Only a month after sitting down in her new office for the first time, Danske Bank's incoming head of responsible investment is ready to make changes in the bank's investment universe. Ulrika Hasselgren and her team have decided to add 90 companies to the bank's exclusion list, as a consequence of the group's endorsement of the Paris Pledge for Action to help limit global warming to a maximum of 2 degrees Celsius.
The companies — which make 30 percent or more of their revenue from thermal coal and/or tar sands or generate power from these energy sources — will not be a part of Danske Bank's investment universe in the future. The decision affects all funds under Danske Invest, all of Danica Pension's products and the strategic portfolios of Danske Bank, but ETFs and external funds are not subject to it.
KLP, Norway's largest municipal pensions provider, decided in November 2017 to blacklist companies that derive more than 50 percent of their revenues from coal-based activities. Nordea's threshold for coal companies lies at 30 percent of generated revenue.
Substitutes for coal are available
Danske Bank says that because thermal coal can be substituted by gas, wind, solar or nuclear power, it will not invest in these activities. However, since metallurgical coal — needed for steel production — does not yet have a substitute, this remains an area in which the bank can invest.
"We invest for value while also being mindful of our customers' needs, our role in society and the evolving landscape of sustainability standards around the world. Thermal coal and tar sands are some of the most compromising fossil-fuel resources which affect the environment significantly. These investment restrictions are one of our actions in 2018 as part of our commitment to sustainable investments in the years to come," says Ulrika Hasselgren, Head of Responsible Investment, Danske Bank to AMWatch.
The investment restrictions will be fully implemented during the first quarter of 2018 and relate to an amount of invested capital that exceeds "hundreds of millions of Danish kroner" according to Danske Bank. The revised exclusion list will be published at the end of March.