Swedbank: Rethinking Fossil Fuel Ties Amid Scope 3 Pressure

When discussing carbon footprints, most think of emissions from factories, transport or energy use.
However, for financial institutions the biggest environmental impact comes from somewhere less obvious — Scope 3 emissions.
Specifically Category 15, which covers investments, highlights the emissions linked to a company's financial activities. These are the indirect emissions that result from investments, covering banks, asset managers and public financial institutions like multilateral development banks.
Banks have long played a major role in financing industries that drive climate change, particularly fossil fuels. A report from Banking on Climate Chaos reveals that the world’s 60 largest banks invested US$705bn in fossil fuel companies in 2023 alone. Since the Paris Agreement was signed, this figure has reached an astonishing US$6.9tn.
North American and Japanese banks dominate this space, maintaining strong ties with the fossil fuel sector. In Sweden, banks finance nearly 100 million tonnes of CO2 emissions annually — more than double Sweden’s own territorial emissions, according to the Fair Finance Guide.
However, public pressure is forcing change. Swedish banking giant Swedbank is leading the charge by significantly cutting ties with fossil fuel financing.
What is Category 15?
Category 15 falls under downstream Scope 3 emissions, meaning the emissions arise from the services provided — in this case, capital or financing.
Essentially, it’s the carbon footprint of the projects and companies banks invest in. The emissions accounted for here are the Scope 1 and Scope 2 emissions (direct and energy-related emissions) of the investees.
This category spans four key types of financial investments: equity investments, debt investments, project finance and managed investments.
For equity holdings, companies must report proportional emissions based on their share, unless they set a threshold, like a 1% equity share, to exclude minor investments, provided this is disclosed and justified.
Crucially, insurers must also count emissions tied to investments made using insurance premiums, treating these as their own capital. This level of accountability is reshaping how financial institutions view their role in the climate crisis.
A long-standing relationship under fire
"Sustainability is at the core of our business strategy," comments Johanna Fager Wettergren, Head of Group Sustainability at Swedbank.
"We maintain our momentum in working for a long-term socially and environmentally sustainable society by strengthening and developing our customer offering."
This shift follows widespread protests, with activists demanding that banks stop funding fossil fuel expansion.
Jakob König from the Fair Finance Guide states: "The banks must stop financing the hunt for more fossil fuels, it completely undermines the climate transition."
Swedbank joins Handelsbanken in this movement, with both banks halting new loans to oil companies. Handelsbanken made its decision two years prior, setting a precedent.
Danish bank Danske Bank followed suit in 2023, acknowledging that 99.9% of its carbon footprint stemmed from financed emissions.
The mixed record of Nordic banks
Despite these strides, not all banks are on the same page.
The Swedish Society for Nature Conservation notes a growing divide in how Nordic banks handle fossil fuel financing.
While Swedbank has reduced its fossil fuel funding by 90% since the second half of 2021, others lag behind. Danske Bank has also made notable cuts, but banks like SEB, Nordea and DNB have only reduced new fossil fuel loans by 1% to 5% since the Paris Agreement.
SEB claims it has reduced credit exposure to upstream oil and gas activities by more than 75% from 2019 to 2024. The bank adds: "At the same time, our sustainability-related financing has increased 185% at the end of 2024 compared to 2021."
Additionally, SEB reports a drop in the fossil fuel share of its energy portfolio from 59% to 30% over the same period.
Yet, environmental groups remain sceptical.
Karin Lexén, Secretary General of the Swedish Society for Nature Conservation, says: "It is gratifying that another major Swedish bank has become an international role model when it comes to sustainable financing.
"Now more must follow suit and take responsibility, because there are still large fossil fuel companies that receive loans to continue operations that exacerbate the climate crisis."
Karin criticises banks that claim to help fossil fuel companies transition while continuing to fund their expansion.
"The banks have long responded to criticism by saying that they are helping the oil companies to adjust. But the companies are continuing in the completely wrong direction by increasing their extraction instead of phasing it out. Now the banks must stop the loans just as Handelsbanken and Swedbank have done."
Swedbank’s rapid shift is striking. Since the Paris Agreement, it provided US$3.6bn in fossil fuel finance, but it has almost entirely ceased new loans since late 2021. The move shows how financial institutions can align their investment strategies with climate goals, tackling Scope 3 emissions head-on.
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