Forestry Position statement Danske Bank 4 April 2016 1
Introduction About Danske Bank Group Danske Bank is a Nordic universal bank with strong regional roots and close ties to the rest of the world. We serve more than 3.5 million personal, business and institutional customers, and in addition to banking services, we offer life insurance, pension, mortgage credit, wealth management, real estate and leasing services and products. Our vision is to be recognised as the most trusted financial partner, and we are driven by a desire to create long-term value for our customers, investors and the communities we serve. Danske Bank and corporate responsibility Financial institutions play a key role in maintaining financial stability and contributing to economic growth. It is our responsibility to conduct our business in a manner that creates long-term value for all our stakeholders. International agreements lay the basis for how we conduct our business in a responsible and transparent manner and provide a framework for our dialogue with stakeholders. The initiatives that the Group endorses include the following: UN Global Compact OECD Guidelines for Multinational Enterprises UN Guiding Principles on Business and Human Rights UN-supported Principles for Responsible Investment UN Environment Programme Finance Initiative Purpose and scope of position statements Danske Bank works continually to improve its business practices, and we encourage those we work with to do the same by taking environmental, social and governance (ESG) aspects of their business into consideration. Our position statements clarify how Danske Bank works and establish a shared framework for a proactive and forward-looking dialogue about risks and opportunities with our customers, business partners and the portfolio companies we actively invest in (the portfolio companies ). The statements apply in all the markets where we operate and encompass all the operations of Danske Bank Group. 2
Existing policies and position statements The international agreements that Danske Bank has signed lay the foundation for several of our policies and procedures, including our Responsibility Policy, Responsible Investment Policy, Supplier Policy and the ESG principles in the overall Credit Policy as well as the Arms and Defence Credit Policy. We also have position statements on the topics of arms and defence, climate change, fossil fuel, and forestry. Engagement, feedback and contact Please visit our website at www.danskebank.com/responsibility for more information about how we work in this area. You are also welcome to contact Dorte Eckhoff, Head of Corporate Responsibility, Danske Bank (deck@danskebank.com) with further questions or feedback. 3
Forestry POSITION STATEMENT DANSKE BANK 1. Introduction The forestry industry makes a crucial contribution to international trade, national economies, employment, and household incomes. In 2013, the United Nations Forum on Forests estimated that forests contribute more than USD 250 billion to the global economy annually and that almost 1.2 billion people rely on forest resources to generate income and food. Well-managed forests are a necessity for sustainable environmental development both locally and globally. They stabilise the global climate system, regulate water cycles, and provide a habitat for flora, fauna and people. ESG risks have been identified in the forestry industry; they concern pressure on natural resources, impact on communities, impact upon biodiversity and endangered species, and an indirect contribution to climate change because of general deforestation. International organisations recognise the need for more sustainable forest management and are putting pressure on the forestry industry to control these risks and implement sustainable practices. At Danske Bank we acknowledge the need for sustainable forest management. When working with customers, business partners and portfolio companies in the forestry industry, we aim to minimise the adverse environment and social impact and to support good governance by promoting internationally recognised standards. 2. Our approach To promote sustainable forest management, Danske Bank is guided in its business by a number of international agreements and conventions that we encourage our customers, business partners and portfolio companies to adhere to as well (see the list in section 4). Additionally, we expect our customers, business partners and portfolio companies to operate in accordance with relevant international, national and local laws and regulations. On the basis of these international agreements and conventions, we consider ESG risks in our credit, investment and procurement practices. And when investing in the forestry industry as part of our alternative investment strategy, we prefer to invest in assets in developed and mature markets such as the EU, North America, Australia and New Zealand. 4
3. Implementation To ensure that we manage our investments, lending and business activities associated with ESG risks on the basis of the international agreements we endorse, we have implemented the measures listed below. We will continue to review our efforts in order to meet our customers and stakeholders needs in the best possible manner. Screening and ESG risk analysis When investing in the forestry industry, we screen the portfolio companies in collaboration with our screening and research partners to ensure that their conduct is in accordance with our Responsible Investment Policy and the international standards we endorse. We integrate ESG considerations systematically in investment practices and monitor the development of ESG risks on an ongoing basis. When lending to the forestry industry, we conduct a screening in order to ensure that our customers conduct is in accordance with our Credit Policy and Responsibility Policy and the international agreements we endorse. In collaboration with our customers, we assess possible ESG risks associated with our lending, and we clarify our expectation of responsible business conduct that is consistent with recognised international agreements. Dialogue and engagement If there are allegations of possible breaches of international agreements, we initiate a dialogue with portfolio companies. The aim of the dialogue is to clarify the circumstances and to determine whether the company plans to change its behaviour. We prefer to engage the companies and encourage the development of higher standards of responsibility instead of excluding them from our portfolio. But if no corrective measures are taken, we will exclude the company. If we see that a existing customer is not compliant with our Credit Policy, we seek a solution in collaboration with the customer. If the only option available is terminating the credit relationship, we do it in a controlled process. Corporate Responsibility holds an ongoing dialogue with credit and procurement functions on how we work with companies placed on our investment exclusion list. 4. Agreements and conventions Danske Bank s business conduct is guided by a number of international agreements that promote sustainable forest management: UN Global Compact OECD Guidelines for Multinational Enterprises UN Guiding Principles on Business and Human Rights UN supported Principles for Responsible Investments UN Environment Program Finance Initiative We also take into account additional international conventions regarding portfolio companies that work with forestry: Convention on Biological Diversity UNESCO World Heritage Convention on International Trade in Endangered Species of Wild Fauna and Flora 5