Sustainability Report 2020 2 SUSTAINABILITY REPORT 2020

About this report

This report covers activities in the Danske Bank Group for the financial year 1 January 2020 to 31 December 2020. Our reporting approach is to provide an overview of our 2023 Group Sustainability Strategy and the issues that are material to our stakeholders and our business. We aim to provide a fair and balanced representation of our activities, progress and performance, as outlined in our reporting principles.

This report represents our statutory statement on corporate social responsibility and gender diversity at management level, in accordance with sections 135a and b of the Danish Executive Order on Financial Reports for Credit Institutions and Investment Companies, etc. In addition, it meets proposal 14 cf. the 25 proposals by Finance Denmark’s Anti- money Laundering Task Force.

Our annual reporting suite includes the Danske Bank Group’s Annual Report 2020, Risk Management 2020 and this report. A full version of our Principles for Responsible Banking self-assessment is included in our Sustainability Fact Book 2020, where we also present additional information and data on our role in society, sustainable finance, Danske Bank’s environmental footprint, social indicators and governance. We also issue a Statement on Modern Slavery Act 2020 and a Statement on Carbon Neutrality 2020 – these are available at danskebank.com/sustainability. SUSTAINABILITY REPORT 2020 3

Contents

FOREWORD

04 Foreword by Chris Vogelzang

BUSINESS & STRATEGY

06 Our business 08 Our role in society 10 Our strategic direction 12 Strategy execution and stakeholder dialogue

SUSTAINABLE FINANCE

14 The power of finance 16 Financing a sustainable transition 18 Investing in a sustainable future

ENTREPRENEURSHIP

20 Start-ups and scale-ups

FINANCIAL CONFIDENCE

22 Financial capability at a young age

GOVERNANCE & INTEGRITY

24 Customer engagement 26 Compliance culture 28 Financial crime prevention 30 Responsible sourcing

EMPLOYEE WELL-BEING & DIVERSITY

31 Diversity and inclusion 32 Employee engagement 34 Community engagement

ENVIRONMENTAL FOOTPRINT

35 Environmental efforts We welcome any comments, suggestions or questions you may have regarding this report or our PERFORMANCE OVERVIEW & ASSURANCE performance. Please send an email to [email protected] 36 Principles for Responsible Banking You can stay up to date on the 37 Task Force on Climate-related Financial Disclosures most recent developments at 40 ESG performance data danskebank.com/sustainability, 41 Independent auditor’s assurance report and you can follow Danske Bank on 42 Reporting principles Twitter, LinkedIn and Instagram. 4 SUSTAINABILITY REPORT 2020

FOREWORD

Dear reader,

2021 marks the 150-year customers by providing vital and anniversary of Danske Bank. innovative financial services, A company that has existed and we contribute to growth for a century and a half is a and the general prosperity of company that has managed to the Nordic countries. adapt and evolve and that has managed to run a business But as we embark on that has been commercially celebrating our anniversary, “For Danske Bank and for our customers, sustainable over the course of we are also coming to terms time. with issues from our recent and sustainability and the transition to a greener distant past. We are working economy is possibly the greatest opportunity and At Danske Bank, we have hard to address these issues the greatest challenge ahead. We regard sustainable evolved as a reflection of with an ambition to promote the societies we are part of, a culture in which problems finance as a strategic lever for Danske Bank to and we have helped shape are discussed, handled and succeed commercially.” these societies by creating resolved openly and responsibly. opportunities and by helping Chris Vogelzang individuals and businesses We want to be a trusted partner CEO – Danske Bank to realise their ambitions – as and become an even better well as by helping to build bank that is simpler, faster and innovate the financial and more competitive and that infrastructure. creates long-term value for our customers, employees, society We have a long and proud and investors. As a responsible history, and we have much to bank, we will work to resolve celebrate. Each day, we service issues of past mistakes, while the needs of thousands of continuing to look forward and SUSTAINABILITY REPORT 2020 5

helping our customers assess Our efforts rest on our which business and everyday The coronavirus pandemic the risks, challenges and commitments to the UN life were turned upside down, continues to be a tremendous opportunities ahead. Principles for Responsible and the social and financial challenge for us all. But our Banking and Principles for consequences are likely to stay collective ability to adapt to By integrating ESG Responsible Investment, as well with us for years. a new and unforeseen reality considerations into our as through our embracement has also shown us what we financing and investment of the Task Force on Climate- Danske Bank is a well- can achieve when we all work activities, we want to take a related Financial Disclosures. consolidated bank, and we are together. I believe that this is an leading position on sustainable We also continue to support in a solid position to support important lesson to draw upon finance in the Nordic region. the UN Global Compact, and our customers throughout the as we set out to transform our We will build on our strong we contribute to several of the crisis. Our foremost priority in businesses and our economies customer relationships and UN Sustainable Development 2020 has been to safeguard in the transition towards a use our leading position among Goals. the health and safety of greener and more sustainable corporates and institutions our employees, customers future. to drive the agenda across Our responsibility to provide and external partners while customer segments. resilient and sustainable supporting our customers financial solutions for our with lending and expertise and For Danske Bank and for our customers and for society also advice. We will continue to do customers, sustainability and guides our work and initiatives so in 2021. the transition to a greener to support families, businesses economy is possibly the and external partners through Throughout the process, we Chris Vogelzang greatest opportunity and the the financial hardship and have had to invent new ways of Chief Executive Officer greatest challenge ahead. We uncertainty caused by working and new ways to meet Danske Bank regard sustainable finance as a COVID-19. and advise our customers, and strategic lever for Danske Bank the experience has strength- to succeed commercially. The year 2020 will be ened our ambitions to become a remembered as a year in better and simpler bank. 6 SUSTAINABILITY REPORT 2020

BUSINESS & STRATEGY Our business

Danske Bank is a bank for people and businesses across the Nordic region, and our more than 22,000 employees serve in excess of 3.3 million customers. By providing a high level of financial competence and leading innovative solutions, we strive to create long-term value for our key stakeholders.

Since 1871, we have been helping our customers to become on NASDAQ Copenhagen’s OMX C25 index. In addition to banking financially confident and to build their lives and businesses on services, the Danske Bank Group offers customer life insurance a solid financial foundation. Today, Danske Bank is one of the and pension products, mortgage credit, wealth management, real largest financial institutions in the Nordic countries and is listed estate, and leasing products and services.

At the end of 2019, we launched our Better Bank plan and ees, our contribution to society and our investors. In 2020, to announced clear ambitions for 2023 for our key stakeholder strengthen our business resilience and to future-proof Danske groups: customers, employees, society and shareholders. The Bank’s ability to create value, our Executive Leadership Team Better Bank plan will ensure that Danske Bank becomes a expedited our Better Bank transformation by focusing primarily simpler and more competitive bank and that we continue to on compliance, cost savings, better ways of working and on our be more closely integrated into the lives of our customers and purpose and culture. Nordic societies. The plan centres on our customers, employ-

Clear ambitions for our key stakeholders towards 2023

On average among the top two for customer satisfaction in everything we do. Customers

At least 90% of our employees are engaged (as measured in our Employee Engagement Index). Employees

Operate sustainably, ethically and transparently – and have a positive impact on the societies we are part of. Society

Achieve a return on shareholders’ equity of 9-10% and a cost/income ratio in the low 50s. Investors SUSTAINABILITY REPORT 2020 7

Group key figures 2020

Banking services in 3.3 million personal and 1,938 corporate and 12 countries with Denmark, business customers institutional customers Norway, Sweden and Finland served in our core markets served across the Group as core markets and Northern Ireland

191 locations across our 22,376 employees DKK 6.3 billion core markets and Northern including support functions profit before tax Ireland in Lithuania and India

$ $ %

2.6% return on average 67.2% DKK 1.7 billion shareholders’ equity cost/income ratio tax on profit

Customer services

With our strong foothold in the Nordic markets, we are well posi- We engage with our customers at our physical locations and tioned to help our customers meet their financial objectives by pro- through a wide range of digital platforms, including self-service and viding them with banking services based on high levels of financial other digital solutions. Our offices outside the Nordic countries competence and leading innovative solutions. offer gateways to the rest of world for Nordic customers and serve as points of entry to our region for international customers whose Danske Bank is headquartered in Denmark, and in 2020 our cus- activities are anchored in our core markets. tomer services operated through four business units: Banking DK and Banking Nordic, serving personal and small and medium-sized Following structural reorganisation in January 2021, Danske business customers in Denmark, Finland, Norway and Sweden; Cor- Bank’s commercial activities are managed by just two business porates & Institutions, serving corporate and institutional custom- units: Personal & Business Customers and Large Corporates & ers; and Wealth Management, providing pension savings, private Institutions. banking, and asset management services across the entire Group.

We serve personal and business customers in Northern Ireland, which is operated and reported on as a separate business unit. Read more For more details, please see our website and our Annual Report 2020. 8 SUSTAINABILITY REPORT 2020

BUSINESS & STRATEGY Our role in society At Danske Bank, we recognise our role and responsibility in providing financial infrastructure for a prosperous, stable and sustainable economy – not least during challenging situations such as the coronavirus pandemic.

In 2020, the coronavirus pandemic caused major upheavals for society, businesses and families alike, and the crisis clearly showed that financially stable and resilient banks are of great significance to the economy and to the financial infrastructure of society. Danske Bank has initiated a wide range of initiatives to protect and support customers, employees and suppliers and to help mitigate the financial consequences of the coronavirus pandemic for society.

Key figures on our role in society in 2020 are provided here.

A prosperous economy Danske Bank contributes to economic growth by converting short-term deposits Selected responses to the into long-term loans by managing financial assets, by spreading risks and by coronavirus crisis facilitating payments between counterparties. DKK 1,193 billion in deposits • Our Executive Leadership Team and Group Crisis Management Team continuously assessed the situation DKK 1,838 billion loans to customers* to ensure we applied appropriate measures in response DKK 1,765 billion assets under management to any new developments. *Loans and advances (ex. repurchase agreement)

• More than 19,000 employees across countries and business units worked from home, enabling thousands of customer dialogues through online meetings and other digital communications.

• We helped 9 out of 10 customers who requested our help with everything from proactive advisory services and tailored webinars aimed at start-ups to extension of due dates and overdraft facilities.

• We made DKK 100 billion in corona-related credit available to business and large corporate and institutional customers and DKK 3.5 billion to personal customers.

• We assisted in arranging bonds that finance projects alleviating the social and economic consequences of the pandemic.

• We invested more than DKK 1 billion of our treasury funds in bonds issued to respond to the economic Local jobs and growth consequences of the coronavirus pandemic. We continue to support job creation and an employable workforce in local communities by providing direct employment and development opportunities in • We advanced payments by at least two weeks, which the countries where we operate. We also indirectly create jobs at our suppliers’ resulted in early payment of hundreds of million DKK in companies and for our customers when we help them grow their business. total for several thousand suppliers across the markets. DKK 16 billion in salary and pension payments to our • Through our leasing company, Nordania, we donated 44 22,376 employees leasing cars for roadside testing and infection detection DKK 11 billion in payments to our 9,090 suppliers of COVID-19 in Denmark. SUSTAINABILITY REPORT 2020 9

Financial stability A digital financial infrastructure Danske Bank is one of Denmark’s systemically important financial institutions. By providing innovative financial solutions that make daily banking easy and Through our mortgage credit institutions, we provide stable financing of real secure, Danske Bank is contributing to a digital transformation of the financial estate in all our core markets. infrastructure. DKK 819 billion net lending in Realkredit Danmark 48.9 million eBanking transactions DKK 1,019 billion net lending via rest of the Group 67.2 million mobile and tablet transactions

Green transition Public housing We are supporting the transition to a sustainable economy by developing In Denmark, Danske Bank plays a key role in the financing of public housing. green financial offerings and by integrating environmental, social and gover- This system dates back to 1850, and today about 1 million people live in such nance (ESG) perspectives into our investment and lending processes. accommodation. DKK 91 billion green bonds arranged for customers DKK 89.8 billion in net lending to finance public housing via DKK 22 billion green loans granted to customers* Realkredit Danmark DKK 27 billion of Danica Pension’s pension savings invested in the green transition Accessible finance *Danske Bank and Realkredit Danmark We provide accessible finance by offering customised solutions for people with special requirements. For customers who are less comfortable with digitalisation, our services include ordinary mail and mail payment, Easy Banking, cash cards and cash deposits. To help visually impaired people, many of our ATMs have braille keyboards and synthetic speech. 191 physical locations 22 million ATM transactions

Financial crime prevention Safe and sound financial behaviour We contribute to combatting financial crime by working closely with authorities By sharing knowledge and tools, we help individuals and businesses prevent fraud and the financial sector and by developing and implementing effective measures and keep their money and data safe. We also share our expertise on financial with regard to anti-money laundering, counter-terrorist financing and financial literacy to help individuals develop sound financial behaviour. sanctions. 28,847 unique visits to our Keep It Safe platform 3,100 full-time employees dedicated to the financial crime 105,862 unique visits to PengeSkyen, our new online universe agenda in Denmark More than 2.6 million customers had their ongoing due diligence completed 10 SUSTAINABILITY REPORT 2020

BUSINESS & STRATEGY

Our strategic direction

We aim to support value creation for all our stakeholders and have updated our 2023 Group Sustainability Strategy, thereby placing sustainable finance at the core of our strategy to future- proof Danske Bank’s business.

The creation of societal value sures (TCFD), the Principles for achieved in recent years as well sustainable finance as “finance and business value can and Responsible Banking (PRB) and as on our Better Bank 2023 to support economic growth must go hand in hand. This the Principles for Responsible ambitions. By doing so, we while reducing negative impacts assumption drives our approach Investments (PRI), all of which further develop the areas that and increasing positive impacts to sustainability and is an impor- are supported by Danske Bank, create both societal value and on ESG factors”. This aligns tant lever for our Better Bank are significantly shaping market business value, which in turn well with the EU’s definition, transformation towards 2023. developments and our business. also strengthens Danske Bank’s and it covers integration of ESG competitiveness. considerations into our financ- The 17 UN Sustainable Devel- To seize opportunities and avoid ing and investments activities opment Goals (SDGs) and so- risks associated with these de- Our main area of impact is across the Group. The strategy ciety’s sustainability transition velopments while also meeting through sustainable finance. includes five additional focus towards 2030 are driving rapid our stakeholders’ expectations, Consequently, sustainable areas that continue to be of high change across markets. For the we in 2020 revisited and finance is at the core of our importance for our stakeholders financial sector in particular, the updated our Group Sustain- sustainability strategy, and our and which are vital to our per- EU Action Plan on Sustainable ability Strategy. Our updated ambition is to take a leading po- formance and credibility on the Finance, the Task Force on sustainability strategy builds on sition on sustainable finance in overall sustainability agenda. Climate-related Financial Disclo- our foundation, on the results the Nordic countries. We define

2023 Group Sustainability Strategy Sustainable finance We help our customers achieve their sustainability ambitions through financing and investing

Entrepreneurship Financial confidence We support new p Fin We help people become businesses in creating shi anc ur ial ne c financially confident sustainable growth e on r fi p d e e tr n n c

E e

y t Sustainable i

G s

r

& o

e v finance e v i e e i n Employee well-being r y d Governance & integrity t n o e l a & & diversity We operate in a responsible g p r n g i c m t n We foster well-being, diversity and transparent manner y e E i e and inclusion in our workplace -b ll e w E l nvironmenta footprint

Environmental footprint We minimise our own environmental footprint SUSTAINABILITY REPORT 2020 11

Our contribution to the SDGs

With our strategy and our 2023 targets, we aim to contribute Through our sustainable finance activities, we potentially have to the UN’s 2030 Agenda for Sustainable Development and to an indirect impact on all 17 SDGs. Depending on the underlying the SDGs. Over the past couple of years, we have targeted our activities, the impact can be both negative and positive, which efforts on SDG 4: Quality education, SDG 8: Decent work and we will start mapping in more detail in 2021, in line with our economic growth, and SDG 13: Climate action. Reflecting our PRB commitment, see p. 13 and p. 36. In this report, we refer to work to promote equal opportunities in leadership and our efforts relevant SDG targets for which we are currently able to disclose to reduce illicit financial flows and combat financial crime, the supporting metrics on progress across our six focus areas. updated strategy also addresses SDG 5: Gender equality and SDG 16: Peace, justice and strong institutions.

Strategy focus areas and value creation 2023 targets 2020 status SDGs

Sustainable finance Increase volume of sustainable finan- Sustainable financing: Massive investments are needed to achieve society’s sus- ce to 1) well above DKK 100 billion DKK 102 billion since 2019 tainability goals. Through sustainable financing and investing, in sustainable financing including we can address society’s needs while supporting our cus- granted green loans and arranged Investing in the green transition: tomers, mitigating ESG risks and avoiding stranded assets. bonds and to 2) DKK 30 billion DKK 27 billion since 2019 investments in the green transition by Danica Pension

Set a climate target for our corporate 23% of corporate loan portfolio loan portfolio in alignment with the mapped for climate impact Paris Agreement on Climate Change

Entrepreneurship 10,000 start-ups and scale-ups 5,065 start-ups and scale-ups Entrepreneurs play a vital role in driving growth and innova- supported with growth and impact supported since 2016 tion for sustainable solutions. By enabling and supporting tools, services and expertise entrepreneurship, we can support growth and positive impact, attract new customers and also strengthen our value propositions for existing customers.

Financial confidence 2 million people supported with 1,154,913 people supported since Personal finances are a source of worry for many people. financial literacy tools and expertise 2018 By fostering financial confidence and sound financial practices among the next generation, we can support their financial literacy and enhance our value propositions towards these customer segments.

Governance & integrity Over 95% of employees trained 95% of employees trained By fighting financial crime and promoting responsibility and annually in risk and compliance sustainability in the value chain, we can exert significant societal impact. In all aspects of our business operations, governance and integrity is fundamental to rebuilding trust and avoiding financial losses.

Employee well-being & diversity More than 35% share of women in 28% share of women in senior By focusing on our employees’ well-being and diversity, senior leadership positions leadership positions we support healthy and inclusive workplaces and we can strengthen employee engagement, while also improving efficiency, enhancing our talent pool and lowering hiring costs.

Environmental footprint Reducing our CO2 emissions by 75% 86% CO2 emissions reduction since Achieving the objectives of the Paris Agreement on Climate from 2010 and 10% from 2019 2010 and 48% since 2019 Change requires efforts from all stakeholders in society

to reduce their CO2 emissions. Minimising our use of resources and mininising our environmental footprint also enhances cost efficiency. v

“The SDGs address global challenges and patterns in society that no one can solve alone. We want to make a real difference, and we contribute through our actions and financial offerings and by joining forces with stakeholders who share our sustainability ambitions.”

Maria Simonson, Head of Group Sustainability 12 SUSTAINABILITY REPORT 2020

BUSINESS & STRATEGY

Strategy execution and stakeholder dialogue

Key levers for an efficient 2020 established a Sustainable provides a solid overview of execution of our sustainability Finance Council and a Diversity our achievements on a regular strategy are our governance & Inclusion Council, both of basis. Towards 2023, we will framework, our engagement which include representatives further develop and integrate with stakeholders and our from all business units and from sustainability-related KPIs into reporting efforts. relevant Group functions. our performance management framework. We took the first Because our 2023 Group The majority of employees work- step in 2020 by including three Sustainability Strategy cuts ing with sustainability are firmly sustainability-related KPIs in across the entire business, rooted in our business units, and the Group’s variable remu- it is essential to have clear in collaboration with our Group neration structure to ensure roles and responsibilities that Sustainability function, they lead that all employees’ variable enable efficient execution. This the work in their units to embed remuneration is clearly linked is of particular importance for sustainability in everything we to our ambitions. The remuner- the sustainable finance area, do. ation KPIs are based on our which has matured and grown 2023 sustainability targets and in significance to involve more We monitor progress against include Environmental footprint, International sustainability employees across the organ- our targets using a set of Employee well-being & diversity principles and initiatives isation. To further support key performance indicators and Governance & integrity, In our sustainability strategy and coordination and accelerate (KPIs), and our sustainability which together represent all policies, we state our support and Group-wide execution, we in strategy execution dashboard three ESG dimensions. commitment to the following: • 2030 Agenda and the UN Sustainable Development Goals Organisation level Roles and responsibilities • Paris Agreement on Climate Change Board of Directors • Approve Group strategic direction and policies • UNEP FI Principles for • Oversee Group execution via annual strategy updates Responsible Banking • UN-supported Principles for Responsible Investment Business Integrity Committee • Endorse Group strategic direction and policies and approve KPIs and targets • UN Global Compact (BIC) • Approve integration of sustainability in unit roadmaps • OECD Guidelines for • Monitor strategy execution and target achievement Multinational Enterprises Executive Leadership Team and • Oversee integration of sustainability on a strategic, operational and cultural • UN Guiding Principles on Head of Group Sustainability level Business and Human Rights • Universal Declaration of Sustainable Finance Council • Advise BIC on the overall strategic direction within specific areas Human Rights Diversity & Inclusion Council • Review and provide comments to BIC on unit roadmaps • ILO Declaration of Fundamental Principles of Rights at Work • Task Force on Climate-related Business units • Integrate sustainability into unit strategies and roadmaps Financial Disclosures Group functions • Integrate sustainability into offerings, processes, policies, etc. • Develop and execute action plans to achieve targets and report on progress Additional industry-specific international principles and con- Group Sustainability • Develop Group Sustainability Strategy, incl. KPIs and targets ventions that guide our financing, • Enable and monitor strategy execution and drive external reporting investment and procurement • Serve as centre of excellence on sustainability-related issues activities are detailed in our • Spearhead programmes on entrepreneurship and financial confidence position statements, which are available at danskebank.com. SUSTAINABILITY REPORT 2020 13

Our stakeholder engagement

It is key for us that our stakeholders provide us with input about what Compliance remediation related to the Estonia case, closure of they expect from us and what we should do better. Partnerships with the Flexinvest Fri case and the Danish debt collection case, see our stakeholders are also an important lever to success because we p. 24, have been topics in many of our stakeholder dialogues in recognise that collaboration is needed to solve global and complex 2020. This naturally also influences how we engage in dialogue on challenges. sustainability issues. We remain humble to the task ahead of us in restoring the trust of our customers and of society. In 2020, we updated our Stakeholder Policy and specified the princi- ples for engaging with each of our stakeholder groups to support our Danske Bank is a registrant to the online European Transparency ongoing stakeholder dialogues. Our interactions with stakeholders Register, to which we provide information on our lobbying efforts, are guided by cross-cutting principles that include collaborating, with including our fields of interest and membership of industry asso- the objective of reaching shared goals for the benefit of our custom- ciations. As a registrant, we have also signed the Transparency ers and society; always seeking to engage in an honest dialogue; and Register Code of Conduct. making our knowledge and expertise available to our stakeholders.

Material sustainability issues

Based on information gathered The workshops confirmed that from our stakeholder engage- sustainable finance stands out Sustainable finance ments, we annually assess the as the area of greatest signifi- Financial stability and growth materiality of ESG-related topics cance, from both a societal and ESG in financing ESG in investments to identify issues that represent business perspective. Climate change preparedness risks or opportunities for socie- Sustainable use of natural resources and circular economy ty and for our business. We are accelerating our efforts Biodiversity and natural habitats to understand and measure Social well-being This year’s assessment is also positive and negative impacts informed by our comprehensive of our activities. In 2020, we Entrepreneurship stakeholder survey from 2019. joined the Banking for Impact Support for start-ups and scale-ups The survey confirmed that a Working Group, which works Innovation and sustainable business models majority of our personal cus- to develop a data-based and tomers in the Nordic countries comparable method for meas- Financial confidence and investors consider sus- uring and valuing the impact Financial capability for customers tainability to be an important of banks’ activities. We also Financial education for young people and families focus area for Danske Bank, collaborate within the indus- with governance- and compli- try via Finance Denmark on Governance & integrity ance-related topics as the most better understanding different Anti-money laundering material areas. Investors also stakeholder perspectives on Anti-corruption highlighted climate change sustainability issues in the Responsible tax preparedness as an area of Danish society. This is in line Responsible products and fair advice increasing importance. with our commitment to PRB, Access to financial services see p. 36. Data protection and data ethics Similarly, a Group-wide employ- Responsible procurement ee survey in 2019 documented We present and report on our IT security that our sustainability efforts material sustainability issues Financial crime prevention are important to the majority of within the six strategic focus ESG transparency our employees. Climate change areas. Actual and potential was assessed as the most impact on human rights and Employee well-being & diversity important topic, followed by labour rights are an integral Employee health and well-being employee health and working part of several of these issues. Training and development of employees Community support conditions. Likewise, COVID-19 risks and Diversity and inclusion responses affect numerous Executive remuneration* To ensure that the six focus are- issues and reinforce the impor- as in our sustainability strategy tance of sustainability as we embrace our material impacts look to support our customers Environmental footprint CO reduction and risks, we in 2020 held and society in ‘building back 2 Responsible resource consumption workshops with key sustaina- better’. Waste management bility experts across the Group. *Please see our Annual Report 2020 14 SUSTAINABILITY REPORT 2020

SUSTAINABLE FINANCE The power of finance

Our most significant impact on society comes through our financing and investment activities. Danske Bank’s ambition is to take a leading position in the Nordic countries when it comes to sustainable finance.

In future, robust and relevant volume target on sustainable our competitors are also actively sustainable finance offerings financing, and we are close to targeting the field of sustainable will constitute a bank’s licence reaching our target for invest- finance. Lastly, the EU is rolling to operate – particularly in ing in the green transition. out ambitious regulations in the Nordic countries, where Consequently, we will update its Action Plan on Sustainable sustainability standards are our ambitions for our volume Finance, which will have a relatively advanced. targets in 2021 while aligning profound impact on our sector. our definitions with the incom- Ambition In 2020, Danske Bank ranked ing EU taxonomy on climate In addition to these develop- By 2023, we will increase volume as the number one Nordic change mitigation and adapta- ments, voluntary initiatives that of sustainable finance to 1) arranger in Bloomberg’s 2020 tion. We will also continue our aim to advance the financial well above DKK 100 billion in Global League Tables for work to align our corporate loan sector’s integration of ESG fac- sustainable financing including bookrunners for both sustain- portfolio and Danica Pension’s tors and drive transparency are granted green loans and arranged able bonds and green bonds. investment portfolio with the ob- also gaining increasing support. bonds and to 2) DKK 30 billion investments in the green transition Also, 82 of our funds and jectives of the Paris Agreement Such initiatives include PRI, by Danica Pension. sub-funds were awarded the on Climate Change. PRB and TCFD – all of which acknowledged European sus- we support, see pp. 36-39. We will also set a climate target tainable finance label LuxFLAG Market development We are also an active member for our corporate loan portfolio ESG in 2020, thereby position- The financial sector is increas- of the Taskforce on Nature-re- in alignment with the Paris ing Danske Invest as the fund ingly taking a central role in the lated Financial Disclosures Agreement on Climate Change. manager in Europe that has the sustainability transition by facili- (TNFD) informal working group, most funds with this certifica- tating sustainable financing and which has started to scope the tion. Our score from the CDP investing, and banks currently mandate and governance of the 2020 performance Climate Change 2020 Ques- face a number of significant formal TNFD. tionnaire, which is aligned with market developments that bring Sustainable financing the TCFD, increased from C to new risks and opportunities. Beyond climate

DKK To classify sustainable 120 bn B. However, achieving a leading position in the Nordic countries Firstly, Nordic customers are economic activities, the EU 2023 target 100 bn requires persistency, proactive relatively advanced in their taxonomy is introducing 80 bn engagement and a strategic sustainability considerations, screening criteria for climate 60 bn approach to the regulatory and they expect their bank to change mitigation and 40 bn agenda. We will further develop be able to support sustainable adaptation activities. Although our position across customer development across segments. this is an important first step, 20 bn segments and sectors and will Secondly, the speed of the Danske Bank fully supports 102 0 use the power of finance to climate transformation has a the intension to expand the Data is accumulated create immediate and long-term disruptive effect on sectors and taxonomy and to include broader from 2019 sustainable progress. companies, rapidly creating new definitions of ESG factors. Investing in the green transition winners and losers. This offers This is in line with the societal DKK In 2019, we introduced volume opportunities for the financing trend to go beyond climate and 35 bn targets for sustainable finance of high performers and those consider other environmental 2023 target 30 bn towards 2023. Because market that want to transition, but it challenges, such as threats to 25 bn conditions were more favour- also carries the risk of stranded biodiversity and natural habitats, 20 bn able in 2020 than expected, assets for those who do not. while also increasing emphasis 15 bn we have already met our Group Thirdly, competition is strong as on reducing inequality and 10 bn 5 bn 27 0 Data is accumulated “The EU Action Plan on Sustainable Finance aims at channelling financial from 2019 flows towards Paris-aligned activities. Danske Bank takes on this responsibility 23% of corporate loan portfolio by ensuring competitive and robust sustainability offerings that support a mapped for climate impact. net zero carbon economy by 2050. We are committed to helping our customers in this transformation.”

SDG contribution Berit Behring, Member of the Executive Leadership Team, Head of Wealth Management We stimulate climate change and Interim Head of Corporates & Institutions. measures, in support of SDG 13.2. SUSTAINABILITY REPORT 2020 15

ensuring a just transition to a challenges. This is reflected in dominant theme that challenges forward, we will use mapping low-carbon future. the increased focus on social people, business and societies of our negative and positive bonds and investments, see p. to act differently as we all look impacts to develop our insights Although it is too early to draw 16 and p. 18, as well as in a to ‘build back better’. Green and to increase our contribution decisive conclusions, the raised awareness on employee loans, green bonds and green to society. We also work to coronavirus pandemic seems to well-being – not least at Danske investments, which represent reduce our own environmental have reinforced and accelerated Bank, see p. 32. our key contribution to SDG footprint, see p. 35. focus on social factors, in 13: Climate action, currently particular unemployment Nevertheless, we expect dominate our sustainable and related socio-economic climate change to remain a finance portfolio. As we move

In support of regulatory incentives Danske Bank engages actively in developing the regulatory incentives for financial institutions to channel more capital framework for sustainable finance through our industry towards projects that have a clearly defined environmental association memberships, and we fully support the and/or social benefit. Increased requirements for ESG recommendations of the Danish Government’s climate integration and disclosures will also help address challenges partnership on finance and the intention and ambitions of and dillemas related to lack of both data and standards for the EU Action Plan on Sustainable Finance. This action plan measuring performance and risks. further consolidates the agenda and introduces regulatory

Group-wide sustainable finance framework

Integrating sustainability has been developed. Launched these guidelines will help which will be anchored in the into everything we do is key in December 2020, the safeguard our sustainability PRB. Our position statements to our way of working with framework provides guidance ambitions and commitments will also be reviewed in order sustainable finance at Danske on the implementation of our while developing commercial to ensure that they remain Bank. Our approach is to use sustainable finance ambition approaches. How we work with relevant in a market where our financial expertise as the and targets, and it also identifies governance, transparency, new issues emerge as society starting point and to develop key focus areas for execution training and data is key to is transitioning. Our current the sustainability competences and potential synergies. supporting our development position statements cover in our financial teams. By and our customers’ Agriculture, Arms and Defence, developing our financial teams’ The framework includes a sustainability journey. Climate Change, Forestry, sustainability capabilities and set of guiding principles for Fossil Fuels, Human Rights, by equipping them with ESG the entire Group. Inspired by In 2021, we will introduce a and Mining and Metals. data, we aim to deliver best- and aligned with the PRB, Sustainable Finance Policy, in-class sustainable finance advice. This also means that the responsibility for developing sustainable finance solutions Danske Bank’s guiding principles on sustainable finance lies with the respective business units, where knowledge of customers and stakeholders is strongest. To ensure that we work in an effective and Align business and Enable our customers’ Measure and improve Engage and partner with consistent manner, a Group-wide societal goals sustainability journey impact stakeholders sustainable finance framework 16 SUSTAINABILITY REPORT 2020

SUSTAINABLE FINANCE

Financing a sustainable transition

Sustainable financing is the Danske Bank was also one of ability and reputation. Certain provision of loans and bonds for the banks behind the financing industries face more ESG risks projects and activities that have of Swedish company Northvolt’s than others, and in line with a clearly defined environmental USD 1.6 billion project to build Danske Bank’s position state- or social benefit. At Danske the largest battery manufactur- ments, we treat these industries Bank, we issue our own green ing facility in Europe – a facility with a risk-based approach. This bonds to finance our green len- that will support electrification means that these industries are ding activities, and we arrange and a carbon-neutral transporta- subject to higher expectations sustainable bonds for our custo- tion and energy sector. Further- in terms of their management mers to support the financing of more, Danske Bank provided and mitigation of risks than low their own sustainable transition. green loans amounting to DKK risk industries are. In line with 1,635 million for the financing the principle of three lines of Our Green Bond Framework, of wind farms in Bolivia and defence, we train and supply launched in 2019, defines the Ethiopia in cooperation with Da- all relevant personnel with loans or investments eligible to nida Sustainable Infrastructure knowledge, tools and govern- Financing 2020 figures be funded by the proceeds of Finance (DSIF). ance understanding to ensure • Loans: DKK 1,838 billion in loans granted to banking green bonds issued by Dan- awareness of our ESG risk customers across the Group. ske Bank. In March 2020, we ESG risk assessments policies and to help, in particular, • Green loans: DKK 22.3 billion published our first Green Bond When we grant a loan to a first-line relationship managers provided by Danske Bank and Impact Report, which highlighted customer, we enter into a long- and second-line credit officers to Realkredit Danmark. the fact that our two inaugural term commitment. We carefully comply with these. • Sustainability-linked loans: green bonds have provided DKK assess the financial situation DKK 24.4 billion. 7 billion in green loans to our of our customers to ensure we In 2020, we developed a new • Green bond issuance: DKK corporate customers, resulting in offer loans that are suited to the digital solution for ESG risk 13.5 billion provided by Danske 532,039 tonnes of avoided CO customer’s needs and financial assessment, thereby making Bank and Realkredit Danmark. 2 • Green bonds arranged for emissions. capacity. We also take into con- the process smoother and customers (nominal amount): sideration the purpose for which enabling better monitoring and DKK 91 billion. In 2020, the continued growth the funds will be used and work reporting at both customer level • Social bonds arranged for and interest in green loans to integrate ESG considerations and portfolio level. We launched customers (nominal amount): combined with interest in ar- into our risk management frame- the solution in the autumn of DKK 17 billion. ranged sustainable bonds for work, see p. 26. 2020 to the larger customer • Group Treasury: DKK 9.4 customers resulted in a total of segments, and we expect to billion in treasury funds placed DKK 102 billion in sustainable At individual business cus- expand the solution to other cus- in green bonds out of DKK 10 financing being provided by the tomer level, we perform ESG tomer segments in 2021. ESG billion allocated towards 2022. • ESG risk training: Group. risk assessment of regulatory risk analysis is also performed Approximately 500 compliance, track record, ESG at portfolio level, where we also relationship managers and In 2020, we granted green commitment, and of the busi- conduct climate scenario analy- credit line officers trained in loans to customers across the ness’s efforts to mitigate any sis in line with the TCFD, see pp. ESG risk assessment. Nordic countries to cover clean issues. The ESG risk analysis 37-39. transportation, renewable ener- is an integrated part of the gy, green and energy-efficient credit analysis, and we aim to Record for sustainable bonds buildings, and sustainable fore- assess whether the customers’ In terms of the number and Read more stry. In Denmark, we introduced ESG approach is aligned with volume of sustainable bonds For more financing figures, please see p. 40 and our Sustainability the first green building loan for Danske Bank values and with that were issued globally, 2020 Fact Book 2020. For more details public housing by granting a loan how current or potential risks was yet another record year. The about ESG risks, please see our of approximately DKK 500 milli- could affect Danske Bank and volume of sustainable bonds report Risk Management 2020. on to Boligselskabet Sydfyn. customers’ conduct, repayment exceeded the total volume of SUSTAINABILITY REPORT 2020 17

reduce CO global sustainable bonds issued Danske Bank’s facilitation of disclose the climate alignment 2 and to contribute to in 2019 by 51%. And as a likely a NOK 1.5 billion sustainabili- of our shipping portfolios. national climate targets, such result of the coronavirus pande- ty-linked revolving credit facility as Denmark’s target for a 70% mic, the volume of social bonds for Bane NOR Eiendom – a Our target is to have a portfolio reduction in GHG emissions issued increased significantly, Norwegian property manager in line with, or lower than, the from 1990 levels by 2030. accounting for almost a quarter and developer – is one example PP trajectory, which is at least a of the total sustainable bond of a sustainability-linked loan. 50% total reduction in GHG by In Denmark, the average com- market. In the Nordic countri- The margin that applies to the 2050 from 2008 levels, as set pany car annually emits around by the International Maritime es, the volumes of sustainable facility is linked to the ability of five tonnes of CO2, which is bonds issued also grew and pro- Bane NOR Eiendom to meet Organization. In December around 30% of the average vided opportunities for attrac- specific sustainability certifica- 2020, the first report published citizen’s total annual emissions. ting new investors, creating hig- tions for the eligible real estate showed that in 2019 our portfo- GreenFleet70 is a concept her demand, ensuring enhanced projects and its ability to meet lio alignment score was 11.9% that has been introduced to visibility, and improving investor annual reductions in energy higher than target, and we will help Danish companies reduce dialogue. The Swedish krona consumption across its building engage in dialogue with our emissions from road transport. remains the main currency for portfolio. customers to drive progress. In addition to offering an exten- sustainable bond issuance in sive selection of electric vehicle the Nordic countries, and it is Responsible shipping Danske Bank also supports models, the concept provides the third most-used currency To support the transformation of the Responsible Ship Recycling a number of tools, including an for green bonds globally. Our the international shipping sector Standards, and in 2020 we advanced fleet planner. Part- ranking as number one among and help finance its decarbon- inserted separate clauses on nerships with electric mobility Nordic banks in Bloomberg’s isation, Danske Bank is both a responsible recycling in 94% of providers is also an important 2020 Global League Tables for member of the Getting to Zero all new loan agreements for the part of GreenFleet70, which bookrunners on sustainable and Coalition and one of the found- sector. Our target for 2021 is Nordania Leasing introduced green bonds underscores our ing signatories of the Poseidon 100%. in April 2020. In total, 14% contribution to supporting the Principles (PP), launched in of all new car orders in 2020 market. 2019. And as one of 18 inter- Promoting a green fleet were electric or plug-in hybrid national shipping banks, Danske A greener company vehicle vehicles, against only 3% of all We began 2020 by structuring Bank has begun to assess and fleet offers the potential to new car orders in 2019. the first ever Green Bond Fra- mework for a seafood business – Mowi ASA, a Norwegian pro- ducer of farmed salmon – and we acted as joint bookrunner for the business’s inaugural EUR Paris-aligned loan book Set target(s) and take actions We will use our target(s) to steer 200 million green bond issue. In line with our ambition to lower our financed actions and annually disclose Following this, we acted as greenhouse gas (GHG) emissions, Danske Bank in 2020 committed to setting a climate progress. We aim to incorporate bookrunner in connection with climate considerations into the target by 2023 for our corporate loan 2023-onwards a number of other key bond is- portfolio in alignment with the climate goals existing framework for balance sues: the Kingdom of Sweden’s of the Paris Agreement on Climate Change. sheet allocation and include inaugural SEK 20 billion green To guide our work in this area, we joined the these as a natural step in the bond issue, the Dutch public Partnership for Carbon Accounting Financials development of customer sector bank NWB’s EUR 2 billi- (PCAF), an industry-led partnership that aims to develop relationships. on social bond issue to finance and implement a harmonised approach, based on the affordable housing, and the GHG Protocol, to measuring and disclosing Develop target/s and Nordic Investment Bank (NIB) GHG emissions associated with loans and investments. We also contributed implementation strategy SEK 1.5 billion Nordic-Baltic to Finance Denmark’s financial sector We will apply the findings of Blue bond issue within water the portfolio mapping to set a guidelines for CO2 disclosures, which resource management and pro- links to our support for standardised 2021-2022 baseline for the climate target for tection. We ended the year by sustainability disclosures and TCFD. our corporate loan portfolio based acting as joint bookrunner and on best practice that currently green structuring adviser on the In 2020, we mapped 100% of the GHG emissions points to setting sectoral targets Swedish residential property associated with the Group’s utilities lending and implementation strategies. company Heimstaden Bostad’s book, and we gained valuable insights into the inaugural SEK 1.2 billion green power-generation technologies applied across our customer base. Our mapping is now bond issue. Measure and disclose financed being extended to other sectors, with emissions priority being focused on the emissions- Sustainability-linked loans We are measuring our financed intensive industries where our GHG emissions building on the For the financing of activities engagement can have the most positive 2020-2021 PCAF methodology and guidance that cannot be classified as impact. We will regularly disclose the from Finance Denmark, and green or sustainable, we offer outcomes of our analysis, and we aim we will disclose the outcome in sustainability-linked loans. to cover a major share of the corporate absolute and relative terms. Interest in this type of loan, for lending portfolio by 2022. By 2020, we had mapped 23% which the terms of financing are of our corporate loan portfolio. linked to material ESG-related performance criteria, continued to increase throughout 2020. 18 SUSTAINABILITY REPORT 2020

SUSTAINABLE FINANCE

Investing in a sustainable future

Responsible investing is a cornerstone of our fiduciary duty to and our efforts in relation to active ownership, screenings and protect and grow our customers’ investments, and it supports our restrictions. ESG is integrated so that it fits the unique features ambition to create value for society. and characteristics of each of our investment strategies and asset classes. Our portfolio managers integrate ESG into their investment We continued to integrate ESG factors into our investment processes, and they identify material financial and ESG factors to processes, products and advisory services throughout 2020. Our assess the potential impact of these on performance when they ESG Integration Council ensures the integration of ESG into the make investment decisions. And to improve our processes and investment decisions across Wealth Management, including Danica assist our investment teams in their everyday work, we develop Pension. Across all fronts, we also strengthened our disclosures tools and training programmes on an ongoing basis.

Platform for ESG integration • mDASH, our proprietary analytical tool that helps to • Educational programmes to build skills in including identify and evaluate material ESG issues likely to impact sustainability in investment processes and in advising a business’s financial performance. customers about sustainability matters. • ESG data platform that sources high-quality ESG data • On-site ESG analysts and specialists across the from multiple suppliers, thereby helping to integrate ESG Nordic countries to help deploy robust ESG integration and enable better-informed investment decisions. processes locally.

Active ownership ings of portfolio companies, invest in line with customers’ grated, Restricted and Thematic By exercising active ownership, we strengthened our voting values. We restrict businesses labels for investment funds, and Danske Bank seeks to effective- infrastructure in 2020. Our that are involved in ESG-relat- these will be replaced with a ly manage risks and oppor- aim is to exercise our voting ed controversies, practices or labelling system compliant with tunities, maximise returns, rights for all the shares we other activities considered un- the SFDR. positively influence businesses, hold, albeit taking into account acceptable by Nordic societies. and create value for customers preconditions, resources and This includes businesses that For our funds, we prepared a and society. When sustainabil- the cost of exercising voting contribute to climate change, set of sustainability one-pagers ity issues of concern arise, our rights. We also developed loss of biodiversity and weak that include details of carbon approach is to actively engage voting guidelines to enable us labour standards. As a result footprint, investment restric- with businesses instead of to vote on passively managed of our norms-based investment tions and third-party ESG refraining from investing and assets. These guidelines cover restrictions, more than 150 ratings of the individual fund. leaving the problem for some- a range of topics, ranging from companies were restricted in And as we move ahead, we will one else to deal with. board compensation and capital 2020, and these are on our further strengthen the visibility structure to biodiversity, water publicly available Investment of ESG characteristics across Our portfolio managers regularly scarcity and anti-corruption. As Restriction List. our product range in order to engage with businesses to a result, we voted at more than meet the sustainability prefer- address material ESG issues 5,200 company meetings in Product innovations ences of our customers. that affect the businesses’ 2020 against 406 in 2019. The EU’s incoming Sustainable financial performance. The Finance Disclosure Regula- Our two new investment and top three ESG topics in 2020 We disclose data on our en- tion (SFDR) sets out reporting pension solutions, Global were greenhouse gas (GHG) gagement and voting activities requirements that aim to create Sustainable Future and Danica emissions, employee health and twice a year in our Active Own- transparency for customers on Balance Sustainable Choice, safety, and energy efficiency. ership Report. And in 2020, the actual sustainability charac- both introduced in 2020, also Coronavirus pandemic-related to increase transparency and teristics of investment prod- cater for the increasing demand issues were of course also enhance the relatability of data, ucts. The SFDR imposes new for investment products that on the agenda in 2020, and we published Active Owner- obligations for transparency on meet specific requirements. activities carried out by our ship Stories about selected how specific financial products These two solutions enable portfolio managers in relation engagements, the handling of promote environmental and/or customers to invest in a green to these included assessing dilemmas and the expected social characteristics and how and sustainable transition in business model resilience; outcomes of these. products target sustainable support of the SDGs. Through discussing potential behavioural investment objectives. new product innovations, changes, including shifts Restrictions we will continue to develop in demand for e-commerce In 2020, we enhanced the In 2020, we started the pro- our sustainable investment and payment services; and process for applying norms- cess of adjusting and enhancing offerings, and we plan to addressing social well-being as based investment restrictions a wide range of our investment introduce a 2023 sustainability a means to protect employees, covering all Danske Invest funds products to ensure compliance target for Danske Bank Asset the business and society. and Danica Pension’s invest- with the SFDR. From January Management in 2021. ment activities. The enhanced 2021, we will discontinue using To extend our voting activity process enables us to better current sustainability labels, at the annual general meet- meet customer demand and such as our ESG Inside Inte- SUSTAINABILITY REPORT 2020 19

Danske Invest Global Sustainable Future Danica Balance Sustainable Choice DKK 15.3 billion AuM DKK 580 million AuM invested in companies driving the invested in companies addressing global sustainability transition and specific sustainability topics and adressing selected SDGs. supporting the SDGs.

Large-scale CO2 emitters In 2020, we voted at climate-related investment As well as encouraging annual general meetings of restrictions, as is the case businesses to act on climate businesses such as Duke for TC Energy Corporation, change, we also participate Energy, ExxonMobil, Chevron, for example. This energy in investor coalitions such as Ford, General Motors, Delta infrastructure company is Climate Action 100+, which we Airlines and United Airlines. constructing a pipeline to joined in 2019. This coalition We voted in favour of aligning connect the Canadian tar sands specifically targets 100 of the lobbying activities with the production area to the USA for most systemically important climate targets of the Paris the purpose of delivering crude GHG emitters, which together Agreement on Climate Change oil, and the pipeline forms part account for two-thirds of annual and for increased disclosures of the oil industry’s pursuit to global industrial emissions. on climate and energy-related triple tar sands production by We engage with businesses to lobbying activities. 2030. Because the tar sands curb CO emissions, improve pipeline conflicts with the 2 Investment 2020 figures governance and strengthen Another way to address Paris Agreement, TC Energy • Assets under Management climate-related financial unacceptable business Corporation is now on our (AuM): DKK 1,765 billion disclosures. developments is to apply Investment Restriction List. AuM across the Group. Our Responsible Investment Policy applies to all AuM. • Danica Pension: DKK 27.2 Danica Pension investments billion investments in the green transition incl. equities, fixed income, green bonds, In 2019, Danica Pension communicated our green investment pledge of DKK 100 billion by 2030. In alternative investments and 2020, Danica Pension increased its investments in the green transition by 164% – from DKK 10.3 real estate. Also, there are billion to DKK 27.2 billion. The current volume of investments means that Danica Pension is close to ongoing energy-efficiency reaching its initial 2023 milestone of DKK 30 billion, and we will review our investment milestones in projects for a total of DKK 38 2021. million invested in shopping centres. In 2020, we joined the global UN-convened Net-Zero Asset Owner Alliance and committed to make • ESG integration: 96% of our Danica Pension’s investment portfolio carbon neutral by 2050. We are further developing a 2025 investment managers integrate milestone for CO reductions in our investments. Launched in 2020, Danica Pension’s first carbon ESG into their investment 2 processes. footprint report shows that equity and corporate bond investments made by Danica Pension in 2019 • LuxFLAG ESG label: 82 of emitted 33 tonnes of CO2 per DKK million invested. This is 21% lower than a global benchmark our funds and sub-funds were covering scope 1, 2 and 3 emissions. Also, a first scenario analysis of the expected short- and long- awarded the external label that term emissions from portfolios indicated that 80% of equity investments are Paris-aligned towards recognises ESG integration 2030, whereas 55% are aligned towards 2050. This indicates the need for businesses to commit to throughout the entire investment process. more ambitious CO2 reduction targets. • Engagement: More than 800 interactions with 525 companies domiciled across Ambitions for investments 42 countries and with whom in the green transition DKK 30 billion DKK 50 billion DKK 100 billion we engaged on approximately 100 financially material ESG issues. 2023 2025 2030 2050 • Voting: More than 5,200 company meetings across 65 countries attended to exercise Ambitions for a Paris-aligned CO2 reduction target Carbon investment portfolio (being devleoped) our voting rights on more than neutral 56,700 voting proposals.

Danica Pension also launched a new sustainable investment strategy on its property portfolio.

The ambition is to reduce the CO2 emissions of the Danish property portfolio by 37% in the Read more period 2019 to 2025. Furthermore, at least 25% of the Danica Real Estate property should be For more investment figures, sustainability certified by 2025. please see our Sustainability Fact Book 2020. 20 SUSTAINABILITY REPORT 2020

ENTREPRENEURSHIP Start-ups and scale-ups

Danske Bank supports the growth of new businesses that can drive innovation and job creation, thereby contributing to the overall well-being and sustainable development of society.

All businesses today need to companies will be able to face July. At these events, advisers conduct their operations in an the strong competition from from Danske Bank and other increasingly sustainable way. competitor companies in Asia experts provided inspiration and Many entrepreneurs view global and the USA. suggested approaches on how sustainability challenges as to navigate in the short-term to business opportunities and The Hub – a cornerstone for stay in business while protect- will create innovative solutions start-ups ing opportunities for long-term in which growth and positive Recruitment and access to capi- growth. The 15 events attracted impact go hand in hand. tal have proven to be the main around 800 attendees. scalability challenges for growth However, many start-ups fail to companies. A key initiative in Angel investor training and develop into viable businesses addressing these challenges is pitch events despite the significant poten- The Hub, Danske Bank’s free, In order to help start-ups gain tial they possess. Supporting digital community platform. access to risk capital, Danske growth companies is part of Today, The Hub is the Nordic Bank offers wealthy Private Danske Bank’s core business, region’s largest job portal for Banking customers training and since 2015 we have been start-ups – not only helping in making informed decisions working with start-ups and start-ups to recruit talent but about angel investing. The train- scale-ups across the Nordic also helping applicants to find ing covers topics such as risk countries in a more structured the right job. Through The Hub, handling, defining an investor way with an ambition to help start-ups can create a profile to profile, building and managing a them grow their business and increase their visibility among portfolio, due diligence and valu- increase their positive impact at investors and promote their va- ation, active ownership and exit the same time. We understand cant positions and work culture strategies, and impact invest- what businesses need at each to job seekers. Since its launch ment. Upon completion of their of the different phases of their in December 2015, more than training, the angel investors are lifecycles, and we can support 500,000 job applications have introduced at a pitch event to them with relevant financial and been submitted to The Hub, and early-stage start-ups looking for non-financial solutions. Since more than 28,000 job vacan- funding. early 2016, we have supported cies have been posted. Ambition 5,065 start-ups and scale-ups The programme was launched Supporting 10,000 start-ups with growth and impact tools, COVID-19 briefings at The Hub in Finland in 2019 under the and scale-ups with growth services and expertise. In 2020, Danske Bank focused name Hub Invest and was and impact tools, services and a great deal on helping start-ups repeated in 2020 with 47 par- expertise by 2023. The successful businesses of to get through the challenging ticipants. A similar programme, the future will be found among situation caused by COVID-19. named Angel Investor Acade- the entrepreneurs of today. However, our experience shows my, was launched in Sweden 2020 performance They are using tech and risk that start-ups, in general, have and Denmark in 2020, attract- capital to achieve growth and fared well during the situation ing 15 and 24 participants 12,000 innovation, and they are able thanks to the agile and oppor- respectively. New angel investor 2023 target 10,000 to rapidly scale up their global tunistic mindset prevalent in training and pitch events are presence. For Danske Bank, this this customer segment. Some planned to be held in Denmark 8,000 represents opportunities start-ups have found new oppor- and Norway in early 2021. 6,000 for establishing relationships tunities thanks to their digital with high-growth business cus- business models and their Return on Diversity 4,000 tomers, extending our insights ability to quickly adapt their Women entrepreneurs in Denmark are much less likely to 2,000 into new technologies and busi- products or services to the new ness models, and tapping into situation. attract investment and on aver- 5,065 0 new top line and profit pools. age attract smaller investments 2020 This also allows us to provide In March, Danske Bank con- than their male peers. This is Data is accumulated from 2016. alternative investment oppor- ducted a survey at The Hub to not merely a societal problem. tunities for Private Banking identify the most pressing is- Because there is a risk of losing customers and enable business sues facing start-ups as a result out on talent, innovation, job SDG contribution customers to access to new of the pandemic, and we creat- creation and economic growth, We stimulate formalisation technologies. Nordic societies ed a series of webinars at The it also represents a lost potential and growth among start-ups, in will benefit from growth in jobs Hub on relevant topics, which for start-ups and investors alike. support of SDG 8.3. and productivity, and Nordic were held from late March to Furthermore, an overwhelming SUSTAINABILITY REPORT 2020 21

majority of research indicates connect with new investment that helps early-stage Nordic im- a positive correlation between and ecosystem partners. pact start-ups to fine-tune their diversity and performance and business models and prepares return on investment. To gain a deeper understanding them for the next stages of of the challenges, Danske Bank growth. The programme is all-ex- To address the gender imbal- conducts an annual analysis, penses-paid and offers mentor- ance in the Danish start-up insights from which are shared ing, training and networking. This ecosystem, Danske Bank in in our State of Nordic Impact year’s programme took place in 2020 sponsored the Return on Start-ups report. The 2020 Stockholm and was arranged in Diversity guide. Developed by report concluded that the Nor- partnership with WeWork Labs, Bootstrapping, Female Found- dic countries boast a growing RISE and Ignite Sweden. All 11 ers of the Future, Nextwork number of impact start-ups that participating start-ups focused and The Danish ICT Industry are maturing to a point where on developing solutions revolving Association, this guide provides they are beginning to resemble around the circular economy, new tools for founders, inves- regular growth-stage start-ups. and the programme included tors and those who organise As well as showing that the ma- sessions with large corpora- investments. jority of the start-ups are based tions such as Coop, H&M, Hiliti, Entrepreneurship 2020 figures • Danske Bank Growth: 50+ on potentially scalable business Husqvarna and Electrolux to pro- employees are part of our Supporting impact start-ups models that have the potential vide inspiration and explore op- Growth tribe, a Centre of At Danske Bank, we believe that to work on regular early stage portunities for collaboration. At Excellence specialising in the Nordic region can become a investment terms, the analysis the end of the programme, the helping start-ups and growth centre for start-ups that make a also shows that nearly half of start-ups pitched their business companies across our positive social and environmen- the founders have significant ideas in front of more than 100 business and market areas. tal impact by addressing one or entrepreneurial experience. participants and potential inves- • The Hub: 7,600+ start-ups, more of the SDGs. To make this tors at a Demo Day. Since the 29,500+ jobs, 560,000+ a reality, we must help impact Accelerator programme launch of the first programme in applicants and 1,000+ investors listed on our free, start-ups build the right capabil- In 2020, we ran Danske Bank’s 2018, a total of 29 starts-ups digital-community platform for ities among founding teams and fourth accelerator programme have graduated. start-ups across our markets. The Hub is operated by Rainmaking. • +impact: 1,200+ purpose- driven start-ups and 400+ Impact as a percentage of total VC investment New home of impact and innovations investors listed on our Nordic and European starts-ups are more impact-focus- 40% free, cross-Nordic, digital sed than their global peers. In 2019, impact investing matchmaking platform. 35% accounted for over 30% of Nordic and 15% of total • +impact accelerator: 11 European venture capital (VC) investment, whereas the 30% Nordic start-ups graduated global average was 7%. from our training programme 25% for impact start-ups. The figures are published on a new global data platform • Angel Investor Academy and 20% created by Dealroom, ImpactCity, Tech Nation and Danske Hub Invest: 86 Private Banking Bank in 2020. The platform provides global intelligen- 15% customers participated in ce and trusted insights about start-ups and scale-ups, training programmes and pitch 10% innovations, investment, investors and other key players events in Finland, Sweden and across ecosystems. 5% Denmark. • Canute: 82 start-ups 0% +impact by Danske Bank is a Knowledge Partner and has participated in the Canute contributed with information on 1,000+ impact start-ups 2012 2014 2016 2018 2020E market introduction in the Nordic countries. By sharing our data, we hope programmes for scale-ups Global Europe Nordic countries to increase transparency and awareness of the Nordic going international. Danske impact scene. Bank is a founding partner. • Start Up Capital conference: 100 start-ups participated at two virtual Start Up Capital conferences arranged by Develop Diverse Tech BBQ to facilitate and Develop Diverse is one of the successful start-ups on our +impact platform. Develop curate efficient conversations Diverse has developed a software platform that analyses language in companies’ between Nordic start-ups communication channels to detect gender, age and ethnicity biases. The platform also and foreign venture funds who can help start-ups scale proposes more inclusive alternatives, thereby helping companies to foster more diverse internationally. Danske Bank is and inclusive workplaces. In 2020, Danske Bank tested the platform and now uses it sponsor. to ensure more inclusive job postings and career-related content on social media and • Nordic Women in Tech danskebank.com, all of which helps us to reach a wider and more diverse talent pool. Awards: 10 Nordic women were celebrated at the awards ceremony arranged by “It is an important signal to investors and other companies that a large player like Danske WonderCoders to recognise Bank believes in us and is using our product to foster inclusion and diversity.” role models who lead the Jenifer Clausell-Tormos, CEO and founder of Develop Diverse. movement for more women in tech in the Nordic countries. Danske Bank is sponsor. 22 SUSTAINABILITY REPORT 2020

FINANCIAL CONFIDENCE Financial capability at a young age

At Danske Bank, we want to contribute to people’s financial confidence by helping the next generation to develop sound money habits and progress all the way to a financially secure adulthood.

Despite the many strengths of ment in our dialogue with cus- The results of the survey point the Nordic welfare model, per- tomers. This will strengthen our to four key elements for building sonal finances are still a source advisory capabilities and can in financial capability. of worry for many. Learning and the long-term help Danske Bank developing sound money habits to reduce risk and build future Firstly, practice makes perfect. early in life is an essential foun- customer relationships. Knowing how to make a budget dation for financial confidence, and plan for the future does not but as money is becoming COVID-19 affects financial necessarily mean that children invisible and spending is confidence and young people will actually becoming digital, many parents Danske Bank’s annual survey do these things when they find it hard to make the value of financial confidence among become adults. To develop their of money tangible and under- people in Denmark shows financial mindset and skills, standable for their children. This that the coronavirus crisis they need to practice making is why we need new insights has made people in Denmark, financial decisions themselves. into money habits in a digital young people in particular, more society and new ways of talking worried about their personal Secondly, good financial capabil- about ‘invisible money’ with our finances, and around a quarter ity starts early. When children children. of 18 to 34 year olds fear that reach the age of three or four the coronavirus situation will years, parents should give them At Danske Bank, our ambition is make it harder for them to find access to their own money. to help our customers and soci- a new job. The survey shows that children ety as a whole achieve greater and young people who receive financial confidence – with a An evidence-based approach regular pocket money and have particular focus on helping to financial capabilities a bank account that they fre- children and young people get To gain more knowledge of quently use are more financially off to a good start. Since early what drives good money habits, capable. 2018, we have supported more we developed the children’s than one million children, young financial capability framework The third element is under- people and parents with finan- in 2020 to provide an evidence- standing the role of money cial literacy tools and expertise. based approach for teaching in society. Information and Ambition And to reach our 2023 target, good money habits to children knowledge alone are not enough Supporting two million people we will scale up our initiatives and young people. Based on to build financial capability. with financial literacy tools and and evolve our financial literacy this framework, we conducted Children and young people who expertise by 2023. programmes to reflect develop- a survey of the current state talk with their parents about ments in society and technology. of financial capability in the general money topics are more Nordic countries, and the financially capable than those 2020 performance We will also provide insights results provide a baseline for who do not. about how to foster good money measuring the impact of our 2.5 mio. habits among children and programmes in terms of Finally, parental behaviour is 2023 target 2.0 mio. young people as an integral ele­ behavioural changes. essential. Parents are usually

1.5 mio.

1.0 mio. Children and young people across the Nordic countries I receive regular pocket money (weekly or monthly) who receive pocket money regularly have higher financial (Number of respondents = 3,690) 1,154,913 0.5 mio. capability than those who have their own money but who do Average Financial Capability Score not receive pocket money regularly. Both groups have higher 60 0.0 mio. financial capability than the children and young people who 50 2020 do not have their own money. It is important to note that it is 40 Data is accumulated from 2018. not the amount of money that matters but the frequency at 30 which children interact with money. 20 10 Source: Financial Capability report, 2020 0 SDG contribution 5‚6 7‚8 9‚10 11‚12 Age group We help people to achieve literacy and numeracy, in support No (no own money) No (has own money) Yes of SDG 4.6. SUSTAINABILITY REPORT 2020 23

A financially capable person… ...sees the value in actively managing their money

...knows how to make sound money decisions and ...has confidence in their act om them own ability to make decisions about money

...manages money well ...plans and saves from day to day for the future

...uses credit well but avoids unmanageable debt Financial confidence 2020 figures ...prepares for • MoneyVille: 304,020 children unexpected events across our markets used our online game to gain a better understanding of how money is earned, how to prioritise spending and the importance good at saying the right things, the first module was launched late knowledge and skills in of saving. but children in particular learn on the PengPong.dk website in economics. As part of the pro- • Money Week in Denmark: through observation and imita- November 2020. The material gramme, Danske Bank advisers 4,288 pupils aged 13 to 15 tion – not by listening. Letting is freely available for all teach- gave a presentation, held online attended lectures in financial children see how money ers and can be combined with due to COVID-19, at two school literacy given by 179 of our matters are handled with the a guest lecture from one of our events. financial advisers. Money bank or see other types of finan- employees. Week is arranged by Finance cial decision builds financial In 2020, Danske Bank advisers Denmark. • SMART Money in Denmark: capability. Our financial literacy pro- also attended five workshops Our financial advisers grammes Pocket Money organised in collaboration participated in 20 guest PengeSkyen and Peng’ Pong Day and PengeKøbing were with The Children and Youth lectures in schools to teach In March 2020, we launched launched in Denmark in Foundation in Finland and held 290 children how to boost a new online universe, Penge­ 2019 and were planned to be at vocational schools. At these their financial confidence. Skyen (The Money Cloud), in introduced in the other Nordic workshops, the youngsters cre- • Pocket Money app: 19,452 Denmark. On this site, parents countries in 2020. Unfortunate- ated digital stories about how new users in Denmark, can find tips, inspiration and ly, the coronavirus pandemic money affects their everyday Norway, Sweden and Finland. advice from experts on how to meant that we were unable to life and future, and our advisers • PengeSkyen in Denmark: 105,862 parents visited our foster good money habits in invite children and their parents shared their own experiences online universe that provides children, such as understand- to such events, but we hope to with personal finances. information, entertainment and ing what money is, savings, roll out programmes in 2021. advice on how to foster good expenditure and digital money. Blogs on financial wellbeing money habits in children. PengeSkyen kicked off with a Master your Economy In 2020, Danske Bank in • Peng’ Pong in Denmark: 323 campaign that reached 72% Danske Bank in Finland has Northern Ireland developed primary school pupils and 17 of our target group on social various initiatives aimed at and launched a new blog for teachers in five schools tested media alone, and our campaign boosting the financial skills of personal customers that helps the learning material about evaluation showed that the site young people aged 16 to 29 and encourages them to start money habits. • SMART in Northern Ireland: was well received by 96% of – a demographic that receives talking about money. The blog 941 downloads of our financial the parents using the site. the least support in this area. will explore a wide range of literacy teaching materials that Together with Junior Achieve- topics – from savings, fraud and were made available to parents We have continued the develop- ment Finland, we in 2020 money and mental health to and teachers on our website ment of new teaching material launched the Master your money management, including for homeschooling following for primary school pupils in Economy programme, which tips on money management the COVID-19 lockdown. partnership with the Danish offers the first free teaching for young people who have • Sustainable relationship students’ organisation. Based material on financial literacy moved away from home and are with money in Finland: 50 on everyday experiences and for secondary schools, created financially independent for the young people participated at five workshops at vocational through exercises and reflec- in alignment with the Finnish first time. Customers will also schools where 10 Danske tion, the material helps develop school curriculum. In the pro- be asked what money topics Bank advisers shared their the pupils’ financial skills and gramme, the students examine they themselves would like to experiences with personal knowledge. The material has their own attitudes, practice talk about. finances. Organised by the been tested in five schools, and decision-making and accumu- Children and Youth Foundation. 24 SUSTAINABILITY REPORT 2020

GOVERNANCE & INTEGRITY Customer engagement In 2020, Danske Bank’s customer engagement focused primarily on helping individuals and businesses affected by the coronavirus crisis and on compliance remediation.

The coronavirus crisis has instalments, increases of facili- and ensuring the right decisions affected a large number of ties and extension of terms. We were made earlier rather than Danske Bank’s customers, also suspended the charging of later; helping customers to make many of whom have required negative interest rates for the use of public support schemes; help within a very short period of rest of 2020 for up to 90,000 advising about currency or inter- time. Across our core markets, small businesses in Denmark est rate hedging for customers we offered an extended level of that have deposits of less than with, for example, market shares help and flexibility to customers, DKK 500,000. in Norway or Sweden, where the and we set up a dedicated currencies have depreciated. unit to provide urgent help to Among personal customers, We have been proactive in customers who had been hit there was a particular need for contacting all Private Banking hard financially, for example deferred payments, and among customers to inform them of the customers who temporarily lost business customers, credit developments in the financial their jobs or whose businesses cases doubled. Across the markets and to give them our experienced drastic decreases Danske Bank Group, we made assessment of the situation and in sales. Since the start of the DKK 100 billion in new corona- provide general recommenda- pandemic, Danske Bank has virus-related credit available to tions. been in contact with thousands business and large corporate of customers through online and institutional customers, In Denmark, Danica Pension meetings, by phone and via while we also helped customers opened a hotline for all custom- Ambition other digital communication raise new funding in the debt ers who have health insurance channels, and we have helped capital markets. coverage. Through the hotline, To rank, on average, among the top two for customer satisfaction 9 out of 10 customers who customers who felt that the in everything we do by 2023. requested our assistance. Business customers asked us to coronavirus pandemic was provide a range of advisory ser- affecting their mental well-being Our offers included wider ac- vices, including assisting them in were able to talk to a psycholo- cess to overdrafts, payment in making a plan for their business gist. 2020 performance

Banking DK • Retail customers: Below target • Commercial customers: On target “We need to help customers affected by the coronavirus crisis in a responsible Banking Nordic • Retail customers: On target in 1 way – whilst still upholding responsible debt levels and compliance requirements. out of 3 countries We achieve this by ensuring that critical functions remain in place and that • Commercial customers: On target in 3 out of 3 countries processes to extend liquidity are as flexible as possible in the situation.” Corporate & Institutions • Number 1 overall in the Nordic Glenn Söderholm, countries Member of the Executive Leadership Team and Head of Banking Nordic, Interim Head of Banking DK • On target in 2 out of 4 countries Wealth Management Asset Management: • Number 1 overall in the Nordic Remediation efforts collection system in Denmark, we can and will ensure that all countries • On target in 1 out of 4 countries In recent years, we have identi- which led us to overcollect the issues that may arise are Danica Pension: fied a number of legacy issues debt from customers despite dealt with as quickly as possible • On target in 2 out of 2 countries in connection with which warnings from employees and and that we will make things Northern Ireland Danske Bank has failed to act business partners who raised right for our customers. To this • Personal Banking & Small in our customers’ best inter- the issue internally. The issue end, we have established a new Business: Number 2 ests. Several of these cases has subjected Danske Bank to remediation office to oversee • Corporate & Business Banking: have been revealed through our public criticism, and we deeply the remediation of identified Number 1 ongoing efforts to improve our regret that employees were not legacy issues and to ensure compliance, risk and control heard when they voiced their consistent, decisive and proac- SDG contribution capabilities and processes; concerns. tive handling of all issues. With We seek to deliver easy and others have been revealed direct reference to the Executive secure access to financial through internal warnings. A We cannot undo past mistakes, Leadership Team, the remedi- services for all, in support of case in point is the issue con- and we cannot guarantee that ation office will ensure a fully SDG 8.10. cerning data errors in our debt new mistakes will not occur, but transparent approach along with SUSTAINABILITY REPORT 2020 25

timely communication to cus- Our Better Bank customer navigation that combines safe- Customer Data Insight Reports tomers and other stakeholders. ambition for 2023 is that we guarding customer data with a in 2020. We also enhanced rank, on average, among the top good customer experience. The internal procedures, such as As planned, by the end of 2020 two for customer satisfaction platform allows our customers our physical archiving process, we had completed our internal in everything we do. Through to service themselves and to ensure that we do not store investigation into the non-resi- our Better Ways of Working optimise their daily work, while personal data any longer than dent portfolio at the now-closed initiative, we aim to improve allowing us to provide them with is absolutely necessary, and Estonian branch regarding the customer experience and even better support. District by doing so we updated the alleged violation of the rules on respond faster to changing also enables customers to eas- retention rules for more than prevention of money launder- customers’ demands. ily see accounts across banks 12 million physical documents ing. We continue to be in close and offers an easy integration stored centrally. We have, how- dialogue with authorities in Danske Bank has a legal obliga- of data and solutions from other ever, identified that some per- Denmark, the USA, Estonia and tion to ensure that our advisers banks and partners. Over time, sonal data has been stored for France; however, the timing and act in the best interests of our more solutions and features will a longer time than necessary. outcome of these dialogues customers, and retail advisers be added – including solutions This should of course not have remain uncertain. do not receive sales-related bo- from new partners – to give our happened, and we are working nuses as a matter of principle. customers a platform that en­ to solve these issues. In 2020, we continued the Our advisers receive continuous ables them to connect and act process of closing down the training in how to offer the most on their financial data. Supporting customers’ green Flexinvest Fri case, and we suitable products and advice. transition paid a total of DKK 310 million We send questionnaires to our Strong data ethics For many of our customers, the in compensation to almost customers to get their input We work diligently to ensure green transition is high on the 87,000 customers who invest- on how we can improve the that data protection, privacy and agenda, and we want to support ed in the Flexinvest Fri product customer experience, and we integrity are taken into consid- them in making sustainable during a certain period and paid encourage customers who are eration at every step when we choices. In February 2020, fees that were too high. not satisfied with our services process personal data. In 2020, Danske Bank and Realkredit to contact us with a view to our dedication to upholding Danmark introduced improved Statements of inspections from settling the matter. It is also strong data ethics led to a loan terms for energy improve- the Danish Financial Superviso- possible for customers to file a variety of changes in the way ments for personal customers ry Authority (the Danish FSA) complaint online. we work and how we document in Denmark who want to reduce are available on our website, our work. energy consumption in their and we are committed to contin- District – cutting complexity homes. To help the customers uing our close and construc- In addition to the changing Requirements of the EU General assess the potential for energy tive dialogue with all relevant market conditions caused Data Protection Regulation saving in their homes, we also authorities and with customers by the corona pandemic, our (GDPR) form part of our man- partnered with a consulting and all other stakeholders. business customers face datory compliance training, engineering company to provide intensified regulatory demands see p. 27, and in 2020 around this service. In December Customer satisfaction and a heightened risk of fraud. 500 employees who are 2020, we announced a new car Despite a year of challenges To meet digital needs of these particularly exposed to GDPR loan for electric cars. This loan for Danske Bank, our customer customers and to help them cut received additional training. Our has a 0% interest rate for a pe- satisfaction levels are progress- through complexity, we in 2020 customers are also becoming riod of six months and reduced ing on the right path, although launched our digital financial increasingly aware of their establishment costs. Read we are not yet meeting our platform, District. With District, GDPR data subject rights, and more about our sustainable objective. we introduce new and simplified we provided more than 5,000 finance offerings on pp. 14-19.

Customer 2020 figures • Danske Mobile Banking: 1,668,010 users of our Danske Bank Mobile Banking app. The app continues to be the most used channel by our customers. • Corona-related credit: DKK 16 billion in credit made available to small and medium sized business customers, and DKK 84 billion in credit made available to large corporate and institutional customers.

Read more For more details about customer satisfaction, please see our Annual Report 2020. 26 SUSTAINABILITY REPORT 2020

GOVERNANCE & INTEGRITY Compliance culture Danske Bank strives to build and maintain a strong culture that embeds compliance into everything we do and sets the foundation and expectations for individual behaviour across our Group.

A strong compliance culture ing and operating effective Whistleblowing Policy provides empowers all employees to controls. assurance that employees can take positive steps to ensure raise concerns without fear of the Group adheres to applicable The second line of defence reprisals or inappropriate reac- laws, rules and regulations. This consists of Group Risk Manage- tions, also if they turn out to be is achieved by setting a clear ment and Group Compliance. mistaken. The whistleblowing tone from the top; reinforcing They set the standards, policies scheme also applies to external individual accountability and and methods under which the stakeholders and can be ac- risk-awareness through appro- first line of defence operates, cessed via the Whistleblowing priate policies and training; and and they are responsible for the Policy, which was made public supporting open communica- risk and compliance oversight. in December 2020. tion through accessible tools, The Chief Risk Officer and the behavioural standards and Chief Compliance Officer are In 2020, we redesigned the reward structures. As regu­ both members of our Executive whistleblowing reporting site, latory requirements continue Leadership Team and may also making it more inviting and to evolve, we will also continue contact the Board of Directors user-friendly and to give employ- to invest in developing our risk directly. ees a strong sense of trust and management framework and security, and we further devel- capabilities to ensure that any The third line of defence is oped our training on whistle­ new expectations remain firmly Group Internal Audit (GIA) blowing. We also implemented embedded in our daily activities. – an independent and objective a Whistle­blowing Handling function that evaluates and Instruction, which clearly out- Our Code of Conduct Policy improves the effectiveness of lines handling procedures for is the overarching document our risk management, control received whistleblowing reports. reflecting the purpose and and governance processes. The The number of whistleblowing values of Danske Bank and head of GIA reports directly to reports increased by more than our expectations as to how all the Board of Directors. 50% from 2019 to 2020. employees conduct themselves in their activities on behalf of More broadly, we have an Esca- Tax transparency the bank. The code identifies lation Policy that helps our em- At Danske Bank, we have a the principles we seek to uphold ployees to recognise potentially firm position on tax compliance, and the associated areas that significant issues and concerns as set out in our Tax Policy. underpin wider rules and stand- and which sets out the expecta- We seek transparency and a ards across policies, processes tions we have of employees to proactive, open and cooperative and risk management. raise issues of concern to the relationship with the tax authori- right level in the organisation. ties, and we are committed to Danske Bank applies an enter- In 2020, we updated the policy disclosing our tax payments in prise risk management (ERM) to give additional clarity to all accordance with national and framework that sets common individuals within the Group on international requirements and Ambition standards for risk management the relevant triggers and esca- in line with good practice among our peers. Over 95% of employees trained across all risk types. To ensure lation paths, thereby enabling annually in risk and compliance appropriate oversight and us to respond faster and more by 2023. accountability, the framework effectively. Should it come to our attention specifies how risk governance that any of our customers or and risk responsibilities are Whistleblowing scheme business partners are engaging structured. Our risk manage- We make an effort to promote in tax fraud or tax evasion, we 2020 performance ment practices are organised in a healthy and safe culture in cooperate with the relevant accordance with the principles of which employees feel they can authorities in accordance with 95% of our employees completed and passed risk and compliance the three-lines-of-defence model. share their concerns with their applicable rules and regulations training. colleagues, managers or HR. and in line with our core values. The first line of defence consists However, employees can also We do not participate in any of our frontline and direct report concerns about irregula­ abusive tax arrangements. Our support functions that own the rities or wrongdoings anony- employee training on financial SDG contribution risks and are responsible for mously through our whistle- crime prevention includes We work to reduce corruption their operational management blowing scheme. All reports are understanding tax affairs at and bribery in all forms, in across national borders, which investigated and treated in the customer level and detecting support of SDG 16.5. includes designing, implement- strictest confidence, and our tax evasion. SUSTAINABILITY REPORT 2020 27

Anti-corruption and bribery instruction that includes a set of Danske Bank Group must com- Relevant policies Mitigating the risks associated criteria for sponsorship agree- plete all courses within their Group policies of specific relevance with corruption and bribery ments. This will also improve first 14 days of employment. to sustainability include: • Anti-bribery & Corruption Policy is part of our compliance our assessment of anti-corrup- • Anti-Money Laundering, infrastructure. We operate in tion risks and controls across The training provides knowledge Counter-Terrorist Financing and accordance with the following the Group. that empowers employees to do Sanctions Policy five principles: (i) not to accept the right thing for our custom- • Code of Conduct Policy or solicit bribes in any form; (ii) In 2020, we updated our Gifts ers, for our colleagues and for • Compliance Policy not to make or accept facilita- and Hospitality Instruction and society. The courses follow a • Conflict of Interest Policy tion payments; (iii) not to offer, broadened the scope, criteria learning path that helps employ- • Credit Policy promise or give a financial and principles for providing ees to complete the training in • Diversity and Inclusion Policy or other advantage; (iv) to only and receiving gifts and hospi- an order that ensures the best • Escalation Policy accept gifts given or received tality. The updated instruction possible learning experience • Market Abuse Policy • Remuneration Policy in specific situations; and (v) includes new thresholds and and the embedding of knowl- • Security Policy to avoid any conflict between a process for pre-approval edge. • Stakeholder Policy our personal interests and the and registration of gifts and • Supplier Code of Conduct interests of the Group. hospitality. We are continuously improving • Responsible Investment Policy the courses, and in 2020 we • Tax Policy Our stance on corruption and Mandatory training made a notable update of the • Whistleblowing Policy bribery is expressed in our Code All employees must complete course on fighting financial of Conduct Policy and in our annual training that includes crime by broadening the scope recently launched Anti-Bribery courses covering risk and from anti-money laundering Read more and Corruption Policy. This compliance issues related to to also include other financial For more details, please see our latter policy will in 2021 be our policies and applicable regu- crime risks, such as fraud, tax Annual Report 2020 and our Risk complemented by a separate lation. All new employees of the evasion, bribery and corruption. Management Report 2020.

Learning path for mandatory risk and compliance training

Lay the foundation

1 Code of conduct 2 Everyone is a 3 Share your concerns 4 Security and What are the conduct risk manager Why we embrace a speak-up operational resilience policies and standards that all What defines good risk culture, how we share How to recognise threats to IT employees must live up to. behaviour, and how to create our concerns and report security and signs of fraud, and a sound risk culture. wrongdoings, e.g. through the how to respond. whistleblowing scheme.

Learn about the biggest regulations

5 Fighting financial crime 6 GDPR $ How to prevent money laundering, the financing of How to protect personal data and comply with the EU terrorism, fraud, bribery and corruption, tax evasion, and General Data Protection Regulation (GDPR). the breaching of financial sanctions.

Gain specialised knowledge

7 Competition law 8 Gifts and hospitality 9 Market abuse 10 PAD How the requirements affect What are the criteria and How to recognise market Why Personal Account Dealing our activities, including key principles for giving and manipulation and inside (PAD) rules are important, and risk areas. receiving gifts and hospitality. information, and how to behave what are the responsibilities of in such situations. employees. 28 SUSTAINABILITY REPORT 2020

GOVERNANCE & INTEGRITY Financial crime prevention Fighting financial crime remains at the top of Danske Bank’s agenda and we continue to strengthen our defence systems, processes and capabilities.

Danske Bank has continued include new digital platforms We continued to train custom- to make substantial invest- to gather Know Your Customer er-facing staff to ensure the right ments to enhance our financial (KYC) information and using skill set and knowhow, and we crime-prevention procedures, our customers’ preferred digital updated our mandatory eLearn- systems and competences. In communication channels, such ing on fighting financial crime for 2020, we made solid trans- as Danske Mobile Banking and all employees across the Group, formational progress on our Danske eBanking, to obtain see p. 27. continuous path to strengthen additional KYC data. our defences. In 2020, a strong governance Monitoring and screening of structure to support our trans- Those who attempt to misuse customers and transactions is formation efforts was put into the financial system con­tinue a vital part of our financial crime place. This includes a compre- to evolve their methods and are defence, and these underwent hensive Group-wide plan that becoming more sophisticated considerable technological outlines clear divisions of roles and cunning – financial crime upgrades in 2020. Today, and responsibilities and serves related to COVID-19 is testimony customer screening and trans- as a detailed road map for our to that. Consequently, fighting fi- action screening have been Financial Crime Transformation, nancial crime remains at the top significantly enhanced. We which both ensures interna- of Danske Bank’s agenda and is have expanded our automated tional best practice and meets one of the strategic focus areas surveillance of transactions by our regulatory requirements in in our Better Bank plan. using technology to optimise all the jurisdictions we operate the process and target relevant in. We continue to share our Advanced technologies risk. Also, new data analytics progress with regulators on In 2020, we continued to invest and visualisation systems have an ongoing basis to increase heavily in optimising and auto- been implemented, and these transparency. mating the processes, systems have enhanced the coverage and tools that underpin our of our investigations and the Our work also included signifi- financial crime prevention ef- speed in which our investiga- cant development of our policies forts. This work included further tors are able to identify potential to ensure our requirements are integration and consolidation of financial crime risks. more precisely articulated­ and our IT systems to strengthen designed, decreasing unnces- our controls and make process- Strong governance and sary complexity and ensuring es smoother and simpler for our capabilities greater standardisation across customers. Although technology is impera- business units. For example, tive in our fight against financial we updated our policy on We also increased the speed of crime, it can only take us some anti-money laundering (AML), our customer ongoing due dili- of the way. Ultimately, it is our counter-terrorist financing (CTF) Ambition gence (ODD) processes across people who make the difference. and sanctions. This policy sets the Nordic countries through In 2020, we increased the num- out our principles and standards To continue to strengthen our new automated processes, and ber of capable hands working for the management of risk and efforts in the fight against we implemented new digital to prevent financial crime, and compliance, and it determines financial crime to become an even better bank for all ways to collect customer infor- we hired a large number of em- the objectives of our financial stakeholders. mation used in the due diligence ployees who possess specialist crime prevention framework processes and other financial expertise and international that extends across our entire crime controls. Examples experience to fill key positions. customer base. 2020 performance More than 2.6 million customers had their ongoing due diligence completed. “The threat of financial crime is a challenge for all financial institutions. Given the global nature of financial crime and the cunning behaviour of criminals, it requires a joint approach within the financial sector and between the sector and SDG contribution authorities to properly make the financial system safe and resilient.” We work to reduce illicit financial flows and combat all forms of Philippe Vollot, organised crime, in support of Member of the Executive Leadership Team and Chief Compliance Officer SDG 16.4. SUSTAINABILITY REPORT 2020 29

Partnering for change effectiveness in future financial counter-terrorist financing Over the past years, we have crime prevention. measures – measures we carry actively engaged in domestic out in continuous cooperation and cross-border initiatives. By We also participate in a similar with the sector and authorities. doing so, we have been able public-private partnership A tangible outcome from this to share insights and exper- between Nordic banks and the is our new Fighting Financial tise and develop solutions to Financial Intelligence Unit (FIU) Crime webpage, which aims strengthen and secure our in Finland. In this partnership, to increase transparency for collective defence systems in we focus on exchanging infor- our customers, investors and close collaboration with supervi- mation on current and emerging society by showing how Danske sory authorities and other large crime phenomena related to Bank works to combat financial banks across the Nordic coun- money laundering and terrorist crime. tries and in the rest of Europe. financing and the risks of these, in adherence with the Danish Furthermore, we contribute to An example is our engagement Anti-Money Laundering Act. the development of more effi- in the public-private partnership, cient AML and counter-terrorist Swedish Anti Money Launder- Through our industry associ- financing legislation through ing Initiative (SAMLIT) – a pilot ation, Finance Denmark, we our Nordic and European trade project that tests new methods take part in a permanent AML associations, and in August for sharing information between working group, and in 2019 we 2020 we provided input to banks and authorities under participated in the AML Task the European Commission’s current legislation and identifies Force. This task force present- AML Action plan via its public changes needed to enhance our ed 25 proposals for AML and consultation.

Joint efforts against cybercrime The monetary losses from payment fraud, we provide tools for businesses and for per- such as investment scams, romance scams, sonal customers that enable them to protect cryptocurrency scams and ID theft, can themselves against cyber criminals. We also amount to millions for business customers and collaborate with the Danish Consumer Council to hundreds of thousands for personal custo- on their free digital self-defence app, Mit mers. Fraudsters are continually broadening digitale forsvar, which provides advice on how and honing their techniques, and in 2020 the to avoid becoming a victim of fraud and what number of attacks on our customers increased to do if this happens. To date, the app has been 20% from 2019 levels. downloaded by more than 150,000 people, and in 2020 we provided an emergency alert In 2020, we also saw the emergence of on the app about vulnerabilities in a particular COVID-19-related scams: primarily phishing, internet browser – an alert that was viewed by which in some cases imitated local healthcare 11,500 users. To raise public awareness of authorities. We allocated additional resources fraud threats, we also share our expertise with to enable us to monitor the changing threat the media and through webinars. In 2020, our landscape and raise awareness amongs custo­ content on social media was viewed by more mers and employees of new attack scenarios than 40,000 users. Financial crime prevention on a weekly basis, which enabled us to quickly 2020 figures respond to COVID-19 fraud threats. Also, our Danske Bank shares best practice on the • Resources: 3,100 full-time employees dedicated to the customers proved to be alert to these scams, latest fraud intelligence, and we collaborate financial crime agenda. resulting in a relatively low number of these with external cyber security organisations to • Financial crime training: fraud cases. help strengthen cyber resilience within the Over 5,000 staff across the Nordic countries. These organisations include Nordic countries completed Creating awareness about cyber security, both the Danish Centre for Cyber Security, the targeted physical or virtual within and outside the bank, remains a priority. Danish National Center of IT-related Economic training sessions about anti- As part of this, we conduct an annual hacking Crime (LCIK), and the Nordic Financial CERT, money laundering and financial event at which employees are exposed to a which plays a lead role in the joint effort to fight crime prevention, building on range of security challenges and are trained in cybercrime. We also share our insights about the mandatory financial crime preventive measures. At least once a month, topics such as cyber security, hacking and eLearning. • Payment screening: Every we engage with business customers to raise password security with universities and the month, more than 40 million their awareness of the most common fraud financial community at various industry events payments were screened. trends, and through our Keep It Safe platform and seminars. • Keep It Safe: 28,847 unique visits to our site on cyber security and fraud awareness. 30 SUSTAINABILITY REPORT 2020

GOVERNANCE & INTEGRITY Responsible sourcing Danske Bank promotes responsible business conduct throughout our supply chain, and responsible sourcing is an important part of our supplier due diligence programme.

In 2020, a total of 9,090 Global Compact and the UN environment into consideration suppliers delivered products or Guiding Principles on Business when they select a meeting services across the Group, and and Human Rights. We expect venue. Our online travel booking Group Procurement collaborat- our suppliers to set similar tool now displays information

ed with locations, departments sustainability standards for their about CO2 emissions for each and business units on 2,092 supply chains. flight, and we are also develop- new contracts. ing our own eco score for hotels The responsible sourcing pro- to raise employee awareness of Responsible sourcing and cess is part of our supplier due the environmental implications collaboration with our suppliers diligence programme alongside of their choices. forms part of our value-chain other supplier assessments, approach to embedding ESG such as IT security, financial New invoicing platform considerations throughout our assessment and GDPR. In Danske Bank launched a new business. By doing so, we can 2021, we will implement a new procurement and invoicing minimise potential adverse soci- Third Party Risk Management platform called Ivalua in Novem- etal effects and support positive (TPRM) framework that will also ber 2020. Not only does this societal change. Our responsi- include responsible sourcing. platform improve our own pro- ble sourcing process ensures curement procedures, invoice that all suppliers comply with Environmental awareness processing and collaboration the sustainability standards Danske Bank only uses con- with suppliers, but it also bene­ set out in our Supplier Code of ference venues that meet our fits our suppliers by delivering Conduct and with additional environmental requirements. shorter processing time and specific environmental require- In 2020, each meeting venue better communication with ments for selected products listed in our conference booking Danske Bank regarding source and services. This code is based tool, Meeting Manager, has to pay. on international sustainability also been given an eco score to principles, including the UN enable employees to take the

Our risk assessment has three main steps

1: Pre-qualification questions 2: Self-assessment questionnaire 3: Corrective action plan Ambition The risk profile of suppliers is pre- High-risk suppliers and suppliers If the self-assessment questionnaire Our ongoing target is to have assessed based on the contract of contracts exceeding DKK 10 reveals unsatisfactory issues, we a minimum of 80% of tenders spend, their geographical location million complete an additional engage in dialogue with the supplier through the responsible sourcing and the category of their product or in-depth questionnaire about their and agree on a corrective action process. This applies to supplier service. ESG policies and performance. Their plan. If the issues are not resolved to contracts above DKK 1 million replies are evaluated by our external our satisfaction, we may terminate that are handled through Group partners. the business relationship. Procurement.

Independent audits 2020 performance A handful of suppliers are selected on the basis of their and sub-contracting practices. selected each year by Danske risk profile, how they affect our In addition, we audited a Danish 96% of tenders through the Bank for independent third-par- business and their score in the real estate administrator and an responsible sourcing process. ty audits. The twin aim of these self-assessment questionnaire. archiving supplier in Sweden. audits is to evaluate whether or None of these audits revealed not the suppliers live up to our In 2020, we audited two sup- any severe non-compliance is- SDG contribution Supplier Code of Conduct and pliers at the construction site of sues, and the audit reports have We encourage our partners and to identify areas where we may the new Danske Bank head- provided valuable insights into suppliers to adopt sustainable help the suppliers improve their quarters in Copenhagen to gain the performance and maturity practices, in support of SDG 12.6. ESG performance. Suppliers are insight into working conditions level of the suppliers. SUSTAINABILITY REPORT 2020 31

EMPLOYEE WELL-BEING & DIVERSITY Diversity and inclusion At Danske Bank, we aim to build a diverse and inclusive culture that mirrors the societies we are part of and to create equal opportunities for our employees.

Diversity and inclusion are high across Danske Bank’s manage- defined core competencies in on the agenda at Danske Bank, ment levels. relation to addressing gender and in 2020 we strengthened structures, norms and values this further by establishing Although progress has been in an organisation as well as a Diversity & Inclusion (D&I) made, the three targets are not emphatic leadership. Council and by making our fully met, and we will prolong mission clear. When people feel current targets until 2023. Of Inclusive workplace that they belong, they are com- the 13 members of the Board of Again in 2020, we sponsored fortable expressing themselves Directors, nine are elected at the Copenhagen Pride Week, openly, freely and in their own Annual General Meeting (AGM), during which employees and voice – and they feel empowered and with three women in this family members participated to make a difference. We believe group, the share of women in in different activities under that a diverse and inclusive cul- 2020 was 33% against a target the slogan Free To Be Me. In ture unleashes the full potential of 38%. When we include our conjunction, we launched a set of our employees and makes us four employee-elected mem- of principles in the Group that a better bank for all our stake- bers, of whom three are women, ensure equal rights to parental holders. the total share of women on leave for all employees in non- the Board of Directors is 46%. traditional families, irrespective To progress our work, we The target for our Executive of the gender identity or sexual updated our D&I Policy, hired Leadership Team is 25%, and orientation of the employee D&I experts and appointed 18 despite changes to the team in or the employee’s biological D&I leads. In 2020, we also 2020, the current figure stands relation to a child. set targets and launched new at 13%. The share of women in initiatives on inclusion, equal management positions in 2020 In 2020, we also joined the opportunities and on creating an remained stable at 37% against Stonewall Global Diversity attractive workplace. a target of 38-40%. Champion programme to further strengthen our work on becom- Gender diversity A new screening tool, Develop ing a more inclusive workplace In 2019, we set a target of in- Diverse, see p. 21, was for lesbian, gay, bisexual and creasing the share of women in introduced in 2020 in our transgender (LGBT+) people. senior leadership positions from recruitment process to help 27% in 2019 to 35% in 2023. ensure inclusive job postings Stonewall is Europe’s largest We are still at 28% and aim to and career-related content, LGBT+ organisation, and the Ambition increase this through a number and a performance tool for the Group’s decision to join the More than 35% share of women of measures, including target- year-end process was rolled programme was inspired by the in senior leadership positions by ed recruitment where there is out to ensure focus on potential membership of Danske Bank 2023. always at least one woman in manager bias when evaluating in Northern Ireland. Another the final field of candidates for employee teams. We also aspect of inclusivity addressed leadership positions and on the launched a D&I educational by Northern Ireland involves 2020 performance hiring committee. programme for managers shaping the agenda to recruit, that strengthens inclusive retain and retrain people at 40% We have equal gender distribu- leadership by developing the work whatever age and stage 2023 target 35% tion across our workforce but competencies managers need of their career. In 2020, a re- 30% not across our management to enable them to unlock the sulting age-inclusive action plan 25% levels, which is why we since full potential of their employees. involved around 100 employ- 20% 2018 have been working The programme, which will be ees in seven online mid-career towards three 2020 targets to rolled out across the Group review sessions on careers and 15% increase the share of women in 2021, builds on UNESCO- financial well-being. 10% 5% 28% 0 2020 SDG contribution Through the Stonewall Global Diversity Champion programme, Danske Bank’s HR We seek to provide equal function and our employee-led Rainbow Networks have access to best-practice opportunities for leadership at tools such as support, webinars and guides to increase our knowledge about LGBT+ all levels of decision-making, in topics and to ensure that our policies are fully inclusive. support of SDG 5.5. 32 SUSTAINABILITY REPORT 2020

EMPLOYEE WELL-BEING & DIVERSITY Employee engagement At Danske Bank, we want to foster employee well-being and be a more engaging workplace through better ways of working and by ensuring a sense of belonging and equal opportunities for all our employees. In 2020, the coronavirus pan- over the past year, ending 2020 line with national recommenda- demic drastically changed our at 84%. To aid teams in improv- tions to mitigate the spread of ways of working. The pandemic ing the employee experience, the coronavirus and to safe- affected our daily operations we will be introducing several guard the health and safety of because most of our employ- initiatives, including a new our employees. ees were advised to work engagement survey. from home, which required a The pandemic has stimulated tremendous team effort. Also, Providing opportunities for our more digital ways of working, our execution of our Better Bank employees to develop their and following the introduction of plan with increased focus on competencies and build their coronavirus restrictions in the cost and more effective ways career is also a key focus when spring, we conducted a survey of working led to layoffs. Both it comes to becoming a more on becoming a more flexible and conditions had a negative effect engaging workplace. In 2020, virtual workplace. More than on employee engagement, and around 2,300 managers and 4,000 employees responded, reversing this trend is a strong employees tested our Grow and their message was clear: ambition for us. Universe tool that supports the 93% find it important to have embodiment of our employees’ the opportunity to work remote- As announced in October development journey. The tool ly in future. Working from home 2020, we expect to discontinue was found to be valuable by was also seen as an important up to 1,600 positions across 80% of the test group, and it measure for improving mental the Group within six to twelve will be launched for all employ- health because it increased months’ time. Part of the re- ees as part of our new perfor- engagement, made life less duction is achieved through the mance set-up in 2021. stressful and decreased com- 260 voluntary resignations in mon illnesses. On this basis, we November, the discontinuation Additionally, we will continue the in June introduced our Working of positions, natural attrition work done in 2020 to ensure from Home initiative, which and by maintaining our hiring succesfull onboarding as part allows employees across the freeze to reduce the number of our recruitment processes, Group to work from home one of layoffs. Also in November and we will build on the valuable to two days a week, subject to 2020, a total of 257 employ- input provided by 43% of our agreement with their manager. ees in Denmark and in other employees who responded to countries were laid off. We are a survey on shaping the future In addition, our new initiative carefully evaluating across units culture of Danske Bank. Another Working@Danske aims to and markets where and how fu- way of supporting employee build a flexible working environ- ture layoffs will be effected, and engagement is through our vol- ment driven by a more virtual, the situation is being handled in unteering initiative, see p. 34. collaborative culture across the close dialogue with the unions. Group. This will be achieved by Flexible and virtual workplaces enabling big-scale flexibility for Employee engagement In 2020, approximately 90% of a stronger work-life balance, Ambition Our Employee Engagement our employees across locations which in itself will be achieved By 2023, at least 90% of our Index decreased by two points worked remotely. This was in by shaping our company for employees are engaged, as measured in our Employee Engagement Index. Better Ways of Working One of the initiatives to help us become a more engaging workplace is Better Ways of 2020 performance Working. Through this initiative, we will foster new ways of collaborating by changing the way we are organised from being a traditional, hierarchical bank to becoming a modern 84% score in the Employee organisation. By encouraging more collaborative relationships between departments and Engagement Index by reducing bureaucracy, we aim to become a better bank for our customers and our employees. Our colleagues will move from specialist departments into cross-functional SDG contribution teams that work towards one common goal and which have the autonomy to decide how to deliver the best solutions for our customers. Not only will this help us to become more We seek to protect labour rights efficient and speed up the digitalisation of customer journeys, but it will also empower our and promote safe and secure working environments for all our colleagues by making them responsible for deciding how we develop the best solutions. employees, in support of SDG 8.8. SUSTAINABILITY REPORT 2020 33

flexibility while remaining fully close to 500 mental health our whistleblowing scheme, see compliant with working envi- ambassadors played a vital p. 26. ronment regulations. We are role in promoting initiatives investing in technology to enable that build mental resilience and Our Code of Conduct Policy and teams to engage and become elevate the well-being of our HR-related policies address more collaborative, effective and employees. We introduced a human rights risks in the adaptable to the physical envi- new intranet site that provides workplace and are supplement- ronment they are in. We are also inspiration, tools and training for ed by internal human rights transforming our workspaces, management and employees on guidelines. We are continuously and in 2020 we designed our how to cope with change and working to identify, assess new offices in India, Denmark uncertainties – in both a pro- and address potential and and Lithuania to support differ- fessional and private context. actual adverse human rights ent activities and collaboration Examples include a podcast infringements. Also, we actively between employees and with on how to spot stress when promote a healthy and safe customers – either physically or employees work remotely, and working environment, with the virtually. our engagement of managers aim of eliminating discrimina­ and employees tory treatment and protecting Mental health and well-being in training seminars on stress our employees’ right to freedom A high-paced work environment prevention throughout the year. of association, collective bar- with frequent organisational We also hosted webinars on gaining and privacy. changes can affect the mental mental resilience and healthy and physical health of employ- lifestyles in connection with Equal opportunities ees. In addition, coronavirus re- World Mental Health Day. We disclose our median em- strictions and uncertainty relat- ployee gender pay ratio, which ed to the pandemic may further Do it right illustrates whether or not men challenge employee well-being. In 2020, the #Metoo move- and women are evenly distrib- Because of this, mental health ment continued to stoke the uted throughout compensation was a specific priority for our public debate on how to behave layers. Our gender pay gap of working-environment organi- respectfully in both a business 19% reflects the fact that we sation and councils throughout and social context. This led us have more women than men 2020, and it was a key issue in to reinforce our communication in lower paid jobs and more our collaboration with unions, on our zero-tolerance position men than women in higher paid employee representatives and on sexual harassment and jobs. We aim to change this by local management. Employee emphasise that we must all act promoting equal opportunities well-being also includes promot- in accordance with our commit- for leadership, and we recognise ing good working habits when ment to protect and respect all gender diversity as a driving human rights, including labour force for other diversity aspects, there are no longer physical Employee 2020 figures boundaries between workplace rights. If employees experience see p. 31. We also monitor pay • Full-time employees (FTEs): and home. inappropriate behaviour, we levels and conduct local equal 22,376 FTEs in the Danske encourage them to contact HR pay and gender pay analyses, Bank Group. Our expert team on mental legal, share their concerns on which we report annually to local • Women in the workforce: 49%. health and well-being and our our DoRight intranet site or use authorities where we operate. • Employee turnover: 13%. • Median gender pay ratio: 81%. • Time to Give volunteers: 1,080 employees volunteered across “Our employees have done a tremendous job in serving our customers the Group. and keeping the business running through this year of challenge. It has

clearly shown what we as an organisation are able to achieve when we Read more all work together towards a common purpose.” For more employee figures, please see p. 40, our Sustainability Fact Karsten Breum, Book 2020 and our Statement on Member of the Executive Leadership Team and Head of Group HR Modern Slavery Act 2020. 34 SUSTAINABILITY REPORT 2020

EMPLOYEE WELL-BEING & DIVERSITY

Community engagement

All Danske Bank employees show that 95% are satisfied creates new possibilities for the cancellation of many activ- are encouraged to take part in with the volunteering experience cooperation across the Group. ities. However, the pandemic purposeful activities in their and that Time to Give has a All these factors contribute to also gave rise to creative digital local communities though positive impact on Danske Bank creating a better daily working solutions that made it possible our corporate volunteering – both as a business and as a environment and they enhance for the voluntary work to be programme called Time to workplace. For example, the workplace happiness and job continued online. In compliance Give. This programme provides programme enhances employee performance. And 34% of with coronavirus restrictions, employees with the opportunity engagement, and 76% the volunteers surveyed feel we allowed employees to spend to spend one paid workday per experience an increased sense inspired to do more volunteering the day helping a neighbour, year participating in volunteer of pride in working at Danske in their spare time. family member or local busi- work. Bank. Furthermore, 67% of ness in need. In 2021, we will the volunteers experience New initiatives in the face of continue to support our part- Whether employees want to an increased sense of team COVID-19 ners and will explore new oppor- volunteer on their own or with spirit between themselves The coronavirus pandemic also tunities for digital volunteering their team is entirely their own and their colleagues, which affected Time to Give by forcing in light of COVID-19. personal choice. Similarly, employees can choose which cause they wish to support, or they can sign up for a project that is coordinated by Danske Selected Time to Give activities 2020 Bank. In several countries, Danske Bank has established Denmark – Dream Days partnerships with local NGOs to At three Dream Day events, arranged as part of our partnership with The Children’s Aid Foundation collaborate on the development (Børnehjælpsdagen), 151 employees spent 785 hours making dreams come true for children and young people living in care in Denmark. The dreams were large and small and included everything from getting a of the Time to Give projects. Harry Potter book, a trampoline and a funfair season ticket to meeting an idol or having a book published. In 2020, more than 1,000 Coronavirus restrictions meant that one of the events had to be held online, but this did not diminish employees across the Group either the dreams or the outcome. Through the partnership, employees also offered mentorships and donated 6,588 hours and con- workshops about personal finances to socially disadvantaged young people. tributed with competencies to the value of DKK 1,358,798. India – Care packages Assessment of impact In India, 15 Danske IT employees and their families gathered at a virtual workshop during the lockdown to create care packages for COVID-19 warriors in their neighbourhood. The packages contained handmade The Time To Give partner essentials such as breathable cloth masks, sanitisers and gloves, as well as treats such as chocolates. organisations benefit from the The packages were then handed over to health workers, services workers and municipal staff who work supply of highly motivated and to fight COVID-19 in high-risk situations with only rudimentary or no safety equipment. devoted volunteers, who have generated substantial economic value and opened up a wealth Norway - Christmas help of new possibilities. This is Danske Bank in Norway has a long-standing partnership with the Church City Mission (Kirkens Bymisjon), one of the conclusions in an a non-profit organisation involved in social work. At Christmas, 40 employees helped at sales stands at a Christmas market, wrapped gifts to be given out at a Christmas dinner, folded boxes for packaging glass impact assessment of Time to angels made at workshops, and assisted at Trondheim Gingerbread City. Furthermore, five employees Give conducted by an external arranged courses in personal finance for students at a Church City Mission café. firm in 2020. The partner organisations interviewed stated that Danske Bank Lithuania – Helping hands for public health volunteers possess sought- In Lithuania, approximately 20 Danske Bank employees volunteered at the organisation Sauliu Sajunga, after and valuable skills, such where they assisted at medical posts and helped the police monitor citizens’ compliance with coronavirus as data-management skills, restrictions. Furthermore, approximately 50 employees volunteered at the National Public Health Centre by offering additional helping hands for collecting and documenting information about persons infected and can provide guidance with COVID-19 and their close contacts and providing them with further guidance. about personal finances. Time to Give has also proven to be a recruitment channel Northern Ireland – Inspiring young people that engages civil society in In Northern Ireland, colleagues volunteered their skills at the charitable organisation Young Enterprise and volunteer work. at local schools, where the volunteers taught young people about employability skills, such as interview skills, and provided information on career opportunities in banking. In all, 20 Danske Bank volunteers The surveys conducted among spent 108 hours on this activity in 2020. 385 Danske Bank volunteers SUSTAINABILITY REPORT 2020 35

ENVIRONMENTAL FOOTPRINT Environmental efforts Our efforts to minimise Danske Bank’s own environmental footprint focus on reducing the emissions of greenhouse gases from our premises, operations and travel.

Even though Danske Bank’s ards, such as the Gold Standard, reduced the budget for travel, biggest environmental impact guaranteeing a real reduction in and internal travel recommen-

by far occurs indirectly through CO2 emissions. dations about travelling by train our ba­lance sheet, we must rather than by air on specific also work to reduce the impact Energy-efficient buildings routes have been introduced. from our business operations. The energy consumption in our Furthermore, we will enhance

Our ambition is to minimise our building portfolio accounts for travel reporting with CO2 emis- environmental footprint with a about 40% of the Group’s total sion follow-up, and we will nudge

focus on further reducing our CO2 emissions. In 2020, our our employees towards making own emissions of greenhouse initiatives to increase energy green choices through new fea- gases. Key initiatives towards efficiency focused on installing tures in our travel-booking tool.

our 2023 target include more LED lights and reducing CO2 digital meetings, energy-effi- emissions from heating. For In Northern Ireland, we have re- cient buildings, environmentally example, in the Pasila building vised our company car scheme. friendly company cars and a in Helsinki, Finland, we changed From 2021, employees can reduction in air travel. In 2020, the heating source from fossil fu- select from a range of hybrid our operations resulted in 7,871 els to renewable energy sources, and electric vehicles only, and

tonnes of CO2 emissions, which resulting in an annual reduction from 2022, electric vehicles will

is a 48% decrease from 2019. of CO2 emissions of 369 tonnes. be the sole option. Because this significant drop in In December 2020, the Pasila

CO2 emissions is mainly a result building was certified with LEED Making the most of our waste of the corona pandemic, our cur- Gold environmental certifica- With more than 22,000 em- rent 2023 target will be retained tion. LED light installations at ployees, Danske Bank produces without change. premises in Denmark in 2020 a significant amount of waste will account for a saving of over every day. To increase our re-

Since 2009, Danske Bank 16 tonnes of CO2 annually. In cycling rate from 45% to 75%, has compensated for carbon 2020, our energy consumption we in 2020 replaced individual Ambition emissions from its own opera- was 4.53 MWh per employee waste bins with new waste seg- By 2023, reducing our CO2 tions, such as emissions from (FTE), which is a 13% reduction regation stations at all offices emissions 75% from 2010 and transport and heat consump- from 2019. and locations in Denmark, Swe- 10% from 2019. tion, that cannot be eliminated den and Norway. Our employees through energy reduction Travel-related emissions in Finland and Lithuania have initiatives. This compensation The coronavirus pandemic has been successfully segregating 2020 performance has been achieved through pushed us to work even faster their waste for several years.

certified renewable electricity on finding new solutions for 86% CO2 reduction from 2010

and verified carbon credits. All meeting and working remotely. In The waste segregation stations 48% CO2 reduction from 2019

electricity used by Danske Bank 2020, our CO2 emissions from are designed to accommodate comes from renewable sources air travel were 68% lower than the typical types and amounts 810 tonnes CO scope 1 certified by Guarantees of Origin in 2019, and we are determined of waste found in an office area, 2 3,119 tonnes CO2 scope 2 and International Renewable to maintain lower levels of travel such as coffee cups, napkins, 3,942 tonnes CO scope 3 Energy Certificates, resulting as we move out of the pandemic. banana peels or plastic cups. 2 in a renewable energy share of For other types of waste, such 53% across scope 1 and 2, see Several initiatives will help us as cardboard, batteries, paper or SDG contribution p. 42. We only purchase carbon reduce CO2 emissions from printer cartridges, we have other credits for projects verified travel, while also achieving cost recycling solutions available in We stimulate climate change according to international stand- savings. We have significantly our printing rooms. measures, in support of SDG 13.2.

Eco-friendly payment cards In 2020, we took steps to phase out existing payment cards and replace them with payment cards made from 86% recycled plastic. After a period of thorough testing, the first more eco-friendly payment cards are Read more in production, and the first customers can expect to start using them in For more environmental figures, early 2021. Each year, around six billion payment cards are produced please see p. 40, our Sustainability worldwide, and this initiative makes Danske Bank one of the first banks Fact Book 2020 and our Statement in the world to issue payment cards made of recycled plastic. on Carbon Neutrality 2020. 36 SUSTAINABILITY REPORT 2020

PERFORMANCE OVERVIEW & ASSURANCE Principles for Responsible Banking

As a signatory bank to the Principles for Responsible Banking (PRB), we annually report on our progress in implementing the principles. The full version of our PRB self-assessment is included in our Sustainability Fact Book 2020.

Principles Current status

Principle 1: Alignment Our updated 2023 Group Sustainability Strategy integrates selected SDGs that target areas We will align our business strategy to be consistent with and where we have significant impact. We will focus on integrating sustainability even further into contribute to individuals’ needs and society’s goals, as expressed our business model and into key business decision-making processes. We support the TCFD in the Sustainable Development Goals (SDGs), the Paris Climate initiative, and we disclose climate change risks and opportunities. We have also committed to Agreement and relevant national and regional frameworks. setting a climate-related target for our corporate lending portfolio in alignment with the Paris Agreement on Climate Change, and in 2020, Danica Pension joined the global UN-convened Net-Zero Asset Owner Alliance.

Principle 2: Impact & Target Setting As part of our strategic review, we have introduced ambitions for six sustainability areas. These We will continuously increase our positive impacts while reducing ambitions are supported with KPIs and SMART targets and are aligned with selected SDGs. the negative impacts on, and managing the risks to, people and In order to further mature our understanding of our negative and positive impact, Danske environment resulting from our activities, products and services. Bank joined the Banking for Impact Working Group in 2020 (www.bankingforimpact.org). The To this end, we will set and publish targets where we can have the goal of this working group is to scale up impact measurement within the banking sector to most significant impacts. drive sustainable progress and enhance decision making. To achieve this, the working group aims to build on existing existing methodologies to develop a standardised and comparable methodology and data protocol for banks to measure and value their impacts.

During 2021, Danske Bank also aims to apply the developed method to our own operations so that we can make an initial assessment of our full societal impact.

We will start reporting on our results from the impact analysis in 2021, and new targets will be adapted.

Principle 3: Clients & Customers In 2020, we continued to expand our sustainability-related product offering. We also We will work responsibly with our clients and our customers to accelerated our efforts on our financial confidence programmes for personal customers, encourage sustainable practices and enable economic activities and we help entrepreneurs grow through our +impact initiative. that create shared prosperity for current and future generations. We will focus on further developing our solutions and advisory services to ensure that we, as a financial adviser, can fully support our customers’ sustainability ambitions. This includes regular training programmes for our advisers in providing sustainable finance advice to our customers.

Principle 4: Stakeholders We annually assess the materiality of sustainability-related topics. The assessment includes We will proactively and responsibly consult, engage and partner engagement with stakeholders, as defined in our Stakeholder Policy. with relevant stakeholders to achieve society’s goals. In 2020, we joined a collaboration with Finance Denmark (FIDA) on better understanding different stakeholders’ perspectives on the current challenges in Danish society.

We are also an active member of the Partnership for Carbon Accounting Financials (PCAF), the Taskforce on Nature-related Financial Disclosure’s (TNFD) informal working group, and we

assisted FIDA in developing a methodology for calculating the indirect CO2 footprint of financial institutions. Furthermore, we are an active member of UNEP FI’s TCFD working group and the Banking for Impact Working Group.

Principle 5: Governance & Culture The Board of Directors and the Business Integrity Committee develop and oversee the We will implement our commitment to these principles through implementation of our sustainability strategy, which includes the PRB. They also oversee effective governance and a culture of responsible banking related policies, targets and commitments.

To foster a culture of responsible banking, all employees must annually complete mandatory training in risk and compliance.

The Group-level performance KPIs for 2020 for the Executive Leadership Team and other senior management levels include three sustainability-related KPIs.

Principle 6: Transparency & Accountability We report annually on progress with our sustainability strategy, including on the We will periodically review our individual and collective implementation of the PRB, TCFD and the UN Principles for Responsible Investments (UN PRI). implementation of these Principles and be transparent about and accountable for our positive and negative impacts and our In 2020, we revised our Group Sustainability Strategy to further develop the areas where we contribution to society’s goals. create both societal value and business value while simultaneously meeting our stakeholders’ expectations. We also joined the PCAF to enable us to measure and disclose the greenhouse gas emissions from our lending and investing portfolios in a harmonised way. SUSTAINABILITY REPORT 2020 37

Task Force on Climate-related Financial Disclosures

Danske Bank’s first publication aligned with the Task Force on Cli- this will continue to be a priority in the coming years. To enhance mate-related Financial Disclosures (TCFD) was provided in Danske our own and the financial industry’s expertise, Danske Bank active- Bank’s Sustainability Report 2019. Since then, we have taken ly participates in industry-wide collaborations. We have played an tangible steps forward in how we assess and act on climate-related active role in UNEP FI’s TCFD pilot Phase II, and we will continue risks and opportunities. Our TCFD execution relies on embedding to hone our climate-stress testing capabilities in Phase III in 2021. climate considerations into our business units’ operations and on Danske Bank has also committed to financial industry initiatives collaborating across our organisation to share and develop best that support society’s transition to net zero greenhouse gas (GHG) practices. In addition, we will continue to improve our development emissions and encourage improved climate disclosures, including of the tools, methods and practices that are required for full TCFD the Net-Zero Asset Owner Alliance and the Partnership for Carbon implementation. Accounting Financials (PCAF). During 2021, we look to disclose more quantitative information about the Group’s climate-related In 2020, embedding all the necessary climate data for sufficient risks and opportunities. climate risks and opportunity disclosures was a key focus area, and

1. GOVERNANCE

1.a) Board’s oversight of this was when the BoD in products and the implementa- ing sustainable investments, The Board of Directors (BoD) 2020 reviewed Danske Bank’s tion of TCFD recommendations. ensures the integration of ESG exerts oversight over climate-re- approach to ESG risk in oil and into the investment decisions lated issues in a variety of gas sector financing. In 2020, we set up our Sus- across Wealth Management, manners – both as routinely tainable Finance Council, which including Danica Pension. scheduled items and when 1.b) Management’s role includes members from all Climate considerations are also important matters arise. The The overall responsibility for business units and from Group tied to management remuner- Group’s sustainability strategy Danske Bank’s 2023 Group Risk Management and acts as ation because variable pay in is reviewed annually by the Sustainability Strategy, policies a preparatory consulting body Danske Bank includes three BoD, which also approves new and related programmes, for the BIC. The impacts of sustainability considerations, policies and the annual external including climate-related issues, climate risks on credit risk are one of which is the carbon reporting on sustainability, resides with the Business In- also discussed in our execu- footprint of our own operations. including climate. Environment, tegrity Committee (BIC), which tive Group All Risk Committee Towards 2023, we will further social and governance (ESG) includes all the members of our during sector reviews and risk develop and integrate sustaina- considerations are also taken Executive Leadership Team. appetite discussions. Also, our bility-related considerations into into account when the BoD con- Among other duties, the BIC is ESG Integration Council, which our performance management siders the Group’s sector risk responsible for Danske Bank’s consists of heads of different framework. and risk appetite. An example approach to climate-related investments strategies, includ-

2. STRATEGY

Climate change is an important items represent a key part of tation of the EU Action Plan on society’s low-carbon transition. strategic consideration for our ongoing work. Sustainable Finance. In addition, For example, customers are in- Danske Bank, and we anticipate future physical changes in the creasingly requesting products that it will affect the bank’s 2.a) Identified risks and Nordic climate, such as in- that can benefit the climate business in the near, medium opportunities creased average temperatures agenda, and supporting compa- and long term. Our business Risks related to the transition and increased frequency of nies and sectors that tackle the units have identified specific, to low-carbon societies can heavy precipitation events, can climate change challenge can high-level climate-related busi- have an impact on many things, increasingly affect the operating bring us new business, enhance ness impacts and opportunities, including the financial perfor- conditions of our bank, our cus- our investment performance summarised here. Identifying mance of some of our custom- tomers and our investments. and integrate us closer with the climate risks and opportunities ers and investments, and there societies that we are part of. and assessing the likelihood are also implications for the At the same time, several This is particularly true in the and magnitude of the financial future regulatory environment in opportunities are currently Nordic region, where the major- impacts from individual climate connection with the implemen- materialising in connection with ity of Danske Bank’s stake- 38 SUSTAINABILITY REPORT 2020

PERFORMANCE OVERVIEW & ASSURANCE

holders are heavily engaged ments, further details of which more, supporting the low-car- of physical and transition risks in climate action. All Nordic are provided below in section bon transition can be beneficial on our activities. We have also countries have high climate three: Risk management. when it comes to meeting performed scenario analyses ambitions and have disclosed a our fiduciary duty to create to stress-test our climate-re- target to reach net zero green- On the other hand, we believe investment value for our clients. lated risk exposure in certain house gas (GHG) emissions that we are in an excellent po- In order to seize and capitalise sectors. Our business units before 2050. sition to benefit from business on climate-related opportuni- are continually developing new opportunities that emerge from ties, we have included volume products and service offerings 2.b) Impact on business, supporting our customers and targets related to green lending that enable us to seize and cap- strategy and financial planning investments in the low-carbon and investments in our 2023 italise on the business opportu- If we fail to adequately take transition. Within our Nordic Group Sustainability Strategy. nities the low-carbon transition climate change into account, core markets, we see high and brings with it. For instance, we transition and physical risks increasing levels of demand for 2.c) Resilience of the in 2020 launched Global Sus- could materialise across our sustainable financing, advisory organisation’s strategy tainable Future, a new thematic major operations. This could and investment services. The To identify and manage risks, investment product, and Danica affect, for example, customer sustainable financing products Danske Bank has developed Balance Sustainable Choice – a acquisition and retention; Dan- that we see our customers analytical tools, sector poli- pension solution that invests ske Bank’s competitive position; showing an interest in include cies and relevant expertise, in companies that are leading balance sheet health; and the green loans, green bonds and all of which are deployed to in the global sustainability market value of our invest- sustainable bonds. Further- assess the potential impacts transition.

3. RISK MANAGEMENT

Climate-related risks can have example through the financial well as our non-financial risks. areas in climate-related risk an impact on Danske Bank risks we take, including credit, The table below provides management in 2020. through numerous channels, for market and liquidity risk as an overview of the focus

Unit 3.a) 3.b) & 3.c) Process for identifying and assessing Process for managing climate-related risks and integrating climate-related risks this into our overall risk management processes

Lending We have prioritised the high-climate-risk Our position statements outline our Credit Policy for sectors by using a climate risk heat map to industries that have elevated ESG risks. We implement qualitatively assess which of our portfolios will position statements through the ESG screening of all be most exposed to physical and transition corporate lending. We have integrated ESG, including risks given our Nordic footprint. For these high- climate, assessment into our standard credit process for risk industries, in particular, we include climate our large corporate customers, and we provide staff training scenario analysis in our industry reviews to about the financial effects of climate change. Also, we take assess possible credit risk effects. climate risks into consideration as a part of the Industry Reviews that are a central risk-management tool within our organisation. Furthermore, we have committed to align our corporate lending book with the objectives of the Paris Agreement on Climate Change.

Asset We are integrating ESG, including climate The main methods for ESG risk management, within management considerations, into our investment process, which climate-related risks are included, are outlined & Danica and we have built the datasets, tools and in our Responsible Investment Policy. For instance, we Pension resources needed to achieve this. Tools include use a bottom-up approach based on identifying material our materiality dashboard, mDASH, which sustainability risks to integrate ESG; we exercise active structures the material ESG assessment of ownership to encourage companies to take action on individual businesses based on the SASB climate; we include ESG considerations in external framework, and a climate toolkit, which manager selection; and we apply screening and norm provides climate-exposure metrics and based restrictions, e.g. for coal-based-power production. alignment metrics to help our investment Furthermore, we are establishing asset-class-level policies to teams in their decision making and in one-to- decarbonise our Danica Pension portfolio. one discussions. SUSTAINABILITY REPORT 2020 39

Climate risk scenario analysis in 2020

As part of our credit risk assessments, we have started to show that the agricultural sector is sensitive to a carbon include climate risk scenario analysis in order to stress-test tax and that a proper implementation of the tax could be high-climate-risk sectors identified through a climate risk key in incentivising the sector towards a solid transition. heat map. The analysis is already now starting to inform sector-specific risk strategies, but our ambition is to grad- Scenario analysis is also used in investment strategies to ually advance over time as data and methodology evolves identify possible plausible low-carbon transition pathways and as more sectors are covered. In 2020, the following and to help understand what these developments could sector-specific climate risk analyses were performed: mean from risk and return perspectives. As a signatory to the Net-Zero Asset Owner Alliance, Danica Pension • Physical risk – real estate analyses transition scenarios to help establish decarbonisa- Physical risk assessments analysed the risk of flooding tion strategies that enable CO2 reduction targets to be met from sea, streams and lakes for both our Danish mort- towards 2050. gage and commercial real estate portfolios by using the Danish Coastal Authority’s geographical data and projections of future flooding risk. The analysis showed Credit quality in the oil and gas portfolio: exploration and that flooding risk is clearly prevalent for parts of the production segment Danish real estate portfolio. Further analysis is needed Exposure-weighted probability of defaults to translate the risk into financial impacts in the long 60% term, to incorporate mitigation factors such as insur- 50% ance coverage, and to extend the assessment to other 40% Nordic markets. 30% • Transition risk – oil and gas 20% A transition risk analysis was performed for the oil and 10% gas portfolio using new climate scenarios from the Net- 0% work for Greening the Financial System, including a de- -10% layed 2°C scenario and a disorderly 1.5°C. Irrespective 2020 2025 2030 2035 2040 2045 2050 of the scenario used, it is clear that ambitious transition Hot house world Delayed 2°C plans are needed to ensure stable credit quality in the Orderly 2°C Disorderly 1.5°C

long term, and our work to ensure Paris alignment is The graph shows credit quality deterioration under four of the scenarios from the Network therefore key for this sector. for Greening the Financial System, as used for the transition risk stress-test on the oil and gas portfolio. The climate scenarios make different assumptions about the future energy mix, but common to all the transition scenarios is that the share of oil and gas in the world • Transition risk – agriculture energy mix will diminish over the long term. Depending on how ambitious the world is in reducing its carbon emission, credit quality will deteriorate, assuming that our customers A sensitivity analysis was performed on our agriculture do not react to the changing world, thereby indicating the need for ambitious transition portfolio using future estimated carbon taxes. Results plans.

4. METRICS AND TARGETS

4.a & 4.c) Disclose the and DKK 100 billion by 2030. In 2021, Danica Pension will re- as a Green Bond Impact Report metrics and targets used to We have also announced that lease an intermediate decarbon- on avoided CO2 emissions assess and manage climate- we will set a climate target for isation milestone for 2025. We resulting from green loans to related risks and opportunities our corporate lending portfolio are currently in the process of corporate customers on the As a part of our 2023 Group in alignment with the Paris mapping the climate impact of back of Danske Bank’s two Sustainability Strategy, we re- Agreement on Climate Change, our corporate lending book, and inaugural green bonds. leased metrics and targets that and Danica Pension has joined in May 2020 we joined PCAF measure how well we are able the Net-Zero Asset Owner to utilise and share financial For details of Danske Bank’s to capture the opportunities that Alliance, thereby commit- industry best practices in this CO2 reduction target of 75% arise from the transition to a ting to decarbonise its total area. We have also contributed from 2010 by 2023 for our low-carbon economy. These tar- investment portfolio by 2050. to Finance Denmark’s finan- operations (4.b), our scope 1, 2 gets include our commitment to These portfolio-level targets cial sector guidelines for CO2 and 3 GHG emissions and other facilitate well beyond DKK 100 are central in ensuring that we disclosures. sustainability data, including on billion in sustainable financing future-proof our lending and sustainable finance, please see by 2023 and Danica Pension’s investment portfolios. Currently, In 2020, we published a report p. 40, our Sustainability Fact commitment to investing DKK work is ongoing to develop the on the carbon footprint of equity Book 2020 and our Statement 30 billion in green assets by methodologies to implement and corporate bond investments on Carbon Neutrality 2020. 2023, DKK 50 billion by 2025 these actions. made by Danica Pension as well 40 SUSTAINABILITY REPORT 2020

PERFORMANCE OVERVIEW & ASSURANCE ESG performance data

As part of our annual reporting practices, we include an overview of assured performance data related to our 2023 Group Sustainability Strategy. All data is prepared in accordance with our reporting principles, see pp. 42-43. Complementary data and information is included in our Sustainability Fact Book 2020.

2020 2019 2018 2017 Targets (timeframe) Sustainable finance Green bonds issued by Danske Bank (DB) (DKK billion) 3.7 3.7 - - Green bonds issued by Realkredit Danmark (RD) (DKK billion) 9.8 0.8 - - Share of green bonds issued (DB+RD) in relation to total bonds issued (%) 1.2 0.4 - - Share of green bonds in relation to total bonds issued by DB (%) 1.1 1.1 - - Share of green bonds in relation to total bonds issued by RD (%) 1.2 0.1 - - Bloomberg Leauge Table share of arranged Sustainable Bonds - - (DKK billion) 40.8 39.1 Green loans granted to customers in DB (DKK billion) 12.5 6.2 - - Well above DKK 100 billion Green loans granted to customers in RD (DKK billion) 9.8 0.8 - - in sustainable financing (2023) 1 Share of total green loans (DB+RD) in relation to total loans (%) 2.6 0.8 - - Volume of treasury funds placed in green bonds (DKK billion) 9.4 7.1 - - 10 in allocation (2022) Ranking among Nordic banks in the Bloomberg Global Green Top 3 in the Nordic countries Bonds - Corporate & Government League Table 1 2 - - Investments in the green transition by Danica Pension 27.2 - - - DKK 30 billion (2023) (DKK billion) Assets under Management (AuM) (DKK billion)2 1,765 1,651 1,575 1,530 Environment 3 CO2 emissions scope 1 (tonnes) 810 790 1,270 1,523 75% reduction in total CO2 4 3 emissions­ vs. 2010 (2023) CO2 emissions scope 2 (tonnes) 3,119 4,480 4,308 5,363 3 CO2 emissions scope 3 (tonnes) 3,942 9,960 10,818 11,203

CO2 emissions per FTE (tonnes/FTE) 0.35 0.72 0.82 0.93 Energy consumption (electricity and heat) (MWh)5 99,570 107,615 111,046 113,416 Energy consumption per FTE (MWh/FTE) 4.53 5.18 5.70 6.04 Renewable energy share scope 1 and 2 (%) 53 52 53 50 Social Number of full-time employees (FTE), end of year6 22,376 22,006 20,683 19,768 Women in the Executive Leadership Team (%) 13 11 10 13 25% (2023) Women in senior leadership positions (%)7 28 27 - - >35% (2023) Women in management (%) 37 37 37 35 40% (2023) Women in the workforce (%) 49 50 50 49 Employee gender pay ratio (%) 81 Employee turnover (%) 13 13 13 12 Employee engagement (%) 84 86 84 85 > 90% (2023)

Number of start-ups and scale-ups supported with growth and 10,000 (2023) impact tools, services and expertise 5,065 3,851 - -

Number of people supported with financial literacy tools and expertise 1,154,913 719,763 - - 2 million (2023) Number of participants in employee volunteering programmes 1,080 2,034 - - Governance Women on the Board of Directors elected at the Annual General Meeting (%) 33 25 38 38 38% (2023) Employees trained in risk and compliance (%) 95 96 - - > 95% (2023) Tenders through responsible sourcing process (%) 96 93 97 60 > 80% (ongoing)

1 Sustainable financing includes green loans in DB and RD and Bloomberg Leage Table share of arranged Sustainable Bonds. Total sustainable financing in 2020 was DKK 102.2 billion. 2 Our Responsible Investment Policy applies to all AuM. As a consequence of the upcoming Sustainable Finance Disclosure Regulation (SFDR), we will adjust our categorisation of ESG/ Sustainability AuM in 2021 to follow definitions outlined in the regulation. This means that current sustainability labels, such as our ESG Inside Integrated, Restricted and Thematic labels for investment funds, will no longer be applied, and a new labelling system compliant with the SFDR and new KPIs will be defined. 3 Data covers Denmark (DK), Sweden (SE), Norway (NO), Ireland (IRL), Northern Ireland (NI), Finland (FI) and Lithuania (LIT) and includes estimated figures for the remainder of the Group. We included exact figures from our operations in India (IN). 4  Baseline is 55,690 tonnes of CO2 emissions in 2010. A 75% emissions reduction equals 13,705 tonnes of CO2 emissions in 2023, meaning that by 2023 we need to have reduced our emissions 10% from 2019 levels. Our total CO2 emissions in 2020 amounted to 7,871 tonnes (scope 1, 2 and 3). 5 Data covers DK, SE, NO, IRL, NI, FIN and LIT. In 2017, we included figures from our operations in IN. 6 Data is from Annual Report 2020 and Fact Book Q4 2020. For a definition of ratios, see Definition of alternative performance measures on p. 67 of our Annual Report 2020. 7 Due to a reviewed and more accurate accounting methodology for women in senior leadership positions, we have updated the 2019 baseline from 23% to 27% (updated data is from January 2020). The increase is due to a new definition of senior leadership position, resulting in an increase of the baseline senior leader population from 603 to 927. SUSTAINABILITY REPORT 2020 41

Independent auditor’s assurance report

To the Management and the stakeholders of Danske Bank We performed our review from November 2020 to January We have assessed Danske Bank’s Sustainability Report 2020 2021. Our work has included interviews with key functions in (‘the Report’) to provide limited assurance on selected 2020 Danske Bank, inquiries regarding procedures and methods to data on page 40 of the Report. The Report covers Danske Bank’s ensure that selected ESG data and information have been incor- international activities from 1 January to 31 December 2020. porated in accordance with the reporting principles. We have assessed processes, tools, systems and controls for gathering, Our assessment was performed in order to assess whether: consolidating and aggregating ESG data at Group level, and performed analytical review procedures and tested ESG data pre- • the ESG performance data on page 40 in the Report have pared at Group level against underlying documentation. We have been stated in accordance with the criteria defined by the reviewed the reported data (some measured, some calculated reporting principles; and some estimated) as well as evaluated and given feedback

• Danske Bank has offset its consolidated CO2 emissions for on the reliability and validity of the underlying sources, especially 2020. of estimated data. Furthermore, we have received documenta-

tion that the consolidated CO2 emissions have been offset by We express a conclusion providing limited assurance. purchase of offset certificates. Finally, we have evaluated the overall presentation of the Report, including the consistency of Management’s responsibility information. The Management of Danske Bank is responsible for collecting, analysing, aggregating and presenting the information in the We have not performed site visits or interviewed external stake- report, ensuring that data are free from material misstatement, holders, nor have we performed any assurance procedures on whether due to fraud or error. Danske Bank’s non-financial re- baseline data or forward-looking statements such as targets and porting principles contain Management’s defined reporting scope expectations. Consequently, we draw no conclusion on these for each data type. The criteria for the reporting principles can be statements. found on page 42-43 of the Report. Conclusion Auditor’s responsibility Based on our work, nothing has come to our attention causing us Our responsibility is to express a limited assurance conclusion not to believe that: on the ESG performance data on page 40 in the Report. Fur- • the ESG performance data subject to our review have been thermore, our responsibility is to provide limited assurance on stated in accordance with the criteria mentioned in the report- whether Danske Bank has offset its consolidated CO2 emissions ing principles; for 2020. We have conducted our work in accordance with ISAE • Danske Bank has offset its consolidated CO2 emissions for 3000, Assurance Engagements Other than Audits or Reviews 2020. of Historical Financial Information, and additional requirements under Danish audit regulation to obtain limited assurance about our conclusion.

Deloitte Statsautoriseret Revisionspartnerselskab is subject to Copenhagen, 4 February 2021 International Standard on Quality Control (ISQC) 1 and, accord- ingly, applies a comprehensive quality control system, including Deloitte documented policies and procedures regarding compliance with Statsautoriseret Revisionspartnerselskab ethical requirements, professional standards and applicable legal Business Registration No. 33 96 35 56 and regulatory requirements.

We have complied with the independence and other ethical requirements of the Code of Ethics for Professional Accountants issued by FSR – Danish Auditors (Code of Ethics for Professional Accountants), which are based on the fundamental principles of integrity, objectivity, professional competence and due care, Jens Ringbæk Helena Barton confidentiality and professional behaviour. State-Authorised Lead Reviewer Public Accountant A limited assurance engagement is substantially less in scope than a reasonable assurance engagement. Consequently, the Identification No level of assurance obtained in a limited assurance engagement (MNE) mne27735 is substantially lower than the assurance that would have been obtained had we performed a reasonable assurance engagement. Considering the risk of material misstatement, we planned and performed our work to obtain all information and explanations necessary to support our conclusion. 42 SUSTAINABILITY REPORT 2020

PERFORMANCE OVERVIEW & ASSURANCE Reporting principles

Sustainability Report 2020 Nordic, Commercial; and iii) ENVIRONMENT from Greenhouse Gas Protocol covers the Danske Bank (DB) Corporates & Institutions. Guidance, the emissions from Group (the Group). For an Environmental data covers electricity consumption were overview of the Group and its Volume of treasury funds the actual consumption from omitted owing to the purchase significant subsidiaries, please placed in green bonds the Group’s operations in Den- of renewable electricity certified refer to the Group’s Annual Total accumulated volume mark, Finland, Ireland, North- by Guarantees by Origin and Report 2020. We believe that (DKK) of Group treasury funds ern Ireland, Norway, Sweden, International Renewable Energy the reporting provides a fair and placed in green or social bonds Lithuania and India, and it also Certificates. balanced representation of our (and similar) or alternatively covers the estimated consump-

performance within sustainable bonds that have been issued tion from the Group’s remaining CO2 emissions scope 3

finance, environment, social with a government guarantee operations without registered Scope 3 comprises CO2 perspectives and governance. and founded within Danish or data. The reporting period for emissions from paper usage another Nordic country’s law the year 2020 runs from Q4 and business travel by To ensure data consistency, that promotes the sustainable 2019 to Q3 2020. Data is employee cars and flights. The data has been defined and de- transition of our society. retrieved from the Credit360 emissions from paper usage scribed in business procedures. reporting system. We report our are calculated on the basis of

Internal control procedures have Ranking among Nordic banks CO2 emissions with guidance the paper consumption and the been established to ensure that in the Bloomberg Global from the Greenhouse Gas emission factors from DEFRA. the data is reported according Green Bonds – Corporate & Protocol. For transport by employee cars, to the definitions. Government League Table the emissions are calculated

Ranking among Nordic banks CO2 emissions scope 1 on the basis of the mileage

in the Bloomberg Global Green Scope 1 comprises CO2 emis- and emission factors from Bonds – Corporate & Govern- sions from heating using oil DEFRA. The emissions from SUSTAINABLE ment League Table as of end and gas and from the usage of air travel are reported directly FINANCE 2020. company cars. The emissions by our travel agency, American from heating are calculated on Express. Green bonds Investments in the green the basis of heating consump-

Green bonds covers green transition by Danica Pension tion and either specific emission Estimated CO2 from operations bonds issued by DB and by Investments in green transition factors from energy companies without registered data Realkredit Danmark (RD). Green are defined as investments or average emission factors for For operations that do not have bonds are defined in our Green that contribute to the transition heating for the country from any measured consumption,

Bond Framework. Total funding to a low-carbon, resilient and International Energy Agency we estimate CO2 emissions consists of the following: i) long- resource-efficient economy (IEA) and the Department of on the basis of the average term bonds issued by DB (ex- such as investments where e.g. Environment, Food and Rural number of full-time employees cluding tier 2 and additional tier products, services or activities Affairs (DEFRA). For transport as provided by Group Finance 1), and ii) bonds issued by RD contribute to environmental by company cars, the emissions from Q4 2019 to Q3 2020 (excluding pre-issued bonds). adaption, mitigation, prevention, are calculated on the basis and the average emissions per control or restoration. Data in- of the mileage and emission employee in the Group. These Bloomberg League Table share cludes: 1) investments in com- factors from DEFRA. estimates represent 1% of total

of arranged sustainable bonds panies through listed equity and CO2 emissions in 2020 and

Volume accredited to Danske credit bonds with revenue relat- CO2 emissions scope 2 are distributed across the three

Bank in Bloomberg Global ing to environmental objectives Scope 2 comprises CO2 scopes based on the share of Sustainable Bonds – Corporate and investments in green bonds emissions from heating and the individual scope. & Government League Table through credit, government and electricity supplied by external

(green, social and sustainability mortgage bonds; 2) alternative suppliers. The emissions from CO2 emissions per FTE

bonds). We use the Deal Size investments in renewable ener- heating and cooling are calcu- CO2 emissions per employee (USD) and League Credit gy; 3) investments in sustaina- lated on the basis of heating (tonnes/FTE) are calculated on (USD) for all sustainable bonds bility certified buildings; and 4) consumption and on either the basis of the total amount of

arranged, and exchange into sustainability certified buildings specific emission factors from CO2 emissions (tonnes) and the DKK. owned indirectly in real estate energy companies or average number of full-time employees entities internationally. The emission factors for heating for provided by Group Finance from Green loans reporting period for number 2, the country from IEA and DE- Q4 2019 to Q3 2020. Green loans granted by the 3 and 4 runs from Q4 2019 to FRA. Similarly, emissions from Group, as defined in our Green Q3 2020. district cooling are calculated on Energy consumption Bond Framework. The green the basis of district cooling con- Data for energy consumption loan ratio is calculated by apply- Assets under Management sumption and the specific emis- from electricity and heat is ing green loans granted by the Reporting principle for Assets sions factor used for district either based on automatic data Group over total loans, excluding under Management (AuM) is heating. This is a conservative transfers from smart meters reverse transactions in i) Bank- included in the Annual Report approach. In accordance with or quarterly meter readings, or ing DK, Commercial; ii) Banking 2020. the market-based methodology it is calculated on the basis of SUSTAINABILITY REPORT 2020 43

statements received regularly different fossil sources. This is a to a percentage rate. The Number of participants during the year from energy conservative approach. information was retrieved from in employee volunteering companies and lessors. Data the HR platform and covers programmes on electricity consumption the entire Group. The employee Data includes the total number is calculated mainly on the SOCIAL turnover rate is based on of employees (head count) who basis of statements from information registered from Q1 have reported their participation energy companies, and heat Number of full-time employees to Q4 2020. in the Time to Give programme consumption figures for our The number of full-time employ- during the year. All employees head offices are similarly based ees (FTEs), end of year, is based Employee engagement in the Group have the opportu- on actual readings taken by the on information registered in the Data on employee engage- nity to participate. Registration energy companies. If no reading Group’s accounting system at ment for DB comes from the is captured and reported via an or statement is available, we the end of Q4 2020. PULSE survey, managed by our internal IT system. For Northern estimate consumption on the external provider Ennova. The Ireland and India, registrations basis of the average electricity Women in the Executive survey covers the entire Group. are captured and reported using or heat consumption at the Leadership Team The Employee Engagement Excel and are sent to the Group. country unit and the floor Percentage of women in the Index is based on replies to five space. Data on floor space Executive Leadership Team is questions in the PULSE survey: covers all properties used by defined as the number of wom- three on Encouragement and GOVERNANCE the Group and its subsidiaries, en in the ELT divided by the total two on Enablement. The PULSE including the Group’s own number of members of the ELT. survey runs monthly except Women on the Board of premises and leased premises, July. The reported data is a Directors (AGM elected) for own operations in various Women in senior leadership 2020 average. Percentage of women on the countries. positions Board of Directors elected at Senior leadership is defined as Number of start-ups and the Annual General Meeting In Sweden, heat consumption female employees who hold the scale-ups supported with (AGM). data is calculated on the basis title CEO, any Vice President ti- growth and impact tools, of information from boverket.se tle, leader of business/function, services and expertise Employees trained in risk and (energy labelling of buildings). leaders of leaders or leaders of The support can be via the compliance The consumption figure is team. Calculations were based digital platforms, thehub.io and The risk and compliance calculated on the basis of the on information registered in the +impact.io, advice from DB eLearning courses are man- Group’s share of floor space in HR platform at the end of Q4 Growth Advisers, enrollment in datory for all employees of the the various buildings in Sweden. 2020. +impact accelerators, Canute Group and must be completed According to this method, data programmes or other Growth once a year and on time. In addi- on heat consumption at proper- Women in management and Impact initiatives in DB. tion, all new employees in the ties without actual consumption Women in manager positions Group must complete the mod- in Finland is calculated by using are employees with staff re- The KPI is measured using the ule within the first 14 days of the key figures for Sweden sponsibility. Calculations were number of start-ups and scale- their employment. All temporary because consumption patterns based on information registered ups that posted a job on The employees and external consult- for locations in Finland are in the HR platform at the end of Hub, as a proxy. The start-up or ants with access to the Group’s similar to those for branches in Q4 2020. scale-up supported is counted IT systems must also complete Sweden. at the time it has posted the training. The completion data Women in the workforce first job on The Hub. Data for has been extracted from DB’s Energy consumption per FTE The percentage of women in the KPI covers companies external Learning Management Energy consumption per full- the workforce is based on registered in Denmark, Sweden, System, Cornerstone at the end time employee (MWh/FTE) information registered in the Norway, Finland and Northern of 2020. is calculated on the basis of HR platform at the end of Q4 Ireland and has been accu- the total energy consumption 2020. mulated from Dec. 2015 and Tenders through responsible (MWh) and the number of onwards. Data covers all types sourcing process full-time employees provided by Employee gender pay ratio of corporate structures (IVS, Data covers all new or rene- Group Finance from Q4 2019 The calculation includes all cash ApS, AS, AB, Inc. etc.). Data is gotiated supplier contracts to Q3 2020. compensation (salary, bonus retrieved from the back-end sys- for which Group Procurement payments and any other mone- tem (Keystones) of The Hub. is involved across the whole Renewable energy share tary benefits) for all employees Group where the total contract scope 1 and 2 across the Group. The gender Number of people supported is in scope for pre-qualification Renewable energy share within pay ratio is calculated by com- with financial literacy tools and (supplier with total contract scope 1 and 2 is calculated on paring the female employees’ expertise value above DKK 1 million). the basis of the total energy median cash compensation Data includes active unique The percentage of tenders consumption and the amount with the male employees’ medi- users of DB digital educational that have been through the of renewable electricity certified an cash compensation. tools developed to support responsible sourcing process by Guarantees of Origin and financial confidence. Data also is calculated by dividing the International Renewable Energy Employee turnover includes people participating number of activities in scope by Certificates. The calculation Employee turnover is defined in related physical events the number of activities marked does not include fuel use from as the number of employees arranged by DB. Data has been as compliant. company cars. With limited (head count) who retired or accumulated from 2018 and data on the energy mix for heat- resigned divided by the number onwards. ing, it is assumed that the ener- of employees (head count) gy mix is made up of a variety of per month and converted Danske Bank A/S Holmens Kanal 2-12 DK-1092 København K

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