Financing the green transition of the real economy is not only about financing green activities. It is also very much about financing companies in high emitting and hard to abate sectors that are transitioning towards more low-carbon technologies and processes.  

Many large companies want to transition towards net-zero carbon emissions or scale their low-carbon business solutions, with the aim of increasing their chances of achieving long-term financial success by managing the risks and opportunities the climate transition presents. Nevertheless, because of the substantial investments required, transitioning or scaling can come with the risk of losing competitiveness in the short term.  

At Danske Bank, we are well equipped to enable our corporate customers to connect long-term financial success with short-term competitiveness. We believe that all types of loan instruments, credit and guarantee facilities, as well as primary bond and equity market capital raising, can contribute to a company’s overall sustainable business model and strategy towards the climate transition. However, this is contingent on the company having a credible and actionable transition plan, which is something that we assess and review regularly.  

Engaging in meaningful dialogue with customers about their transition plans, commitments and associated financial strategies – including capital expenditure, mergers and acquisitions – is a key component of our customer strategy. 

If our customers commit to a long-term transition, we commit to helping them manage the short-term challenges, and we believe that an entity-level approach, looking at the company as a whole rather than individual projects, reflects a more holistic approach to financing the transition.

As a concrete example of supporting the transition of a company in a high-emitting and hard-to-abate sector, Danske Bank recently participated in the EUR 2.3bn financing package for the Swedish steel producer SSAB’s investment to replace the current blast furnace in Luleå (Sweden) and build a state-of-the-art fossil-free mini-mill.  

SSAB decided on the EUR 4.5 billion investment in the new steel mill in Luleå during 2024. The company has now signed three green loan facilities. All facilities have a long-term maturity structured to support the full lifecycle of the project. 

– A SEK 15 billion syndicated loan covered by the Swedish National Debt Office (“Riksgälden”) under the “Credit guarantees for green investments” program, 

– A EUR 808 million syndicated loan backed by the Italian Export Credit Agency, SACE, and, 

– A SEK 1.15 billion loan from the Nordic Investment Bank (“NIB”).

The new mill will have a capacity of 2.5 million tonnes a year with two electric arc furnaces, advanced ladle metallurgy and an integrated rolling mill. The investment also includes a cold rolling complex, advanced galvanizing, as well as continuous annealing and is key to re-position SSAB Europe as a maker of premium products. 

Other advantages include lower costs, shorter lead times, as well as better ability to manage swings in demand. The new steel mill will be able to use a flexible mix of fossil-free sponge iron, pig iron and recycled scrap. 

When the new mini-mill is completed, SSAB will close the current blast furnace-based production system in Luleå, which will largely remove the CO2 emissions from existing operations. The reduction corresponds to 7% of Sweden’s current CO2 emissions.