Net-Zero Pathway Framework for Investee Companies

This document is a technical report that outlines Danske Bank's approach to assessing fossil fuel companies' transition to a low-carbon economy through the Net Zero Pathway Framework. The framework is based on the methodology and data from the Transition Pathway Initiative (TPI), which enables investors to evaluate companies' preparedness for this transition. The report details how TPI assesses companies based on two dimensions: Management Quality and Carbon Performance. Management Quality evaluates governance and management practices related to greenhouse gas emissions, while Carbon Performance assesses companies' emissions against climate scenarios aligned with the UN Paris Agreement. The report also describes the Sectoral Decarbonization Approach (SDA) used to set greenhouse gas reduction targets. Furthermore, it explains how companies are categorized based on their alignment with net-zero pathways, guiding investment decisions and engagement strategies. Overall, the framework aims to support informed investment choices and promote corporate accountability in climate action.