Statistical news focuses on the latest figures and trends in Danmarks Nationalbank’s statistics. Statistical news is targeted at people who want quick insight into current financial data.
Decrease in Danish and European exposure to carbon intensive companies
Insurance and pension companies in Denmark have in recent years reduced their exposure to investments in companies with high greenhouse gas emissions measured relative to revenue (the carbon intensity). The same applies to Danish investment funds. A similar decrease has been the case for investors in the euro area. This is shown in new climate-related indicators from Nationalbanken, which compare the developments in Denmark and the euro area.
Danish investors have less exposure to carbon intensive companies compared to euro area investors
Note:
The exposure to carbon intensive companies is measured by the Weighted Average Carbon Intensity, WACI, which is the average greenhouse gas emissions (scope 1, measured in tons CO2e) per million kroner in revenue for the companies included in a portfolio of listed stocks and corporate bonds.
Source:
Nationalbanken and ECB. *Data for the euro area in 2022-2024 is calculated by Nationalbanken based on data from Securities Holdings Statistics (SHS), Morgan Stanley Capital International (MSCI), and Institutional Shareholder Services (ISS). Data for 2024 is based on emissions and accounting figures for 2023 and portfolio composition in 2024.
Decrease in carbon intensity
In 2024, an average of about 10 tonnes of greenhouse gases were emitted for every million kroner of revenue generated in the listed companies that Danish insurance and pension companies had invested in. This represents a halving since 2020 and only one-third of the carbon intensity in 2018. The same applies to Danish investment funds. The large decrease is related to both fewer investments in the most carbon intensive companies and lower emissions relative to turnover in the individual companies.
The decrease in carbon intensity has also happened in the euro area. Insurance and pension companies, as well as investment funds in Denmark and the euro area, have altogether invested over kr. 50,000 billion in listed companies, which emit greenhouse gases to varying degrees. Some of these companies have high emissions relative to their revenue, making them more carbon intensive than others. This includes companies in sectors such as utilities, energy, and materials manufacturing.
Lower exposure can mean fewer risks
On average, the exposure to carbon intensive companies is lower for Denmark's insurance and pension companies than for those in the euro area. Based on the latest published figures from the ECB, approximately 20 tonnes of greenhouse gases were emitted in 2021 for every million kroner of revenue generated in the listed companies that the euro area's insurance and pension sectors had invested in. The same figure was 17 tonnes for Denmark. Calculations from Nationalbanken indicate that this level difference continues to apply in 2024.
A lower exposure to carbon intensive companies can reduce the so-called transition risks associated with the green transition that investors are exposed to. Thus, carbon intensive companies are more exposed in the event of climate regulations and requirements than other types of companies, and this may have led institutional investors to reduce their portfolio share of these stocks, etc.
Climate-related indicators for the financial sector
The European Central Bank, ECB, has published climate-related indicators for the financial sectors of euro area countries since January 2023 (link to data and documentation), and Danmarks Nationalbank has published Danish climate-related indicators since March 2023 (link to sources and methodology). The indicators cover comparable aspects of financed greenhouse gas emissions and exposure to carbon intensive companies through equities and corporate bonds in listed, non-financial companies. Carbon intensity in the investment portfolio is one of these aspects.
The ECB has published climate-related indicators for the period 2018 to 2021, while Nationalbanken has published data from 2018 to 2024. Nationalbanken has calculated the weighted average carbon intensity for the euro area from 2022 to 2024 for the purpose of this statistical news. The calculation is based on investment data from the ECB's Securities Holdings Statistics by Sector (SHSS, link), and company-reported emission data from ISS and MSCI. There are minor methodological differences between the ECB's and Nationalbanken’s estimates, including those related to estimating companies' revenues and emissions in the case of missing data, although this does not significantly affect the reported level of carbon intensity.
Weighted Average Carbon Intensity, WACI, is calculated to measure the average carbon intensity of an investment portfolio. WACI expresses the average greenhouse gas emissions (scope 1) for each million kroner in revenue from the listed equities and corporate bonds of non-financial companies included in a given investment portfolio.