Denmark's Largest Bank Maintains Climate Commitment and Divests from Over 1700 Fossil Fuel Companies

Earlier this week, Danske Bank--Denmark's largest bank--announced that it would no longer invest in over 1700 fossil fuel companies due to their failure to adequately prepare for climate change.  Specifically, their “investment universe now includes [only] around 270 companies involved in fossil fuels as opposed to around 2,000 companies in 2024,” since Danske Bank “now focus[es] primarily on fossil fuel companies that are working to future-proof their business to address the challenges and needs of the future.”  In other words, Danske Bank has decided to exit over 85% of the fossil fuel companies it has invested in based upon the failure of these fossil fuel companies to undertake the necessary steps to account for the impact of climate change.  

While the immediate economic impact of this decision may be limited since “fossil fuel companies make up only a very limited share of [Danske Bank's] portfolios,” the signal sent by this announcement is highly significant.  In effect, Danske Bank is re-affirming its commitment to ESG principles and environmentally-conscious investing, even while numerous other banks--both in the United States and Europe--have been backpedaling due to the changing political environment.  (For example, the Net Zero Banking Alliance has been hemorrhaging members for the last several months.)  Danske Bank is effectively stating that it is “staying the course,” despite the adverse political currents now impacting its peers.  This move may encourage other financial institutions to maintain their own commitments to combat climate change.