Arms and defence. Position statement Danske Bank

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1 Arms and defence Position statement Danske Bank 4 April

2 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

3 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, mining and metals, and forestry. Engagement, feedback and contact Please visit our website at for more information about how we work in this area. You are also welcome to contact Dorte Eckhoff, Head of Corporate Responsibility, Danske Bank with further questions or feedback. 3

4 Arms and defence POSITION STATEMENT DANSKE BANK 1. Introduction Danske Bank acknowledges the right of nations to use legitimate weapons for national self-defence and legitimate national security purposes as set forth in the Charter of the United Nations. We accept that various types of weapon are necessary for achieving internationally accepted goals such as peacekeeping missions. The arms and defence industry is complex, however, and we acknowledge that it entails risks related to various types of weapons and their possible use in violation of international humanitarian law or use for purposes other than national security and self-defence. We must address these risks when providing financial services to the industry. 2. Our approach Danske Bank does not conduct business with a company when there is verified information that the company directly or through their supplies of bespoke components, systems or services is involved in the production of sanctioned weapons, such as anti-personnel mines, cluster munitions, and biological and chemical weapons, or a company that is involved in the stockpiling, transfer or use of these weapons. Nuclear weapons While weapons such as cluster munitions are considered illegal according to international law, nuclear weapons, according to the Non Proliferation Treaty, are not. Even so, Danske Bank believes that the use of nuclear weapons most likely would have indiscriminate effects and would violate human rights. Danske Bank therefore does not conduct business with or invest in companies that directly or through their supply of bespoke components are involved in the production of nuclear warheads or missiles. We recognise, however, that maintenance and service are necessary to ensure an adequate level of security regarding existing nuclear weapons. 3. Implementation To ensure that we manage our investments and lending activities on the basis of our Responsibility Policy, our Responsible Investment Policy, our industry-specific credit policy for arms and defence, and the international agreements we endorse (see the list in section 4), we have implemented the measures listed below. 4

5 Screening When investing in the arms and defence 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. When lending to the arms and defence industry, we conduct a screening in order to ensure that our customers conduct is in accordance with our Arms and Defence Sector Policy, our Credit Policy and Responsibility Policy and the international agreements we endorse. Dialogue and engagement When our external screening partners and advisers identify a possible involvement in the production of illegal or controversial weapons, we engage in a dialogue with portfolio companies. The dialogue is intended to clarify whether there is any possible involvement in illegal or controversial arms manufacturing. If so, we will exclude the company from our portfolio. If we see that a customer is not compliant with our Arms and Defence Sector Credit Policy or 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 functions on how we work with companies placed on our investment exclusion list. 4. Agreements and conventions We expect our customers and portfolio companies to operate responsibly in accordance with the following internationally recognised agreements and conventions: UN Global Compact The UN Guiding Principles on Business and Human Rights OECD Guidelines for Multinational Enterprises Convention on the Prohibition of the Use, Stockpiling, Production and Transfer of Anti-Personnel Mines and on their Destruction (The Ottawa Treaty) Biological Weapons Convention Chemical Weapons Convention Convention on Cluster Munitions We also take into account additional international conventions regarding portfolio companies that work with the arms and defence industry: The Draft Framework Convention on International Arms Transfers The Convention on Prohibitions or Restrictions on the Use of Certain Conventional Weapons Which May Be Deemed to be Excessively Injurious or to Have Indiscriminate Effects 5