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Transitioning to a low-carbon economy is a monumental shift for our societies. The biggest CO2 reductions will come from the decarbonisation of the companies that currently emit the most.

While businesses navigate the complexities of reducing the reliance on fossil fuels, they face challenges balancing these substantial investments in the future with short-term market expectations.

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How we support our customers in transitioning

At Danske Bank, we understand that this transition process is individual. Every company has a unique transition process. While no two companies face precisely the same long-term transition challenges, short-term competitiveness is critical for all larger companies in the process of decarbonisation.

We offer companies, who have a credible plan for their transition – and the value chains that enable them - the financial flexibility they need. So they can navigate the here-and-now challenges on the path to a low carbon future.

Deep understanding of risks


A bank who understands the financial risks, the structural barriers and the market risks that companies face when transitioning towards sustainability.

Long term commitment


An orderly transition may take decades.

We’re in this for the long run.

Financial execution power


As a leading Nordic financial institution, we can ensure access to capital and efficient transaction management.


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The low-carbon economy: a future where fossil fuels no longer power the growth of successful companies.

We offer companies, who have a credible plan for their transition – and the value chains that enable them - the financial flexibility they need.


Navigating the transition and financing requires perspective

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Financing the transition explained 

  • The transition to a low carbon economy will largely be driven by companies in hard –to-abate sectors that today account for the highest emissions. In many sectors, decarbonisation requires fundamental changes to existing business models and technologies, and it will take time and significant capital.

    Danske Bank’s approach to financing the transition reflects this reality. Rather than focusing only on allocating funds to specific projects or activities through use-of-proceeds financing, our approach supports companies that have a credible plan to reduce emissions over time and remain competitive while doing so.

    By taking a company wide view it makes it possible to support long term transformation while addressing short term financial and commercial challenges. This is contingent on the company having a credible and actionable transition plan, which is something that we assess and review regularly.
  • A credible transition plan combines long term ambition with the ability to execute in practice.

    At Danske Bank, credibility is assessed as part of the credit process for companies in selected high emitting sectors. The assessment looks at both the company’s strategic direction and its execution capacity. This includes the alignment of the plan with relevant net-zero pathways, as well as factors such as technological readiness, investment needs, governance, and financial resilience.

    The assessment is forward-looking and at entity level. It is about understanding how the transition affects the company’s long-term financial profile and creditworthiness. The purpose is to form a balanced view of transition-related risks and opportunities as part of the bank’s broader risk assessment.
  • Yes - in some cases, financed emissions may increase in the short term as a result of supporting companies in high-emitting sectors that are investing in their transition. So yes – if we provide more financing to high-emitting sectors, our financed emissions can increase in the short term.

    That is why we assess the transition plans of the companies - we want to make sure the high-emission companies have a credible plan for their transition. Transitioning companies often require more capital during the early phases of their transformation, as they invest in new technologies and processes.

    The objective of transition finance is to support credible transition pathways that can deliver sustained emission reductions over the longer term – but we are not changing our commitments to existing climate targets.

  • The transition risk assessment in Danske Banks scores large companies in high-emitting sectors as “transitioned”, “transitioning”, “start of transition” or “lagging”, based on net-zero alignment and execution risk.

    • 'Transitioning' customers are progressing in line with their own sectoral net-zero pathway but are still exposed to some execution risk.
    • 'Start of transition' customers have commenced their journey towards a net-zero pathway alignment.
    • 'Transitioned' customers are companies who have successfully reached a state where their operations are aligned with a net-zero economy.
    • 'Lagging transition' customers are considered as not having appropriately engaged on the topic in their strategic planning or governance, for example by not setting a clear long-term net-zero target.

    Only the first three categories are described as in scope for transition financing; “lagging” companies are not counted as in scope for financing the transition

  • As an example, a power plant or cement production might take 10+ years to fully decarbonize.

    But if Iour customers commit to their long-term transition, we commit to helping our customers manage the short-term challenges through the inherent risks of the business cycles.

    This longer view allows Danske Bank to finance companies facing temporary margin squeezes or capex burdens (e.g., steel shifting to EAF ), as long as the overall strategy shows financial stability over decades, not just the next cycle.

  • Financing carbon intensive industries is about supporting company-wide transition strategies rather than isolated activities. This approach is especially critical for sectors where decarbonisation requires long-term, systemic change.

    • Automotives manufacturing
    • Cement
    • Chemicals
    • Freight transportation
    • Machinery
    • Metals and mining
    • Oil and gas
    • Power utilities
    • Shipping

    These industries are often considered hard to abate, but their successful transition is essential to achieving global climate goals. By supporting these sectors, banks can enable significant CO2 reductions and foster progress towards a sustainable future.

  • Transitioning to a low-carbon economy is not only about reducing emissions in high-emitting industries. It also requires robust support for the sectors and value chains that enable this transition.

    Enabling sectors play a pivotal role in developing and scaling the essential technologies, infrastructure and services that allow society to move away from fossil fuels and adopt sustainable solutions.

    Key examples of enabling sectors include:

    • Wind power value chain
    • Solar power value chain
    • Bioenergy value chain
    • Hydrogen value chain
    • Battery value chain
    • Energy transmission and storage value chain
    • Carbon capture and storage (CCS) value chain, including carbon sequestration
    • Energy-efficiency value chain
    • Low-carbon transport value chain
  • We believe that all types of loan instruments, credit and guarantee facilities, as well as primary bond and equity market capital raising, can contribute to a company’s overall sustainable business model and strategy towards the climate transition.
  • You can contact us or read more in our publication 'Danske Bank's Approach to Financing the Climate Transition'.
     


    Download our full approach


Financing a transition that may take decades is not a separate one-off transaction; it’s a fundamental part of how a company manages capital and liquidity.

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"Significant capital is needed for transitioning our economies to become more sustainable. We are committed to using the power of finance to support our clients in this transition", says Head of Sustainable Finance, Defence & Advisory, Samu Slotte. 

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