In 2022, Lærernes Pension, a Danish pension fund with over 150,000 members, faced criticism from Danish media and the Consumer Council (Forbrugerrådet Tænk) for its investments in fossil fuels. Critics argued that these investments conflicted with the fund’s sustainability guidelines, particularly regarding the exclusion of thermal coal and tolerance thresholds for other coal-related activities. Now
In October 2022, Danish investigative Danwatch reported on Lærernes Pension’s significant investments in coal companies despite publicly claiming since 2017 that coal was excluded from its portfolio. The investigation identified holdings in 37 companies engaged in coal-related activities.
Consumer advocacy group Forbrugerrådet Tænk criticized the pension fund’s practices, arguing that they might violate both the EU Disclosure Regulation and Danish marketing laws. These laws require transparency and accuracy in the communication of sustainable investment practices.
The article highlights a broader issue of greenwashing, where financial institutions misrepresent the sustainability of their investment strategies. It calls into question the credibility of Lærernes Pension’s sustainability commitments and underscores the need for stricter oversight and clearer communication in the financial sector.
The report concludes by urging the fund to address these discrepancies and improve its adherence to sustainability guidelines.
Soon thereafter, in November 2022, the pension fund announced the divestment of over 2 billion DKK from fossil fuel companies. This decision included the introduction of stricter exclusion criteria, eliminating previous tolerance thresholds that allowed investments in companies deriving less than 5% of revenue from thermal coal. However, this stricter policy applies solely to coal-related investments; the 5% threshold remains for oil and gas companies. Lærernes Pension also stated that they would continue to invest in companies with transition plans aligned with the Paris Agreement, as well as in firms involved in fossil fuel-related services not covered by the new exclusion criteria. The fund acknowledged the complexity of assessing companies’ transition plans and committed to improving communication and transparency regarding their investment strategies.
As a result of this policy change, the planned to divestment of approximately DKK 2 billion was expected to be completed by the end of 2022. The proceeds from these divestments were to be reinvested in other companies.
Now almost one year later, Danish publication, Økonomisk Ugebrev examines the impact of exclusion policies on investment returns among Danish pension funds, with a focus on Lærernes Pension. The Danish Financial Supervisory Authority (Finanstilsynet) mandates that pension funds must document that their exclusion of certain companies does not adversely affect investment returns. However, many pension funds reportedly struggle to meet this requirement.
Despite Lærernes Pension’s extensive blacklist encompassing hundreds of companies involved in sectors like tobacco, weapons, and fossil fuels, the fund asserts that these exclusions do not negatively impact returns, though it has not publicly provided supporting documentation. In contrast, Norges Bank, with a shorter exclusion list of 162 companies, has published calculations indicating that such exclusions have reduced returns by 2.4 percentage points since 2006.
Morten Malle, Chief Investment Officer at Lærernes Pension, acknowledges that exclusions can influence returns both positively and negatively. He notes that the fund conducts ongoing analyses, which show that the impact on returns is generally less than 0.5% in either direction.
