Danica has now implemented a stricter approach to investments in companies with activities within fossil fuels. This means that more investments have been divested and investments are targeted at companies with good transition plans. The shift supports the goal of creating competitive long-term returns for clients.
Danica has been implementing a new approach to fossil fuel investments. This process is now complete and supports the investment strategy’s goal of creating attractive returns for clients in a responsible manner.
It is a continuation of Danica’s ongoing focus on optimizing customers’ investments and targeting investments to companies that are working to transform themselves as part of future-proofing their business model.
“We believe that the most adaptable fossil fuel companies also have the potential to deliver competitive risk-adjusted returns to our clients in the future. Based on independent climate models and data, we can further select companies with a high management climate focus and that have realistic plans to become climate neutral or are well on their way,” says Poul Kobberup, Investment Director at Danica.
The approach reflects customers’ wishes in the area and the commitment to delivering the best possible return.
“Our customers want to invest in the transformation of the energy system, and this aligns with the new approach and investment strategy, where green transformation and returns go hand in hand. The energy area is complex and calls for a balanced approach, and our stricter investment approach takes this into account in combination with securing the customers’ financial interests,” says Poul Kobberup.
“We believe that the most adaptable fossil fuel companies also have the potential to deliver competitive risk-adjusted returns to our clients in the future.”
Poul Kobberup, Investment Director at Danica
Climate plans are assessed on an ongoing basis
The implementation has resulted in approximately 1,730 companies with activities within fossil fuels being placed on the restriction list compared to 2024, and Danica has divested companies in which it had invested. Danica still has the same exposure to companies within fossil fuels as in 2024.
“The overall investment portfolio remains well-diversified and robust, although we are more selective within the fossil sector. We will continue to have investments related to fossil fuels that meet our requirements and will continuously reflect developments within the global energy market and customer wishes,” says Poul Kobberup and continues:
“Companies’ climate plans are assessed on an ongoing basis, and if they change course and no longer meet our criteria, they will be excluded. Conversely, companies can potentially be included in the portfolio if their climate plans improve and meet our criteria,” says Poul Kobberup.
See the restriction list here.
How to assess companies’ climate plans
We assess fossil fuel companies’ transition plans based on our analysis model Net-Zero Pathway , developed in collaboration with Danske Bank. It is based on data and methods from the independent organization Transition Pathway Initiative and companies’ own climate goals. Overall, the method gives us a data-driven foundation to determine whether a company can be assessed as having a realistic transition plan towards climate neutrality. The model assesses companies based on two dimensions.
The quality of corporate governance and its handling of emissions as well as risks and opportunities associated with the green transition (e.g. relevant policies, integration of climate into business strategy, reporting, board involvement).
The company’s CO2 emissions , based on the company’s CO2 reduction targets, and how they are consistent with the Paris Agreement’s objectives.
Facts
- The new approach and analysis model covers a large part of the fossil fuel value chain. This applies to companies where five percent or more of their revenue comes from exploration, production, distribution, refining, transportation, storage, energy generation, and equipment and services within fossil fuels such as coal, oil, gas or tar sands.
- The new approach and analysis model applies to direct equity and bond investments in companies. Investments in emerging market debt are exempt from the new approach. The restrictions are made in the pension products Danica Balance, Danica Tidspension and Danica Traditionel.
- Danica Balance Responsible Choice will continue to not invest in companies where more than five percent of revenue comes from various activities related to fossil fuels. Read about the investment solution’s restrictions here
