Financing

Supporting our customers’ transition

Nordea provides financing to customers’ businesses, mortgages and other activities. We want to use that opportunity to increase the positive impact by financing sustainable activities and, at the same time, decrease the negative impact by financing the transition away from high carbon emitting activities.

Our focus is to support and strengthen our customers through periods of change and enable them to reach new goals. We have a long term perspective and we firmly believe that companies with sustainable business models carry lower financial and reputational risk. It is about increasing our customers’ resilience and to future-proof our business and the businesses of our customers.

Decreasing our financed emissions

Most of our emissions (99.9% in 2024) are indirect and stem from the customers we lend to and the companies we invest in. These are classified as scope 3 financed emissions. We have one of the most ambitious overarching objectives among banks: to reduce carbon emissions across our lending and investment portfolios by 40–50% by 2030 compared with 2019.

Between 2019 and 2024, we decreased our financed emissions in the lending portfolio by 36%. A key driver for this was the large corporate segment, where our financed emissions from oil and gas decreased by 74% and our financed emissions from offshore decreased by 96%.

We set sector targets

As a long-standing member of the Net-Zero Banking Alliance (NZBA), we are committed to setting sector targets. The first round of these targets was communicated in December 2022, supplementing previously communicated sector targets.

We set sector-specific targets as one of our transition planning tools. The sectors in scope for target setting are selected based on their contribution to the total financed emissions profile of our lending portfolio, their climate vulnerability, the list of prioritised carbon-intensive sectors defined by the NZBA and the availability of sector-specific science- or policy-based transition pathways. Since 2021, we have set eight sector targets, based on Paris Agreement-aligned benchmark scenarios. Each year, we assess whether further sectors should be in scope for target setting.

These are the sectors:

Residential real estate

By 2030 Nordea aims to reduce the carbon intensity of the residential real estate loan portfolio by 40–50% compared with 2019 levels. The sector portfolio is benchmarked against relevant country and building type decarbonisation pathways provided by the Carbon Risk Real Estate Monitor (CRREM). The sector includes single-family homes and terraced housing, apartments and tenant-owner associations. The overall housing market is projected to continue growing in terms of both number of homes and average home size in square metres. Total energy demand, however, is being somewhat offset by the replacement of older buildings with new and more energy-efficient buildings.

Agriculture

By 2030 Nordea’s goal is to reduce financed emissions in the agricultural portfolio by 40–50% compared with 2021. The sector target represents 38% of financed emissions in business loans. Nordea’s most significant exposure is in Denmark with 89% of the Agriculture sector financed emissions. The target covers lending to companies whose primary activity is animal husbandry, crops, plantation and hunting and covers customers’ scope 1 and 2 emissions. The target is aligned with the national agriculture targets in Denmark and Finland as well as the SBTi Forest, Land and Agriculture (FLAG) target-setting tool and is assessed to fulfil the 1.5°C requirements.

Power production

By 2030 Nordea aims to have reduced the emission intensity of its power production lending portfolio by more than 70% compared with 2021 levels. This alignment metric allows Nordea to increasingly support investment in renewable power production while reducing the absolute emissions in the lending book. Nordea formulated the target following the SBTi’s SDA. The sector is relevant for Nordea due to the high climate risk associated with fossil fuels (in particular thermal coal) and the significance of fossil free power sources for the decarbonisation of other sectors.

Offshore

As the offshore target concerns a phase-out by 2025, no net zero benchmark has been set. In 2022 Nordea announced a full exit from the offshore sector. Offshore refers to the Drilling rigs segment and the offshore service vessels segment. These are part of the Oil and gas (natural resources) and Shipping (maritime) segments at Nordea. The sector is material for Nordea due to credit risk and the fact that business loans to offshore customers accounted for a relatively large share of the bank’s financed emissions in 2019 (the base year). Offshore is also an emissions-heavy sector, so taking the strategic decision to phase it out of Nordea’s lending book will contribute significantly to Nordea’s target to reduce financed emissions by 40–50% by 2030.

Details from our annual report here

Shipping

By 2030 Nordea aims to reduce the carbon intensity of the shipping loan portfolio by 30% compared with 2019 levels. The carbon intensity is measured by way of the Annual Efficiency Ratio (AER) following the methodology of the Poseidon Principles. The target encompasses shipping vessels that fall within the scope of the Poseidon Principles reporting. The sector is material for Nordea due to the high transition risk associated with shifting to alternative fuels and developing ships, and the share of shipping loans accounted for 25% of Nordea’s financed emissions in the lending portfolio in 2019 (i.e. the base year).

Motor vehicles

By 2030 Nordea aims to reduce the emission intensity of its cars and vans portfolio by at least 40% compared with 2022 levels. The target is based on the 1.5°C requirement in line with the Paris Agreement and more concretely on the IEA’s Net Zero Emissions by 2050 Scenario for cars and vans. The sector is material for Nordea due to the high transition risks associated with fossil fuel dependency of internal combustion engine vehicles and financing opportunities in the shift to zero-emission vehicles and electrification.

Oil and gas

By 2030 Nordea aims to have reduced the combined scope 1, 2 and 3 financed emissions associated with its lending to exploration and production companies by 55% relative to 2019 levels, to a maximum of 1.3 MtCO2e. The target covers scope 1, 2 and 3, as the scope 3 category Use of sold products is the most material emissions category for exploration and production (E&P) companies. The sector is closely monitored by Nordea due to the high transition risk associated with fossil fuel extraction. Moreover, business loans to Oil & Gas clients, when including their scope 3 emissions, accounted for a relatively high share of Nordea’s financed emissions in 2019 (i.e the base year).

Mining

Nordea phased out thermal coal in 2021 and will phase out lending to thermal peat mining customers by the end of 2025. Customers are required to comply with the phase-out by 2025 at the latest. The sector is material for Nordea due to the fast-growing opportunities in metallic minerals and the high climate risk and risk of stranded assets associated with the exploration of thermal coal and peat, which are very high emitting.

The targets in numbers

Guiding principles in the credit process

Nordea’s Code of Conduct describes the high-level ethical principles that guide our business and includes aspects such the environment, labour rights, commitment to human rights, the right to privacy, and anti-bribery and corruption. The Code of Conduct is a central steering document for our financing operations together with our sector guidelines and our sustainability policy. These documents guide Nordea’s ESG assessments in our risk management and due diligence processes.

ESG assessments are performed for both lending and investment portfolios of Nordea’s balance sheet to identify, evaluate and monitor material ESG-related risks. These processes are being enhanced through a multi-year implementation programme and we provide detailed descriptions of these processes in the Capital and Risk Management report.

For corporate borrowers, in summary, ESG assessments are performed according to the size and type of the transaction and the customer’s internal segmentation. ESG-related risks identified qualitatively as material at customer level provide input to the credit risk assessment to reach conclusions on the customer group’s risk level included in the credit memorandum. Approvals are made according to the established credit decision-making process. For customers associated with a high level of ESG-related risks, decisions are escalated to higher-level credit committees where relevant.

Climate-related transition risks have since 2021 been assessed with an enhanced focus through the Climate Risk Assessment Tool (CRAT), for the largest exposures in climate-vulnerable industries for Business Banking (BB) and Large Corporates and Institutions (LC&I) business areas. The key components of the assessment include counterparties’ greenhouse gas (GHG) emissions intensity developments, corresponding quality of their transition planning and the resulting impact of climate-related transition risks on customer repayment capacity. This analysis is aligned with the Group targets on financed GHG emissions reductions and transition plan coverage.

For mortgage borrowers, the main ESG-related risks relate to collateral energy efficiency and physical hazard exposures. In 2022 Nordea has focused on assessing the available energy efficiency information for our mortgage portfolio and long-term exposure to physical hazards in a changing climate.

Nordea exited the risk management framework the Equator Principles in May 2026, for further information on the implementation of the Equator Principles in 2025 contact sustainability [at] nordea.com (sustainability[at]nordea[dot]com).