Danske Bank A/S - Climate Change 2022

C0. Introduction

C0.1

(C0.1) Give a general description and introduction to your organization.

The Danske Bank Group is a Nordic universal bank with strong regional roots. We provide services to customers in 8 countries, with Denmark, Norway, Sweden and Finland being our core markets. Serving 3.3 million customers, from households to multinationals, the Danske Bank Group is one of the major Nordic universal banking groups and Denmark's largest financial services provider. We offer leading innovative solutions within retail, private banking, business and corporate & institutional banking, including investment and trading activities. In addition, we operate substantial wealth management business.

In 2021, the Group operated through two business units: Personal & Business Customers and Large Corporates & Institutions. We also operate a separate business unit that serves personal and business customers in Northern Ireland. We serve our customers at our branches and through a wide range of self-service and digital transaction solutions.

Danske Bank employs about 21,000 people and has more than 3.3 million personal customers and large number of business and institutional customers. We have approximately 270,000 shareholders, and a little less than half of the shares are owned by foreign investors.

Our sustainability efforts reflect our commitment to our core values as well as to operating a profitable, sustainable business based on the needs and expectations of our stakeholders. We want to improve our customers' lives and make societies more prosperous and to do so in a sustainable way, which is why our sustainability work is guided by our ambition to drive our sustainable progress and positive impact in the societies we are part of. We see the integration of societal impact and sustainability into our business model as part of our license to operate and as a source of value creation. Danske Bank's purpose is to release the potential in people and businesses by using the power of finance to create sustainable progress today and for generations to come.

C0.2

(C0.2) State the start and end date of the year for which you are reporting data.

Start date

End date

Indicate if you are providing emissions data for past reporting

Select the number of past reporting years you will be providing emissions data

years

for

Reporting

January 1

December 31

No

year

2021

2021

C0.3

(C0.3) Select the countries/areas in which you operate.

Denmark

Finland

India

Ireland

Lithuania

Norway

Sweden

United Kingdom of Great Britain and Northern Ireland

C0.4

(C0.4) Select the currency used for all financial information disclosed throughout your response.

DKK

C0.5

(C0.5) Select the option that describes the reporting boundary for which climate-related impacts on your business are being reported. Note that this option should align with your chosen approach for consolidating your GHG inventory.

Operational control

C-FS0.7

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(C-FS0.7) Which activities does your organization undertake, and which industry sectors does your organization lend to, invest in, and/or insure?

Does your organization undertake this activity?

Insurance types underwritten

Industry sectors your organization lends to, invests in, and/or insures

Banking (Bank)

Yes

Exposed to all broad market sectors

Investing (Asset manager)

Yes

Exposed to all broad market sectors

Investing (Asset owner)

Yes

Exposed to all broad market sectors

Insurance underwriting (Insurance company)

No

C0.8

(C0.8) Does your organization have an ISIN code or another unique identifier (e.g., Ticker, CUSIP, etc.)?

Indicate whether you are able to provide a unique identifier for your organization

Provide your unique identifier

Yes, an ISIN code

DK0010274414

C1. Governance

C1.1

(C1.1) Is there board-level oversight of climate-related issues within your organization?

Yes

C1.1a

(C1.1a) Identify the position(s) (do not include any names) of the individual(s) on the board with responsibility for climate-related issues.

Position of

Please explain

individual(s)

Board-level

The overall responsibility for Danske Bank's sustainability strategy and related policies - including on climate-related issues - lies with the Board of Directors. The Business Integrity Committee (BIC)

committee

is responsible for decisions regarding Danske Bank's approach to climate-related products and services, such as green loans, green bonds and the implementation of TCFD recommendations. BIC is

also responsible for endorsing the sustainability strategy and policies and for driving execution and regular monitoring of progress. This includes monitoring progress on e.g. emissions reductions

and reductions in energy consumption per employee. This climate-related monitoring has been assigned to the committee as it is a key part of Danske Bank's sustainability strategy and thus

significant to the company.

In terms of an example of a specific climate-related decision made by this committee, in March 2021 the Business Integrity Committee approved Danske Bank's updated Position Statement on Fossil

Fuels, which included a significantly tightened restriction on lending to and investing in companies deriving more than 5% of their revenue from thermal coal mining, coal-fired power generation and

peat-fired power generation.

The Business Integrity Committee is an Executive Committee which is appointed by Danske Bank's Executive Leadership Team and to which decision-making authority is delegated. The following

are permanent members of the committee:

• Group CEO (Chair)

• Head of Large Corporates & Institutions (Deputy chair)

• Head of Personal Customers

• Head of Business Customers

• Group Chief Financial Officer

• Group Chief Operating Officer / Head of Technology & Services

• Group Chief Risk Officer / Head of Group Risk Management

• Chief People Officer / Head of Group HR

• Group Chief Administrative Officer

The following are permanent members of the committee:

• Head of Group Sustainability, Stakeholder Relations, Communications & Marketing

• Head of Group Sustainability

• Group Chief Compliance Officer

Board-level

The Group All Risk Committee is an Executive Committee that convenes at least nine times a year and acts on behalf of the Executive Leadership Team with respect to the Group's risk management

committee

practices. The committee makes decisions on and monitors all material risks associated with the Group's business model and activities. It covers all risks across risk categories, business units,

functions and geographical regions in alignment with the Group's Enterprise Risk Management framework. This also covers ESG risks, including climate-related risks, which is viewed as a cross-

taxonomy risk type impacting the majority of the Group's risk categories.

All members of the Executive Leadership Team are permanent members of the Group All Risk Committee.

Board-level

The Board Risk Committee convenes six times a year and operates as a preparatory committee for the Board of Directors with respect to Danske Bank's risk management and related matters -

committee

including climate related risks. The committee advises the Board of Directors on the Group's risk profile, risk culture, risk appetite, risk strategy and risk management framework. This includes the task

to continuously assess and at least once annually present recommendations to the Board of Directors on Danske Bank's risk profile, risk policies and limits for operational risk, credit risk, market risk,

liquidity risk and other material risks, including reputational risk.

Other,

The Group Sustainability department acts as secretariat to the Business Integrity Committee and is responsible for providing advice and recommendations regarding sustainability aspects of

please

business decisions - in close collaboration with unit-specific sustainability departments. The Group Sustainability department is also responsible for coordinating activities across Danske Bank and

specify

reporting on results. It is Group Sustainability's role to promote awareness of sustainability issues and support local units with expertise on best practices.

(Department)

At the operational level and country level, sustainability matters are managed by specific business unit teams and regional coordinators.

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C1.1b

(C1.1b) Provide further details on the board's oversight of climate-related issues.

Frequency with

Governance

Scope of board-

Please explain

which climate-

mechanisms into

level oversight

related issues are a

which climate-

scheduled agenda

related issues are

item

integrated

Scheduled - all

Reviewing and

The impact of our

The Business Integrity Committee, which is a committee at the Executive level, and whose members include the entire Executive Leadership

meetings

guiding strategy

own operations

Team, convenes at least four times a year. As climate change is an integrated part of Danske Bank's strategic focus areas on "Sustainable

Reviewing and

on the climate

finance" and "Environmental footprint", climate-related issues are on the agenda and reviewed on a regular basis, including by means of

guiding major plans

The impact of our

execution updates with relevant KPIs and targets regarding climate-related issues.

of action

banking activities

Specifically this includes monitoring and approval of KPIs and targets relating to e.g. emissions reductions from our operations and volume of

Reviewing and

on the climate

green financing and investments. Further, the committee oversees the development of climate-related products and services, such as green

guiding risk

The impact of our

loans, green bonds and the implementation of TCFD recommendations. It also discusses and approves Group-wide restrictions on e.g. coal and

management policies

investing activities

oil from tar sands.

Reviewing and

on the climate

Climate-related issues are thus integrated into a number of governance mechanisms, which include reviewing and guiding strategy, major plans of

guiding business

action and risk management policies.

plans

Setting performance

objectives

Monitoring

implementation and

performance of

objectives

Scheduled - some

Reviewing and

Climate-related

The Board of Directors exerts oversight of climate-related issues in a variety of manners, both as routinely scheduled items and as important

meetings

guiding strategy

risks and

matters arise. For example, the sustainability strategy is reviewed annually by the Board based on a report from the Head of Group Sustainability.

Reviewing and

opportunities to

Similarly, the Board of Directors approves the risk management sustainability strategy, the annual external sustainability reporting and policies

guiding major plans

our banking

relating to sustainability, incl. on climate-related issues.

of action

activities

Reviewing and

Climate-related

ESG considerations including climate-related issues are also taken into account when taking stands on the Group's risk appetite and on sector

guiding risk

risks and

risks. This includes the Board's decision on excluding coal and oil from tar sands on the investment and lending side. In this regard, the Board Risk

management policies

opportunities to

Committee convenes at least four times a year and operates as a preparatory committee for the Board of Directors with respect to Danske Bank's

Reviewing and

our investment

risk management and related matters.

guiding business

activities

plans

Furthermore, the Board sets the strategic direction, including regarding future business opportunities such as creating financial products that

support the transition to a low-carbon economy.

C1.1d

(C1.1d) Does your organization have at least one board member with competence on climate-related issues?

Board member(s) have

Criteria used to assess competence of board member(s) on climate-

Primary reason for no

Explain why your organization does not have at least one board

competence on

related issues

board-level competence

member with competence on climate-related issues and any plans to

climate-related issues

on climate-related issues

address board-level competence in the future

Row

Yes

We have based the assessment on what other companies the board

1

members are working for and their current responsibilities. The climate-

related issues cover both the risk and the opportunity side.

C1.2

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(C1.2) Provide the highest management-level position(s) or committee(s) with responsibility for climate-related issues.

Name of the position(s) and/or

Reporting

Responsibility

Coverage of

Frequency of reporting

committee(s)

line

responsibility

to the board on climate-

related issues

Sustainability committee

Reports to

Both assessing and managing climate-related risks and opportunities

Risks and

Quarterly

Business Integrity Committee

the board

opportunities related

directly

to our banking

Risks and

opportunities related

to our investing

activities

Risks and

opportunities related

to our own operations

Other committee, please specify (Group

Risk -

Other, please specify (Among other things, the Group All Risk Committee makes decisions on governance

Risks and

More frequently than

All Risk Committee (incl. CEO, CFO,

CRO

for the lending portfolio and credit risk appetite. This includes reviewing and taking decisions based on the

opportunities related

quarterly

CRO, COO, etc. cf. C1.1a))

reporting

Group's ESG assessments and portfolio exposure strategies.)

to our banking

line

Chief Executive Officer (CEO)

Reports to

Both assessing and managing climate-related risks and opportunities

Risks and

Quarterly

the board

opportunities related

directly

to our banking

Risks and

opportunities related

to our investing

activities

Risks and

opportunities related

to our own operations

Chief Risks Officer (CRO)

Reports to

Both assessing and managing climate-related risks and opportunities

Risks and

Quarterly

the board

opportunities related

directly

to our banking

Risks and

opportunities related

to our investing

activities

Risks and

opportunities related

to our own operations

Credit committee

Reports to

Other, please specify (Exercises the duties and the authority of Executive Leadership Team (ELT) to review

Risks and

Quarterly

the board

and decide on individual credit cases, where climate considerations can impact credit decision making.)

opportunities related

directly

to our banking

C1.3

(C1.3) Do you provide incentives for the management of climate-related issues, including the attainment of targets?

Provide incentives for the management of climate-

Comment

related issues

Row

Yes

Climate-related KPIs continue to be a focus area for Danske Bank and part of our 2023 ambitions as well as our net-zero climate targets,

1

including 2030 interim targets.

Risk and Compliance KPIs also affect remuneration if there are any breaches of climate related specific policy restrictions (SPRs)

C1.3a

(C1.3a) Provide further details on the incentives provided for the management of climate-related issues (do not include the names of individuals).

Entitled to

Type of

Activity

Comment

incentive

incentive

incentivized

Corporate

Non-monetary

Emissions

In 2021, climate-related issues were part of the non-monetary incentives for our Executive Leadership Team, as e.g. emissions reductions are part of our

executive team

reward

reduction target

Better Bank transformation plan and 2023 ambitions.

C-FS1.4

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(C-FS1.4) Does your organization offer its employees an employment-based retirement scheme that incorporates ESG criteria, including climate change?

Employment-based

Describe how funds within the retirement scheme are selected and how your organization ensures that ESG criteria are

Provide reasons for not

retirement scheme that

incorporated

incorporating ESG criteria into your

incorporates ESG

organization's employment-based

criteria, including

retirement scheme and your plans

climate change

for the future

Row

Yes, as the default

Danica Balance is the default retirement scheme for employees in Danske Bank. Danica Pension analyses environmental, social and

1

investment option for all

governance aspects before selecting investments. Exclusions include investments in companies with more than 5% of revenue originating

plans offered

from thermal coal or tar sands. Further, there are no investments in companies involved in weapons such as nuclear weapons or anti-

personnel mines. Additionally, exclusions include investments in companies with more than 5% revenue from tobacco products.

From October 2020, employees in Danske Bank further have the option to invest their pension savings with even more focus on

sustainability factors. It is up to the employee what percentage of their pension savings they want to invest in Danica Balance Sustainable

Choice. Danica Balance Sustainable Choice includes responsible bonds, equities and corporate bonds with special focus on responsibility

as well as investments in renewable energy.

Overall, Danica Pension has committed to have net zero emissions from investments before 2050. Further, the ambition is to reduce CO2

emissions from investments with 15% to 35% before 2025 within five key sectors: energy, utilities, transportation, cement and steel. Danica

Pension also has an ambition to increase investments in the green transition to 100 billion DKK before 2030, and in Q4 2021 the

investments in the green transition had increased to almost 33,5 billion DKK.

C2. Risks and opportunities

C2.1

(C2.1) Does your organization have a process for identifying, assessing, and responding to climate-related risks and opportunities?

Yes

C2.1a

(C2.1a) How does your organization define short-, medium- and long-term time horizons?

From

To

Comment

(years)

(years)

Short-

1

3

term

Medium-

3

5

term

Long-

5

We do not define a single upper limit to our Long-term time horizons across the Group. Climate scenarios rely on long-term horizons, and as an example, we have performed climate

term

assessments with a 25-year outlook or longer on our Mortgage Book, whereas for Corporate Finance, it is typically 10 years or shorter . . A concrete example of a long-term horizon upper

limit is our oil and gas climate analysis, which included a scenario out to 2050.

Transition risk assessments take in to account short medium and long term risks and customers' targets for the same time horizons. Currently, in line with EU Climate action targets, we

are also looking 2030 as the relative medium term time horizon for both ours and customers' targets.

C2.1b

(C2.1b) How does your organization define substantive financial or strategic impact on your business?

Our Enterprise Risk Management framework sets out common standards for how we organise our activities to identify and respond to the risks we face as identified in the Group's risk taxonomy, including financial risks (credit, market, liquidity & capital) and a series of non-financial risks. In addition to these sustainability, conduct and reputational risks are viewed as cross-taxonomy risks, where the impact of climate-related risks are viewed through the lens of their effect on the risk categories in the Group's risk taxonomy.

When assessing climate related risk, we look at its substantive financial or strategic impact in terms of the risk of financial, operational or reputational loss across the Group. For Danske Bank, substantive financial or strategic impact generally means that the estimated financial impacts would result in substantial deterioration in e.g. credit quality or impairments levels or if a strategy has to be significantly updated due to external or internal changes. On a more operational level, the Group carries out risk assessments based on financial impacts and likelihoods of losses occurring in a given process, where financial impacts above DKK 100 m considered high and controls to mitigate these risks in the associated process are prioritised.

Danske Bank has also started to assess and quantify the financial impact and sensitivity of our lending portfolio to climate-related risks for selected sectors using climate scenarios. Sectors are prioritised with a risk based approach, using a climate risk heat map to determine which sectors have the most substantive financial impact.

C2.2

(C2.2) Describe your process(es) for identifying, assessing and responding to climate-related risks and opportunities.

Value chain stage(s) covered

Direct operations

Upstream

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Danske Bank A/S published this content on 21 March 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 22 March 2023 10:32:06 UTC.