In order to be at the forefront on sustainability in the banking industry, Danske Bank is disclosing detailed carbon emissions mapping of three lending portfolios, including the utilities sector, the shipping sector and Danish commercial real estate.
“By being transparent and showing the process and numbers behind our target-setting, we hope others will follow suit in measuring and disclosing climate data relevant for their business and share feedback on how they see our efforts,” Samu Slotte, Global Head of Sustainable Finance at Danske Bank
The three portfolios constitute 28 per cent of the total corporate exposure within the bank’s GHG (greenhouse gas) mapping scope, which is part of the bank’s process towards setting climate targets for its corporate lending book by 2023.
“By being transparent and showing the process and numbers behind our target-setting, we hope others will follow suit in measuring and disclosing climate data relevant for their business and share feedback on how they see our efforts,” says Samu Slotte, Global Head of Sustainable Finance at Danske Bank.
Climate risk in credit decisions
In parallel to the carbon-mapping and target-setting, the bank initiates quantifying financial risks associated with climate risk to better understand what risk and opportunities climate change poses to its customers and business.
“We are quantifying climate-related risks and opportunities because it will allow us to make more informed decisions when it comes to for instance approving a loan or considering the credit risk appetite in our lending portfolios,” says Niels Madsen, Head of Group Sustainability Risk .
“However, it will take time to build and implement the right methodologies. But that does not mean we will just sit and wait for the breakthrough to come. Instead, climate considerations are already now an integrated part of our client dialogue as well as our risk assessments. Earlier this year, we for instance decided to phase-out coal-and peat-based power production from our lending portfolio due to their CO2 intensive emissions profiles”, Samu Slotte further elaborates.
Read more about the bank’s financed carbon emission in the new Climate and TCFD progress report, where you can also learn more about transition risks in the oil and gas portfolio as well as flooding risk in the Danish real estate portfolio. The report will furthermore explain how Danske Bank has in the analyses used methodologies and guidelines from the Partnership for Carbon Accounting Financials, 2° Investing Initiative and Finance Denmark’s as well as the TCFD recommendations and the assumptions behind the Network for Greening the Financial System’s (NGFS) scenarios.