

The Danish central bank reduced its financed emissions by 1.2 million tonnes of carbon dioxide last year.
The emissions are associated with minor holdings in Nationalbanken’s $71 billion foreign exchange reserve, which is invested in government and regional authority bonds, equities and corporate bonds. It covers around 10 percent of the foreign reserve by market value.
The remaining assets in the fund are allocated to money market products, bonds issued by development banks, and other products that do not have “sufficient data or widely accepted definitions of climate footprints”, said the supervisor.
This is the first time that Nationalbanken has published its carbon footprint after switching the entirety of its equity and corporate bond portfolio, which is invested in ETFs, to the EU’s Paris-aligned Benchmark (PAB) format at the start of 2022.
PABs are required to decarbonise at a rate of 7 percent per annum, following an initial 50 percent reduction compared with parent indices.
The data covers Scopes 1 and 2 emissions, which come from sources owned or controlled by a company, but not Scope 3, which result from a company’s activities but it cannot control. This is to avoid double counting, said Nationalbanken.
Around 80 percent of the disclosed assets are invested in government and regional authority bonds. The central bank reported absolute financed emissions of just under one million tonnes of carbon dioxide in 2022, compared with 2.1 million tonnes in the previous year. The reduction was driven by a decrease in the volume of government bond holdings.
Carbon intensity data, which averages carbon emissions over economic output, revealed a more modest dip once portfolio size was accounted for. Nationalbanken’s government bond holdings had an intensity of 198 million tonnes of CO2e per million euro of GDP in 2022, compared with 216 million a year ago.
The remaining 20 percent of assets (equities and corporate bonds) that were reinvested in PABs showed a more significant intensity reduction, to 56 tonnes of CO2e per million euro of revenue from 106 million in 2021.
The central bank reported absolute financed emissions of 98,176 tonnes of carbon dioxide in 2021, and 26,806 in 2022 for the portfolio.
The reserves are maintained by the central bank to ensure the fixed exchange rate policy of the Danish kroner against the euro. Most of the holdings are euro-denominated to enable intervention at short notice.
Nationalbanken appears to be the only EU central bank to invest its own portfolio in PABs to date, although the European Central Bank switched a portion of its staff pension fund to PABs in 2020.
Separately, the Central Bank of Ireland has included climate change and the EU’s anti-greenwash fund disclosure rules among its supervisory priorities for 2023 in an announcement made on Wednesday.
The CBI said it would focus on strengthening financial sector resilience to climate risks and support the green transition, along with implementing the EU’s Sustainable Finance Disclosures Regulation.