Climate change and the green transition affect Danmarks Nationalbank’s work in several ways: First and foremost, they affect our aim of ensuring stable prices and a stable financial system in Denmark. The bank also has a responsibility to adapt in line with the rest of Danish society. Finally, Danmarks Nationalbank issues green bonds on behalf of the state.
Climate change and the green transition affect Danmarks Nationalbank’s ability to fulfil its objectives and tasks
Two of Danmarks Nationalbank’s objectives are to ensure stable prices and a stable financial system. Both these objectives are challenged by climate change and the green transition. For this reason, Danmarks Nationalbank is examining how climate change and the green transition are influencing the Danish economy and financial sector.
Climate change and the green transition are changing the economy
Global temperatures are rising and we are entering a time of more frequent and costly weather extremes. In Denmark, storm surges and heavy rainfall are becoming more frequent. Natural catastrophes abroad can also affect Danish businesses and households through trade. Drought, for example, can increase the price of food and river-borne transport. The supply of energy is also affected by climate change and green transition. Fluctuations in energy prices affect inflation and thus Danmarks Nationalbank's objective of stable prices.
A uniform carbon tax on all greenhouse gas emissions is the most cost effective way to achieve the Climate Act's goals of reducing emissions in Denmark. Carbon taxes and other climate regulation can affect the profitability of companies with high emissions if they fail to adapt in time. However, Danmarks Nationalbank's analyses of different climate scenarios indicate that there are no significant costs to the Danish economy from increasing carbon taxes.
It is important for the bank to understand the economic changes brought about by climate change and the green transition so that we can continue to provide accurate recommendations on the Danish economy.
New winners and losers - and risk assessments
Given the changing cash flows in society, new winners and losers will emerge among businesses and households. Some homeowners may find that the value of their homes decreases due to the risk of flooding or increased requirements for investments in energy improvements.
In other words, climate change and the green transition change the risk associated with lending to a specific company or a property purchase. Financial institutions, such as banks, mortgage credit institutions and insurance companies, need to continually take these risks into account if they do not want to risk large financial losses in the future.
Climate change and the green transition are therefore also important for Danmarks Nationalbank’s work to ensure the stability of the financial sector. We need to understand the dynamics and potential consequences of the changes so that we can continue to make accurate recommendations to authorities and the financial sector.
Collection of new data and knowledge
It is important to have access to good and comparable data in order to assess the consequences of climate-related risks. For example, how vulnerable households, businesses and financial institutions are to climate change. But one particular challenge is that the scale of climate change is unprecedented. Therefore, historical data is lacking.
Danmarks Nationalbank contributes to continuously improving data for assessing risks. For example, we link data on climate change and the green transition to our existing financial statistics and have compiled statistics on the carbon emissions that the financial sector finances through their investments. We are expanding our climate statistics as data improves and standards are developed.
Global knowledge sharing is essential to better understand and manage risks from climate change. Danmarks Nationalbank is a member of the Network for Greening the Financial System, NGFS, a global network of central banks and supervisory authorities. We also collaborate with other European central banks to share knowledge and develop best practices for climate risk management.
How can climate change and green transistion affect financial stability?
Climate change and the green transition can affect the stability of the financial system. But there is still a lot of uncertainty about how that may occur. This uncertainty makes it important to create and assess the consequences of different scenarios.
Danmarks Nationalbank has looked at events related to climate change that may pose risks to Danish credit institutions in the future. More extreme weather events will increasingly affect these institutions. Severe storm surges and periods of heavy rainfall cause damage to households and businesses. Increased risk in exposed areas can also affect property values.
The green transition needed to address climate change may also have consequences for credit institutions. For example, if their customers are affected by greenhouse gas taxes implemented to support the transition. Or if requirements for the energy efficiency of buildings affect the mortgage value of homes with a poor energy rating, for example.
From climate-related events to financial risks
Selected publications on climate
The following lists a selection of our publications that deal in different ways with the impact of climate change on the economy.
Sale of green government bonds is co-financing the green transition
A government bond is a loan taken out by the government, where the buyers of the bond (investors) are guaranteed a certain interest rate during the term of the bond until the day on which the government repays its loan.
In the case of green bonds, the amount which the government raises from the sale of the bonds is earmarked in advance for projects linked to the green transition. Such projects include the electrification of the transport sector and the production of renewable energy.
Denmark has issued green government bonds since 2022. The Ministry of Finance makes the decision on issuance. At the same time, Danmarks Nationalbank is responsible for the practical handling of the bond issuance in its role as manager of the central government’s debt.
In 2025, the government opened a new 10-year green government bond. In doing so, Denmark became the first country to issue government bonds under the new European Green Bond Standard, EuGB standard. This supports common standards whice increase transparency. The purpose of the issuance is also to support a green capital market and ensure a broad and well-diversified investor base for the state.
Read more about green bonds here.
Responsible investments and climate considerations in the foreign exchange reserve
The primary purpose of the foreign exchange reserve is to intervene in the foreign exchange markets, i.e. buy and sell currency against kroner as part of the execution of the fixed exchange rate policy, and to support financial stability in Denmark. This means that the assets invested in must first and foremost be liquid. I.e. it must be possible to sell or borrow against these assets at short notice.
The foreign exchange reserve is therefore primarily invested in short-term money market products (e.g. deposits in foreign central banks) and foreign government bonds. A small part of the foreign exchange reserve is also invested in exchange traded funds, ETFs, to gain exposure to equities and corporate bonds.
Our guidelines for responsible investment are based on the general principle that Danmarks Nationalbank complies with legislation, sanctions and conventions to which Denmark is a party. As part of the guidelines, climate considerations are taken into account for exposures to equities and corporate bonds. This is in line with NGFS' recommendation that equities and corporate bonds are the asset classes where climate focus is most relevant.
Since 2021, Danmarks Nationalbank's ETF holdings have complied with the EU's minimum requirements for climate benchmarks in 2021. The bank is aware that there are alternative approaches to incorporating climate considerations into investments and continuously monitors developments through participation in global and European co-operation.
Danmarks Nationalbank reports the climate footprint of financial portfolios
Through its climate reporting Danmarks Nationalbank seeks to contribute to transparency about the climate footprint of its financial portfolios in line with the European Central Bank and other European national central banks.
Danmarks Nationalbank's climate reporting includes the part of the foreign exchange reserve that is invested in bonds issued by governments and regional authorities as well as equities and corporate bonds through ETFs. The bank also reports on the stock of domestic mortgage bonds.
Danmarks Nationalbank transitioning in line with the rest of society
With an organisation of approx. 500 employees and operations involving a number of tasks critical for society, Danmarks Nationalbank has a responsibility to reduce its own climate footprint. We do so by reducing our own greenhouse gas emissions.
Danmarks Nationalbank works systematically to reduce the climate footprint of our procurement and operations. For example, in decisions about daily operations and energy consumption, in optimising IT capacity, in green procurement requirements and in the production of banknotes and coins. We continuously collaborate with our largest suppliers to strengthen data on emissions and support the transition in our value chains. Where relevant, we incorporate climate requirements into contracts, such as on energy consumption, material reuse, recycling or environmental standards in production.
Our ambition is to reduce emissions from operations in line with Denmark's national climate targets. We measure and publish emissions data so that efforts can be prioritised where they have the greatest impact.