Copenhagen-based Danske Bank Group announced that it has divested from the vast majority of its investments in fossil fuel companies through its Danske Invest fund management unit and Danica pension and insurance business, following the implementation of a new policy that assesses companies’ low-carbon transition plans.

Danske Bank introduced its new methodology for investment in companies in the fossil fuel sector early last year, aimed at increasing focus on companies that have credible transition plans. The bank said that the methodology was designed to align with its customers’ investment preferences.

Erik Eliasson, Head of Responsible Investment at Danske Bank, said:

“Our new fossil fuels investment approach aligns with the preferences of the majority of our customers while underscoring our commitment to achieving competitive returns on a responsible basis.”

Under the new methodology, Danske Bank assesses fossil fuel companies using its Net-Zero Pathway Framework model, based on the Transition Pathway Initiative (TPI), and on companies’ own climate targets. The assessment is based on two dimensions, including management quality, examining how companies manage their emissions and assesses the risks and opportunities related to the low-carbon transition, and; carbon performance, assessing how companies’ emissions reduction targets and how these align with the Paris Agreement goals.

According to Danke Bank, with the completion of the implementation of the new methodology, its investment universe now includes around 270 companies involved in fossil fuels, down from approximately 2,000 companies in 2024.

The bank noted, however, that its overall exposure to companies involved in the fossil fuel sector has remained relatively unchanged, as it has increased investments in some companies that remained in the portfolio, as it divested from others, adding that “we now focus primarily on fossil fuel companies that are working to future-proof their business to address the challenges and needs of the future.”

While the new policy was aimed at aligning with its customers’ preferences, Danske Bank said that in order to accommodate different customer preferences, selected funds are not covered by the methodology, while others exclude all investments in fossil fuel companies.

Thomas Otbo, CIO at Danske Bank Asset Management, said:

“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.”