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Fossil fuels. Position statement Danske Bank

Fossil fuels Position statement Danske Bank 4 April Introduction About Danske Bank Group Danske Bank is a Nordic universal bank with strong regional roots and close ties to the rest of the world.
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Fossil fuels Position statement Danske Bank 4 April Introduction About Danske Bank Group Danske Bank is a Nordic universal bank with strong regional roots and close ties to the rest of the world. We serve more than 3.5 million personal, business and institutional customers, and in addition to banking services, we offer life insurance, pension, mortgage credit, wealth management, real estate and leasing services and products. Our vision is to be recognised as the most trusted financial partner, and we are driven by a desire to create long-term value for our customers, investors and the communities we serve. Danske Bank and corporate responsibility Financial institutions play a key role in maintaining financial stability and contributing to economic growth. It is our responsibility to conduct our business in a manner that creates long-term value for all our stakeholders. International agreements lay the basis for how we conduct our business in a responsible and transparent manner and provide a framework for our dialogue with stakeholders. The initiatives that the Group endorses include the following: UN Global Compact OECD Guidelines for Multinational Enterprises UN Guiding Principles on Business and Human Rights UN-supported Principles for Responsible Investment UN Environment Programme Finance Initiative Purpose and scope of position statements Danske Bank works continually to improve its business practices, and we encourage those we work with to do the same by taking environmental, social and governance (ESG) aspects of their business into consideration. Our position statements clarify how Danske Bank works and establish a shared framework for a proactive and forward-looking dialogue about risks and opportunities with our customers, business partners and the portfolio companies we actively invest in (the portfolio companies ). The statements apply in all the markets where we operate and encompass all the operations of Danske Bank Group. 2 Existing policies and position statements The international agreements that Danske Bank has signed lay the foundation for several of our policies and procedures, including our Responsibility Policy, Responsible Investment Policy, Supplier Policy and the ESG principles in the overall Credit Policy as well as the Arms and Defence Credit Policy. We also have position statements on the topics of arms and defence, climate change, mining and metals, and forestry. Engagement, feedback and contact Please visit our website at for more information about how we work in this area. You are also welcome to contact Dorte Eckhoff, Head of Corporate Responsibility, Danske Bank with further questions or feedback. 3 Fossil fuels POSITION STATEMENT DANSKE BANK 1. Introduction The global need for energy continues to rise. According to the International Energy Agency s reference scenario, primary energy demand is expected to increase 35% globally from 2010 to Even with the development of lowercarbon and more efficient energy systems, fossil fuels will remain an important part of power and fuel delivery throughout the world and will support broad-based economic development. Activities related to fossil fuels (oil, coal and natural gas) contribute to climate change, and ESG risks have been identified in the fossil fuel industries. They concern land use, water use, biodiversity, waste, discharges and emissions, health and safety, community relations, human rights, and bribery and corruption. At Danske Bank, we acknowledge the need for fossil fuels in the coming years to support economic development. When working with customers, business partners and portfolio companies in fossil fuel industries, we aim to minimise the adverse environmental and social impact and to support good governance by promoting internationally recognised standards. 2. Our approach To minimise the risks in fossil fuel industries, Danske Bank is guided in its business by a number of international agreements and conventions that we encourage our customers, business partners and portfolio companies to adhere to as well (see the list in section 4). Additionally, we expect our customers, business partners and portfolio companies to operate in accordance with relevant international, national and local laws and regulations. On the basis of these international agreements and conventions, we consider possible ESG risks in our investment, lending and procurement practices. And when investing in fossil fuel industries, we encourage the portfolio companies to take measures to manage their ESG risks in order to prevent or minimise a potential adverse impact from their business activities. 3. Implementation To ensure that we manage our investments, lending and business activities associated with ESG risks on the basis of the international agreements we endorse, we have implemented the measures listed below. We will continue to review our efforts in order to meet our customers and stakeholders needs in the best possible manner. 4 Screening and ESG risk analysis When investing in fossil fuel industries, we screen the portfolio companies in collaboration with our screening and research partners to ensure that their conduct is in accordance with our Responsible Investment Policy and the international standards we endorse. We integrate ESG considerations systematically in our investment practices and monitor the development of ESG risks on an ongoing basis. When lending to fossil fuel industries, we conduct a screening in order to ensure that our customers conduct is in accordance with our Credit Policy and Responsibility Policy and the international agreements we endorse. In collaboration with our customers, we assess possible ESG risks associated with our lending, and we clarify our expectation of responsible business conduct that is consistent with recognised international agreements. Dialogue and engagement If there are allegations of potential breaches of international agreements, we initiate a dialogue with portfolio companies. The aim of the dialogue is to clarify the circumstances and to determine whether the company plans to change its behaviour. We prefer to engage the companies and encourage the development of higher standards of responsibility instead of excluding them from our portfolio. But if no corrective measures are taken, we will exclude the company. If we see that an existing customer is not compliant with our Credit Policy, we seek a solution in collaboration with the customer. If the only option available is terminating the credit relationship, we do it in a controlled process. Corporate Responsibility holds an ongoing dialogue with credit and procurement functions on how we work with companies placed on our investment exclusion list. 4. Agreements and conventions Danske Bank s business conduct is guided by a number of international standards, principles, and guidelines that promote sustainable management in the fossil fuel industries: UN Global Compact OECD Guidelines for Multinational Enterprise UN Guiding Principles on Business and Human Rights UN-supported Principles for Responsible Investments UN Environment Program Finance Initiative We also take into account additional international conventions regarding portfolio companies that work with fossil fuels: Rio Declaration on Environment and Development The Kyoto Protocol 5
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