Company-wide transition plans will now drive financing decisions, enabling more strategic, long-term support for high-emitting and transition-enabling sectors.
New risk assessment methodology allows Danske Bank to fund companies classified as transitioned, transitioning, or starting transition, improving capital alignment with credible climate strategies.
The broader financing approach may increase short-term emissions, but aims to accelerate systemic climate impact across the Nordic corporate landscape.
Danske Bank is redefining how it supports the climate transition—broadening its approach to finance entire company transitions rather than just isolated green projects.
“By evaluating transition plans at the company level, we will be better equipped to support companies in high-emitting sectors with a more strategic, long-term approach to climate transition,” says Samu Slotte, Head of Sustainable Finance at Danske Bank.
Previously focused on use-of-proceeds financing such as green bonds and sustainability-linked loans, the bank will now include comprehensive entity-level assessments as the basis for financing. This applies to sectors like energy, steel, cement, and transportation, as well as firms critical to enabling low-carbon value chains—from renewable energy to battery storage.
“At Danske Bank, we see an increasing need for facilitating capital to customers in these value chains to support the scaling of technologies and practices that support climate transition,” Slotte adds.
The bank’s transition risk methodology categorizes companies into four tiers: transitioned, transitioning, start of transition, and lagging. Those in the first three categories will be eligible for transition financing based on a dual assessment of their net-zero alignment and execution risk.
RELATED ARTICLE: Howden launches Climate Parametrics practice to de-risk climate transition
“In the short term, our new and broader approach to transition finance may increase carbon emissions associated with our financing activities. In the longer term, we consider our new approach a significant step forward in our ability as a financial institution to support the climate transition of our customers and society,” says Slotte.
This strategic shift aligns with Danske Bank’s existing Climate Action Plan, and the institution will maintain its position against financing fossil fuel exploration and production—having been the first major bank to exit that space.
“When our customers commit themselves to credible, long-term transitions, we commit to support them in managing the short-term challenges,” emphasizes Joachim Alpen, Head of Large Corporates & Institutions.
Danske Bank will continue to offer traditional sustainable finance instruments alongside this broader transition-focused framework—positioning itself as a key partner for Nordic corporates navigating climate-related risks and opportunities.
Follow ESG News on LinkedIn
