Danish P+ Opts to Divest

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    Stockholm (NordSIP) – At the end of last year, Danish pension fund P+ announced its decision to divest from ENI and Repsol, bidding farewell to all major oil and gas companies in its portfolio. Last week, P+ signalled even more strongly its resolve to purge the portfolio from all fossil fuels, saying the fund would no longer hold any upstream oil and gas companies that are expanding production. A resolution to that effect, submitted by the pension fund’s academic members rallied by campaign group AnsvarligFremtid, was backed by the board, and received overwhelming support at the annual general meeting with 78.2% of the members voting in favour.

    “We need to accelerate the green transition, and the exploration of fossil fuels needs to come to an end if we are to succeed with the Paris Agreement,” comments Thomas Meinert Larsen from AnsvarligFremtid. “The members of P+ have once again signalled their support to the Paris Agreement, so this decision is clearly another step for P+ to fulfil its fiduciary responsibility. This bold decision should serve as inspiration for other pension funds.”

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    The decision will affect investments of some EUR 40 million in total in a number of companies: Banco BTG Pactual SA, Comstock Resources Inc, Delek Group Ltd, GS Holdings Corp, JSC NC KazMunayGas (KMG), Mineral Resources Ltd, Osaka Gas Co Ltd (Daigas Group), PT Pertamina (Persero), Schlumberger Ltd, GAIL (India) Ltd, Indian Oil Corporation Ltd, KunLun Energy Company Ltd, MOL NyRt, Petroliam Nasional Bhd (Petronas), The Williams Companies Inc, and Tokyo Gas Co Ltd.

    The adoption of the guiding principle of “no funding of new fossil projects” means that P+ is now joining the ranks of AkademikerPension, AP Pension, and Lægernes Pension, all of which have implemented similar policies to stop investments in oil and gas companies with expansion plans.

    P+ manages EUR 20 billion AUM of pension money on behalf of over 110,000 academics, including economists, lawyers, and engineers. “It is noteworthy that a pension fund with members having a solid understanding of both financial and technological aspects of the global green transformation no longer see continued investments in fossil companies as the responsible choice, and neither as a necessity for the energy transition nor long term profitability,” comments AnsvarligFremtid in a press release.

    “I believe this is a wise and timely decision,” says one of the members behind filing the resolution, Mikael Skou Andersen, an economist, and professor in Environmental Science. “The bell tolls over new investment in coal, gas, and oil, as yet another reputable pension fund is on course for additional fossil fuel divestment of its €20 billion assets. If P+ continues in this direction, P+ should soon be able to qualify for the attractive Nordic Council of Ministers’ swan ecolabel for sustainable investment funds, awarded only to financial products where the Paris Agreement is fully respected. The Swan label will however rule out pension funds from holding US federal bonds, should a possible new Trump administration decide to withdraw from the Paris Agreement,” he adds.

    Another member who has been actively involved in adopting the new policy is Sofie Gry Fridal Hansen. “Time is running out fast, and the green transition cannot wait any longer,” she says. “We have shown more than enough patience towards fossil fuel companies. The world is fully capable of transitioning without the help of fossil fuel companies. Therefore, if they will not transition, they should get out of our way, and as investors, we should divest. If, in the future, they choose to transition, we will reconsider reinvesting in those companies.”

    Other Danish pension funds are considering a similar course of action. Resolutions to tighten fossil fuel policy have been filed ahead of the upcoming AGMs of both PKA and PJD. Will this April see more Danish pension money leaving oil and gas? Stay tuned.

    Julia Axelsson, CAIA
    Julia Axelsson, CAIA
    Julia has accumulated experience in asset management for more than 20 years in Stockholm and Beijing, in portfolio management, asset allocation, fund selection and risk management. In December 2020, she completed a program in Sustainability Studies at the University of Linköping. Julia speaks Mandarin, Bulgarian, Hindi, Russian, Swedish, Urdu and English. She holds a Master in Indology from Sofia University and has completed studies in Economics at both Stockholm University and Stockholm School of Economics.
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