investors have the same priorities. “To accommodate different customer preferences and other factors across markets,” Eliasson noted, “selected Danske Invest funds are, however, not covered by this methodology, just as we also have investment funds that exclude all investments in fossil fuel companies.”
Importantly, the overall exposure to the fossil fuel sector across the bank’s portfolios has remained relatively stable despite the large number of exclusions. This is because the methodology permits increased allocation to those companies that meet the new climate criteria, allowing the bank to maintain diversified exposure while rewarding transition-ready firms. As Thomas Otbo, Chief Investment Officer at Danske Bank Asset Management, stated, “We will continue to invest in companies working in the fossil fuel sector to reflect the global economy and global energy supply. However, in alignment with the majority of our customers’ preferences, we have decided to become even more selective in our fossil fuels investments for most of our investment products. And we firmly believe this to be in the best long‑term interest of our investment customers.”
At the core of the bank’s new approach is the so-called Net‑Zero Pathway Framework, a tool designed to evaluate fossil fuel companies on their ability and willingness to transition. The framework draws on data and methodology from the Transition Pathway Initiative (TPI), combined with an assessment of the companies’ own publicly stated climate targets. The goal, as the bank explains, is to establish a “data‑driven foundation to determine whether the company can be assessed as having a realistic plan towards a low‑carbon transition.”
Danske Bank’s announcement signals a notable development in how Nordic financial institutions are responding to both climate science and client expectations. Rather than a blanket exclusion of fossil fuels, the strategy supports companies that can play a constructive role in the energy transition, while eliminating those that lack credible plans or remain committed to high-carbon operations. For investors and asset managers seeking alignment with net-zero pathways, Danske Bank’s latest move provides a robust, scalable model. It blends fiduciary responsibility with climate action and highlights the importance of data-led decision-making in sustainable finance.
This article was written with the help of AI – it was edited and fact-checked by NordSIP’s team.
