Danish pension funds are failing to support independent climate resolutions at fossil fuel companies, according to a new report by AnsvarligFremtid entitled: THEIR VOTES, OUR FUTURE. HOW DANISH PENSION FUNDS VOTED ON CLIMATE IN 2021.
Conducting a survey into how 16 Danish funds voted at annual general meetings this year, we found mixed results: a growing number are divesting, while those who still hold their shares aren’t voting in line with the Paris Agreement.
AnsvarligFremtid conducted a survey, asking 16 Danish Pension funds how they voted on important climate resolutions filed at the annual general meetings of 10 banks and international oil and gas majors. The survey found that a majority of Danish pension funds have now divested from US oil and gas companies. Shares are sold in Exxon, Chevron and ConocoPhillips, with only two funds — Danica Pension and Velliv — still holding shares in Exxon. Almost half have sold shares in European oil companies such as Shell, BP, Total and Equinor.
However, the survey also shows that for the companies where Danish pension funds still hold shares, the funds don’t consistently vote for independent climate resolutions. This includes Danica Pension and PensionDanmark, who both voted against high profile shareholder-filed climate resolutions at Equinor, BP and Shell. And at BP, only 20% of Danish pension funds voted in favour of an important climate resolution. However, the picture is mixed, with some (eg. P + and Industriens Pension) voting in favor of several of these resolutions.
Perhaps more worryingly, most Danish pension funds support the fossil companies’ own inadequate climate plans. The climate plans presented at the AGMs of Shell and Total received support from 78% and 63% of the Danish pension companies, respectively, even though these oil and gas companies’ climate plans are not in accordance with the Paris-compatible climate scenarios published by IPCC and IEA. Only a few Danish pension funds, such as PKA, Topdanmark and Industriens Pension, voted against the companies’ lacklustre plans (See tables below).
The survey also found mixed results in banking, with Danish funds not consistently supporting climate resolutions. At HSBC, for instance, all Danish pension funds voted in favour of a climate resolution put forward by the bank itself, while only half of the funds with shares in Barclays voted in favour of an independent climate resolution.
AnsvarligFremtid argue that, with combined total of nearly 535 billion euros under management, Danish pension funds have a responsibility to move investments away from fossil fuels and into green energy, in order to meet the goals of the Paris Agreement.
“It is encouraging to see a growing number of Danish pension funds moving away from companies opposed to the green transition. Divestment is a necessary step when companies show that they’re not willing or competent to deliver a rapid transformation of their companies for the low-emission future.
But it is worrying to see pension funds supporting inadequate climate plans at the companies where they do still hold shares, where they’re providing an alibi for continued investment in new oil and gas projects. These are incompatible with the Paris Agreement, and risk ending up as stranded assets resulting in disastrous financial losses,” says Thomas Meinert Larsen, spokesperson for AnsvarligFremtid.
AnsvarligFremtid provides the following recommendations to Danish pension funds to increase their climate action
1. Pension funds should establish clear Paris-compatible policies for their active ownership, including for voting on climate proposals. For AGMs at energy companies, a Paris-compliant voting policy should specify that the pension fund will not vote for a company’s business plan unless it pursues a full halt to the establishment of new fossil extraction projects, just as the International Energy Agency (IEA) has recommended in its latest Net Zero by 2050 report. Similarly clear demands should be specified for banks and heavily polluting companies.
2. Pension funds should establish policies for escalating the active engagement. As an example, the pension fund must set clear expectations for the companies and make it clear that if these expectations are not met within a clearly stated date, then they will sell their assets in the company across its equity and bond portfolio. Such a policy must also make it clear when the pension fund intend to file shareholder resolutions at the company’s AGM. Such policies should be established across industries, including energy companies, banks and other heavily polluting industries.
3. Pension funds should increase their transparency on voting to demonstrate the results of the active engagement. Pension funds should publish their votes in an easily accessible and timely manner on the pension funds’ website, as recommended by the investor network Net Zero Asset Owner Alliance.
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Tables below: The Shell and Total company climate plans received support from 78% (Shell Resolution no.20) and 63% (Total Resolution no. 14) of the Danish pension funds, respectively, even though these oil and gas companies’ climate plans are not in accordance with the Paris-compatible climate scenarios published by IPCC and IEA. Only a few Danish pension funds, such as PKA, Topdanmark and Industriens Pension, voted against the company plans.