Particularly four Danish pension funds have yet to take a clear stand on whether to invest their customers’ savings in fossil fuel companies, which, despite the ringing alarm bells of the climate crisis, are still expanding their fossile business. This is the conclusion of AnsvarligFremtid’s (ResponsibleFuture) new published report “RED LINES FOR FOSSIL INVESTMENTS?”, which ranks the policies and official guidelines of 16 Danish pension funds regarding investments in fossil energy.
ATP, PFA, PensionDanmark and Industriens Pension either lack or have lenient positions on whether they want to invest in companies that profit from the extraction or burning of the fossil fuels that the world has agreed to phase out.
Most evident is the case of the Danish state pension fund ATP, which does not operate with official criteria for which fossil business strategies they can invest in on behalf of their clients.
PFA, PensionDanmark and Industriens Pension all have official sustainability policies, but none of the three have closed the door on oil/gas companies expanding their business with new fossil fuel projects. This is despite clear statements from the International Energy Agency that such activities are incompatible with the Paris Agreement.
The report does not map the pension funds’ actual investments in monetary terms. Thus, the funds can have a responsible investment-policy without clear opt-out criteria and instead operate with a “practice approach”, where each individual investment is assessed based on a holistic analysis that considers, among other things, the company’s transition preparedness. In principle, such an approach can ensure a low exposure to fossil investments, although as a general rule of thumb there will generally be a correlation between the pension funds’ use of ambitious threshold criteria and their total investments in fossil energy.
But without policies and official guidelines for fossil investments, there is nothing to prevent Danish pension money from being invested in companies that may provide a good return in the short term, but whose core business and lobbying activities contribute to destabilizing the planet’s climate.
Recommendation
There is a need for a clear standpoint from the Danish pension funds regarding the fossil fuel sector. Partly because it is morally irresponsible to invest in new coal, oil and gas projects almost a decade after the Paris Agreement was adopted. Partly because the green transition makes these business activities highly risky, also from a risk-return perspective.
READ THE FULL REPORT FROM ANSVARLIGFREMTID (RESPONSIBLEFUTURE) HERE
Danish pension funds’ fossil investment policies sorted by progression
(*) Indicative policy
(**) The term “no criteria” is indicated where criteria such as “zero tolerance”, use of thresholds or fossil non-expansion requirements are not used
Note to delineation of the oil and gas industry
Note that the table only includes a part of the broader fossil fuel industry. For example, the table does not contain information about the funds’ investments in fossil mid- and downstream, gas-based power generation or service companies for the fossil industry.