Climate-related factors are the main reasons for exclusions from dealing with Nordic asset finance banks Danske Bank and Swedbank, according to the newly launched Financial Exclusion Tracker.
While Danske Bank’s exclusions and exclusion procedures are publicly available on its website, Swedbank’s are not public, so their addition to this database provides a new degree of accountability.
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Financial Exclusion Tracker
The Financial Exclusion Tracker collates and displays companies with the reasons for their exclusion by finance firms around the world. Among those included, it counts “companies that have been publicly excluded by financial institutions, for reasons ranging from human rights violations to environmental impact and other sustainability issues”.
In an economic system that functions purely on profit, removing financing from the companies that are not meeting environmental, social and governance (ESG) expectations is one means of improving accountability and more sustainable growth. In this way, the Financial Exclusion Tracker could become a tool for fostering a culture conscious of environmental impact and human rights abuses.
Jakob König, ESG expert and project lead of Fair Finance Guide in Sweden, commented: “This database helps to amplify investor criticism against companies that do not live up to the investors’ sustainability standards. The reason could be a company’s core business model, like tobacco or fossil fuels, or because of poor business conduct where the company is not taking sufficient actions.”
“Public exclusion is a very important way for investors to exercise influence on companies that do not listen to their sustainability demands. This tool helps to amplify the criticism and increases the pressure on both their companies and remaining investors to act.”
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By GlobalDataOut of the entire data set – which includes 13,929 exclusions from 87 different financial institutions – 40% of exclusions are based on climate issues, the biggest driver of exclusions. That is followed by weapons and tobacco at 17% and 12%, respectively.
Swedbank and Danske Bank exclusions
Of the two asset finance banks, König said: “The exclusion lists of Swedbank and Danske Bank have grown significantly in the last years. Swedbank’s investment arm decided two years ago to fully divest from fossil fuel companies and Danske Bank’s list has been extended with a long range of companies with poor environmental and human rights practices.”
The database contains details of 3,082 exclusions by Danske Bank. Of these climate was the main reason cited for exclusion at 1,264, indicating that it is a primary concern for the institution.
The tracker also cites sub-categories for Danske Bank. Fossil fuels dwarf other exclusions, with 1,208 compared to 401 for alcohol, 395 for arms and defence and 317 for gambling.
Danske Bank has clear minimum requirements for manufacturers and financial products to meet to gain investment, and it is a signatory to the UN-supported Principles for Reasonable Investment.
To receive investment from Danske, companies must demonstrate a commitment to a net-zero climate target or a clear plan if not, well defined and set up monitoring procedures for sustainability risk, financial products that promote environmental and social characteristics, no investment in companies that lead to significant harm on sustainable investment and more. Danske Bank has also stated its intention to rank financial products on principal adverse impact indicators.
The database contains details of 328 Swedbank exclusions with 166 being climate-related, followed by 152 weapons-related and nine human rights-related.
While Danske Bank is very clear in its exclusion procedure, Swedbank’s is less transparent.
König added: “Swedbank has not published its exclusion list online, but the bank approved to include it in our public database, which is positive.”
Pia Gisgård, Head of Sustainability and Governance at Swedbank Robur, said about the inclusion of Swedbank’s exclusions in the database: “Due to the risk of incorrect information to customers, we have no desire to be included in the database. However, our views have not been regarded.”
“We can understand that there is an interest in comparing financial institutions' exclusion criteria. Swedbank Robur has a clear exclusion strategy where our criteria are stated. We do not see the benefit of a database with excluded companies as these change over time. The database will not show updated and complete information. We believe that it is better to focus on which companies financial institutions invest in rather than which they do not invest in.”
This contradicts Fair Finance's information that the database will be “updated on a regular basis”.
The Financial Exclusions Tracker is an initiative by: BankTrack, Both ENDS, Fair Finance International, Health Funds for a Smokefree Netherlands, Milieudefensie (Friends of the Earth Netherlands), PAX, Profundo Research Foundation, Rainforest Action Network, and the Environmental Paper Network.
