Danica Pension

Danica's Board of Directors and Executive Board consider questions on sustainability. Board members complete the statutory board leadership course, and the Rules of Procedure for the Board of Directors stipulate that, based on the Danish FSA's requirements as to the knowledge and experience of board members in life insurance companies, the Board of Directors must once a year discuss and assess whether the relevant skills and expertise are represented on the Board. ESG is included as a parameter in this assessment. In addition, Danica is strengthening its sustainability expertise across the organisation to better integrate sustainability throughout the business. Danica's top management consists of the Executive Board and the Board of Directors. At 31 December 2024, the Board of Directors had nine members: five elected at the annual general meeting, three elected by the employees and one external member appointed by the Danish Minister for Finance. The board members elected at the annual general meeting are up for election every year, and board members elected by the employees are elected for a period of four years, as prescribed by the applicable legislation. One of the five board members elected at the annual general meeting (20%) is independent, i.e. is not employed by the Danske Bank Group, and 20% of the members of the Board of Directors, i.e. one out of the total of five members elected at the annual general meeting, is a woman.

Danica has prepared a Process for revision of and reporting on the sustainability strategy and a Process for reporting on carbon sector targets towards 2025 and temperature targets towards 2030 in Danica. The process description for revision of and reporting on the sustainability strategy comprises an internal and an external track. The internal track covers reporting via a quarterly KPI dashboard, which is distributed to internal stakeholders in Danica. The external reporting includes reporting on the sustainability strategy, which is incorporated in Danica's annual report (CSRD) and interim report. It also includes an annual status report on selected areas of Danica's sustainability strategy in Danske Bank's annual report (CSRD). Both are distributed to external financial stakeholders, but a number of internal stakeholders are also involved. The sustainability topics that Danica's Executive Board and Board of Directors considered in 2024 included: Status of the sustainability strategy towards 2025, Review of Danica's material sustainability risks, Introduction to and presentation of the CSRD project, Inspection of sustainable investments with the Danish FSA, Taxonomy reporting, Responsible Investment Policy, Active Ownership Policy and Sustainability Policy, Climate target status for investments.

Sustainability-related KPIs, including climate-related KPIs, are integrated into the Danske Bank Group's, and consequently Danica's, performance management framework to ensure that remuneration programmes reflect the Group's sustainability ambitions. The KPIs for remuneration programmes are approved by the Board of Directors after being reviewed by the Board of Directors Remuneration Committee. The incentive schemes do not apply to members of the Board, as they do not receive variable remuneration. For Danica's Executive Board, KPI agreements are prepared by the CEO, and the KPI agreement applying to the CEO is made with the chairman of Danica's Board of Directors. In 2024, ESG aspects made up 10% of the Executive Board's incentive programme.

As part of the Danske Bank Group, Danica supports a number of international sustainability initiatives and standards. These include: the 2030 Agenda and the UN Sustainable Development Goals, the UN Global Compact, the OECD Guidelines for Multinational Enterprises, the UN Guiding Principles on Business and Human Rights, the UN-supported Principles for Responsible Investment, the UN Environment Programme Finance Initiatives, the ILO Declaration on Fundamental Principles and Rights at Work, the Universal Declaration of Human Rights, the Paris Pledge for Action, the Poseidon Principles, the Responsible Ship Recycling Standards, the UN Principles for Responsible Banking, the Net-Zero Asset Owner Alliance, the Finance for Biodiversity Pledge, FAIRR. Danica regularly performs sustainability due diligence processes, for example in relation to responsible investments, employee engagement, human rights, etc.

As part of Danica's sustainability reporting process, governance structures and processes have been established to ensure that risk management and controls are implemented. Danica has established a working group and a steering committee to manage day-to-day decisions related to sustainability reporting. Danica's Audit Committee receives regular project status updates, and the project is also closely monitored by the internal and external auditors and Compliance. Danica's Board of Directors is responsible for approving sustainability reporting before its publication. In relation to quantitative data, an audit tool has been developed that provides an overview of datapoints, data sources, data quality, data use, calculations, documentation, a description of risk and control environments, etc. Mitigating data controls include spot checks and four-eyes controls. Danica will work continually to improve risk management and controls in order to improve data quality over time. In the coming years, Danica will invest in and improve existing controls, for example by implementing a higher degree of automation.

Danica is owned by Danske Bank and is one of the largest life insurance and pension providers in Denmark. The Board of Directors holds overall responsibility for decisions about Danica's business model to balance the interests of customers and owners. Danica's business model applies to Danica Livsforsikringsaktieselskab. Pension savings products: Danica offers pension savings products and various risk products, including life and disability insurance. Danica focuses particularly on investments that reflect environmental, social and governance (ESG) factors. Risk products: Customers have a choice of various risk products including cover for loss of earning capacity, waiver of contribution, covers on death and spousal covers. The insurance rules are intended to provide a balance between the desired return and the related risk. Danica also offers risk products through Forenede Gruppeliv as well as health insurance and health packages. Customer segments and sales channels: Danica writes pension schemes for customers, mainly in Denmark, within these two categories: 1. Personal customers with individual agreements 2. Personal customers with an agreement under a framework agreement with Danica, e.g. PFS (Pension for Selvstændige) or employees of an undertaking that has entered into a company pension agreement. Sales are made according to a multi-channel distribution strategy via Danica's own sales force, brokers, partners and in collaboration with Danske Bank. Investment and financial risk management: Danica focuses on generating competitive investment returns for its customers. Consequently, the objective of its investment strategy is to achieve systematically high net returns.

Danica has interviewed several stakeholders to gain a better insight into the stakeholders view of Danica's sustainability efforts, to validate the double materiality assessment and to exchange experience. The interviewees were an employee, a key customer, an NGO and an industry association. The stakeholders feedback confirmed that the outcome of the double materiality assessment largely met the stakeholders expectations. Moreover, Danica received inputs for its future work on the sustainability strategy, including inspiration for new employee initiatives, the green transition, trends in real estate investment and on maintaining focus on returns and financial security. The stakeholders inputs will be taken up at steering committee meetings and in other relevant forums and will also be a natural part of Danica's regular reviews of the sustainability strategy. In addition, inputs will also be included in work on the revised sustainability strategy to be developed during 2025.

Climate change and the transition to a net-zero economy present a number of risks and opportunities for the investment portfolio, which Danica seeks to minimise and benefit from in its efforts to protect and grow customers pension investments while supporting the transition. This promotes Danica's ambition to minimise the potential negative climate impacts of the investment portfolio. Danica has defined the following IROs as material under E1: Danica's scope 1, 2 and 3 emissions from the investment portfolio have a negative environmental impact, Danica's equity and credit bond investments are associated with temperature rises and thus have an environmental impact, Danica has investments in the fossil fuel sector, which may have a negative environmental impact, Danica's energy consumption (emissions from own operations) has a negative environmental impact.

In 2024, Danica performed a double materiality assessment on the basis of the following steps: 1. Preparation of the materiality assessment a. Identification of internal stakeholders b. Workshops (scoring of topics) c. Establishment of impacts, risks and opportunities (IROs) d. Financial materiality assessment e. Impact assessment of downstream activities f. Preparation of template 2. Review of materiality assessment a. Presentation of assessment to Executive Board and others Conclusion and methodology memo b. Adjustment of assessment c. Interviews with external stakeholders d. Documentation of the outcome and preparation of methodology memo. Impact materiality was assessed according to four parameters: Scale, Scope, Irremediable character and Likelihood. Scale is an assessment of the intensity of an impact, Scope is an assessment of how many people or how widespread an area is impacted, Irremediable character is an assessment of how easy/difficult it would be to mitigate an impact, and Likelihood is an assessment of how likely an impact is to occur. All four parameters were scored on a scale of 0-5. An impact with an overall average score of three or more across all parameters is considered material to Danica. Financial materiality was assessed according to two parameters: likelihood of occurrence and scope of financial impact.

Danica's Sustainability Statement was prepared on the basis of the double materiality assessment and the material ESRSs and sub-topics. Climate change: Under E1 Climate change, Danica assessed two sub-topics to be material: climate change mitigation and energy. Danica did not assess climate change adaptation to be material. This is due to the fact that the double materiality assessment primarily focuses on offices and real estate investments, and in this context, the impact of insufficient climate change adaptation is assessed to be low. Most office buildings are new, and in terms of real estate investments, Danica Ejendomme's objective is for all new projects in Denmark to be DGNB Gold-certified. In addition, an assessment is made of the level of climate resilience of all new projects.

Danica is part of the Danske Bank Group, and Danica's climate targets form part of the Group's Climate Action Plan, which is a strategy and roadmap for the Group, including Danica, to achieve a net-zero business aligned with the Paris Agreement. Danica does not yet have a transition plan that fully complies with the ESRS disclosure requirements in relation to transition plans. During 2025, Danica expects to collaborate with the Group on developing a group-wide transition plan that is in compliance with the ESRSs disclosure requirements in relation to transition plans. The transition plan will include Danica and be based on the climate targets and actions in the Climate Action Plan, which forms part of the overall business strategy. The Group's Climate Action Plan covers Danica's climate targets and measures for equity and bond investments in relation to decarbonisation targets for five sectors and Science Based Target initiative SBTi temperature targets, green transition investment targets for the entire investment portfolio and decarbonisation targets for the real estate portfolio. Danica's target of having a net-zero investment portfolio by 2050 or earlier is anchored with and part of the Danske Bank Group's Climate Action Plan, which was launched in 2023 as a transition plan toward Net Zero for the Danske Bank Group in line with the Paris Agreement. The plan describes primary interim targets and actions to deliver on the 2050 target. The plan is in accordance with Danica's business strategy and constitutes the first step toward a transition plan for Danica.

Danica's sustainability strategy consists of a number of climate actions and targets, which are a central element in the overall business strategy, Tryghedsrådgiverstrategien (Financial security provider strategy), effective until the end of 2024. As from 2025, this strategy will be replaced by the new business strategy, Forward 28 – Danica. In the new strategy, sustainability, including the climate targets, is one of four strategic focus areas, and the current climate targets are maintained. Danica's subsidiary Danica Ejendomme has adopted its own ESG strategy, which builds on Danica's sustainability strategy and defines climate targets and related actions specifically for the real estate portfolio. These policies and guidelines are integrated into the practical business operations by means of business procedures for the internal Danica departments involved. Danica has an annual cycle comprising all policies. Using a risk-based approach, controls are performed to check how the policies function and are implemented in the business, including the preparation of gap analyses to support compliance with legislation. Policies are approved by the Board of Directors annually, and Internal Audit monitors compliance with the policies using a risk-based approach.

Climate stress testing of the investment portfolio: In the short and long term, climate change could expose the investment portfolio to a number of risks, which Danica's business and risk management system must gradually adapt to in order to mitigate climate change. In January 2024, Danica performed a climate stress test of equities and credit bonds in the investment portfolio on the basis of scenario values from the end of 2022. The climate stress test indicated that assets in the Danica Balance pension product were to some extent exposed to climate risk. Investment process: ESG and climate aspects are included in the investment process from a double materiality perspective. This supports Danica in: managing and mitigating physical risks and transition risks related to climate aspects that could have a negative impact on the return potential of the investments, reallocating investments on an ongoing basis to companies and other assets that support the green transition and have a positive return potential, reducing the negative impact of the investment portfolio on societal sustainability and climate change. Active ownership: Danica exercises active ownership with the aim of influencing and supporting portfolio companies to continuously improve their climate plans and address business-relevant climate risks and opportunities, including PAI. It does so through direct engagement, voting at general meetings and participation in various climate-focused investor associations. In 2024, climate aspects such as energy transition, CO2e emissions and climate neutrality were once again among the topics most often discussed with portfolio companies.

Danica has set climate targets to meet the climate change mitigation strategy and to address material impacts, risks and opportunities identified through the double materiality assessment. In 2020, Danica signed up to the international investor initiative the Net-Zero Asset Owner Alliance and thus committed to achieving a net-zero investment portfolio by 2050 in alignment with the Paris Agreement. In 2021, Danica set interim 2025 CO2e reduction targets for its equity and bond investments in five sectors based on the One Earth Model and the Transition Pathway Initiative, the methodologies of which are aligned with the Paris Agreement. On the basis of this, Danica's objective is that the CO2e intensity of its equity and bond investments within the following industries is to be reduced by 2025 relative to 2019 levels: Energy: 15% (covering scope 1, 2 and 3), Utilities: 35% (covering scope 1), Steel: 20% (covering scope 1 and 2), Cement: 20% (covering scope 1), Transportation: automotive: 30% (covering scope 1 and 3), shipping: 20% (covering scope 1 and 3), aviation: 15% (covering scope 1 and 3). CO2e reduction targets have also been set for the Danish real estate portfolio relative to 2019 levels: The CO2e intensity is to be reduced by 37% by the end of 2025 and by 69% by the end of 2030. Together with the Danske Bank Group, Danica in 2023 committed to the UN-supported Science Based Targets initiative (SBTi). Presently, Danica has defined and submitted the following targets in accordance with the SBTi standards: Equity and corporate bond investments must have a temperature rating of 2.0°C by 2030 (covering scope 1 and 2) relative to a baseline of 2.5°C in 2020, Equity and corporate bond investments must have a temperature rating of 2.2°C by 2030 (covering scope 1, 2 and 3) relative to a baseline of 2.8°C in 2020, The carbon intensity in the Danish real estate portfolio is to be reduced by 69% by 2030 (scope 1, 2 and 3) relative to 2019 levels.

Energy consumption and mix is reported under the climate reporting metrics section. The development of the portfolio's electricity consumption and changes in the energy supply mix are important factors for decarbonisation target execution. Efforts are also ongoing to make it possible to measure actual energy consumption rather than calculated consumption, which is generally a challenge for the real estate industry.

Emissions from investments - Carbon footprint of investments. Equities: Carbon emissions – Scope 1: 483,518 tonnes (2024), 581,108 tonnes (2023); Carbon emissions – Scope 2: 151,766 tonnes (2024), 141,412 tonnes (2023); Carbon emissions – Scope 3 (PCAF scores 1&2): 4,720,595 tonnes (2024), 6,298,137 tonnes (2023); Carbon emissions – Scope 1, 2 and 3: 5,355,879 tonnes (2024), 7,020,657 tonnes (2023); Carbon footprint – Scope 1: 2 tonnes/DKKm (2024), 4 tonnes/DKKm (2023); Carbon footprint – Scope 2: 1 tonnes/DKKm (2024), 1 tonnes/DKKm (2023); Carbon footprint – Scope 3 (PCAF score 1&2): 41 tonnes/DKKm (2024), 42 tonnes/DKKm (2023); Carbon footprint – Scope 1, 2 and 3: 45 tonnes/DKKm (2024), 47 tonnes/DKKm (2023). Credit bonds: Carbon emissions – Scope 1: 135,542 tonnes (2024), 184,875 tonnes (2023); Carbon emissions – Scope 2: 32,404 tonnes (2024), 32,961 tonnes (2023); Carbon emissions – Scope 3 (PCAF score 1&2): 1,245,005 tonnes (2024), 1,688,212 tonnes (2023); Carbon emissions – Scope 1, 2 and 3: 1,412,950 tonnes (2024), 1,906,048 tonnes (2023); Carbon footprint – Scope 1: 1 tonnes/DKKm (2024), 1.47 tonnes/DKKm (2023); Carbon footprint – Scope 2: 0 tonnes/DKKm (2024), 0 tonnes/DKKm (2023); Carbon footprint – Scope 3 (PCAF score 1&2): 19 tonnes/DKKm (2024), 14 tonnes/DKKm (2023); Carbon footprint – Scope 1, 2 and 3: 20 tonnes/DKKm (2024), 15 tonnes/DKKm (2023). Equities and credit bonds: Carbon emissions – Scope 1: 619,060 tonnes (2024), 765,983 tonnes (2023); Carbon emissions – Scope 2: 184,169 tonnes (2024), 174,373 tonnes (2023); Carbon emissions – Scope 1 and 2: 803,230 tonnes (2024), 940,356 tonnes (2023); Carbon emissions – Scope 3 (PCAF score 1&2): 5,965,600 tonnes (2024), 7,986,349 tonnes (2023); Carbon emissions – Scope 1, 2 and 3: 6,768,829 tonnes (2024), 8,926,705 tonnes (2023); Carbon footprint – Scope 1: 2 tonnes/DKKm (2024), 3 tonnes/DKKm (2023); Carbon footprint – Scope 2: 1 tonnes/DKKm (2024), 1 tonnes/DKKm (2023); Carbon footprint – Scope 1 and 2: 2 tonnes/DKKm (2024), 3 tonnes/DKKm (2023); Carbon footprint – Scope 3 (PCAF score 1&2): 33 tonnes/DKKm (2024), 29 tonnes/DKKm (2023); Carbon footprint – Scope 1, 2 and 3: 35 tonnes/DKKm (2024), 33 tonnes/DKKm (2023).

GHG removals and carbon credits are included in the climate reporting framework as part of Danica's climate targets and actions.

Biodiversity is under pressure, and the restoration of biodiversity and ecosystems is crucial in terms of aligning with the Paris Agreement and safeguarding the foundation of the companies Danica invests in. This section describes the work related to Danica's properties and Danica's two biodiversity-related targets. The first target relates to active ownership and is that Danica is to have conducted 30 engagements with 30 portfolio companies by the end of 2025. The second target is that Danica is to launch three to five nature-enhancing projects per year. Both targets have been achieved.

Biodiversity policies are integrated into Danica's overall sustainability and responsible investment framework, supporting the goal of protecting customers' investment portfolios while minimising negative impacts on biodiversity and ecosystems.

Actions and resources related to biodiversity and ecosystems include Danica's commitment to conducting engagement activities with portfolio companies and launching nature-enhancing projects. The first target relates to active ownership and is that Danica is to have conducted 30 engagements with 30 portfolio companies by the end of 2025. The second target is that Danica is to launch three to five nature-enhancing projects per year. Both targets have been achieved.

Danica has two biodiversity-related targets. The first target relates to active ownership and is that Danica is to have conducted 30 engagements with 30 portfolio companies by the end of 2025. The second target is that Danica is to launch three to five nature-enhancing projects per year. Both targets have been achieved.

Impact metrics related to biodiversity and ecosystems change are monitored as part of Danica's biodiversity targets achievement, including the number of engagements with portfolio companies and nature-enhancing projects launched.

Danica has policies related to own workforce including due diligence policies on issues addressed by the fundamental International Labor Organisation Conventions 1 to 8, processes and measures for preventing trafficking in human beings, and workplace accident prevention policy or management system.

Danica has processes for engaging with own workers and workers' representatives about impacts as part of its sustainability engagement framework and employee consultation processes.

Danica has processes to remediate negative impacts and channels for own workers to raise concerns, including grievance/complaints handling mechanisms.

Danica takes action on material impacts on own workforce, and has approaches to managing material risks and pursuing material opportunities related to own workforce, and measures the effectiveness of those actions through various employee engagement and satisfaction metrics.

Danica has targets related to managing material negative impacts, advancing positive impacts, and managing material risks and opportunities related to own workforce, including diversity targets and employee engagement targets.

The number of Danica employees is calculated as the number of people employed at the end of the reporting period.

Information on collective bargaining coverage and social dialogue is included as part of Danica's workforce characteristics reporting.

Gender composition of the Board of Directors and the Executive Board, stated as a percentage. The number of the underrepresented gender on the Board of Directors divided by the total number of members of the Board of Directors and the Executive Board. Board members who are independent of the Group: The number of board members elected at the annual general meeting who are not employed by the Danske Bank Group as a percentage of the total number of board members elected at the annual general meeting.

Adequate wages information is included as part of Danica's compensation and workforce metrics.

Health and safety metrics include number of fatalities and number and rate of work-related accidents, and number of days lost to injuries, accidents, fatalities or illness.

Compensation metrics include unadjusted gender pay gap. Under the CSRD, the pay gap is calculated as the difference in male and female employees' pay, regardless of position and level. Excessive CEO pay ratio information is also included.

Incidents, complaints and severe human rights impacts include incidents of discrimination and non-respect of UNGPs on Business and Human Rights and OECD guidelines.

Danica has policies related to consumers and end-users, including policies related to financial security and healthier lifestyle initiatives. Danica plays a fundamental role in society by providing financial services and solutions that support persons and businesses.

Danica has processes for engaging with consumers and end-users about impacts, including customer satisfaction surveys and feedback mechanisms.

Danica has processes to remediate negative impacts and channels for consumers and end-users to raise concerns, including customer complaint handling mechanisms.

Danica takes action on material impacts on consumers and end-users, and has approaches to managing material risks and pursuing material opportunities related to consumers and end-users, and measures the effectiveness of those actions through customer satisfaction metrics and service delivery indicators.

Danica's target is to help 500,000 persons or businesses become more financially secure by 2025. Another focus is Danica's target of helping at least 400,000 persons and businesses achieve a healthier lifestyle by 2025. Both targets were achieved in 2024.

Under G1, Danica reports on corporate culture, as employee engagement surveys indicate a high degree of satisfaction and motivation among employees. Accordingly, Danica's culture is considered to have a positive impact. The most significant datapoints relate to the degree of completion of eLearning courses and the employee engagement survey, in which Danica meets the target of an employee score of at least 80 out of 100 on satisfaction and motivation. Danica is also committed to following ethical guidelines and implementing anti-corruption actions. To this end, Danica has adopted policies and guidelines for the prevention of financial crime as well as policies to ensure that customers and employees are treated fairly.

Management of relationships with suppliers is included as part of Danica's overall business conduct and due diligence processes.

Danica is committed to following ethical guidelines and implementing anti-corruption actions. To this end, Danica has adopted policies and guidelines for the prevention of financial crime as well as policies to ensure that customers and employees are treated fairly. This includes standards of anti-corruption and anti-bribery and protection of whistleblowers.

Political influence and lobbying activities are managed as part of Danica's overall governance framework and business conduct policies.

Payment practices are managed as part of Danica's standard business operations and supplier relationship management.