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IPE special report May 2018

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ATP blasts 'blatantly over-simplified' WWF report

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Denmark’s biggest pension fund, ATP, has objected to the way it has been criticised in a report on efforts by the country’s pension funds to mitigate climate change via investment.

In an analysis of the effort pension funds are making in this regard, the WWF (formerly the World Wildlife Fund) in Denmark said none of the country’s large pension funds were aiming to divest their investments in coal and oil.

John Nordbo, head of the conservation department at the WWF in Denmark, said: “We can confirm the pensions sector is still not taking the climate seriously, and, at the same time they are gambling with Danes’ savings by continuing to hold money in companies that are bleeding to death.”

ATP condemned the way the report had been put together, saying it did not reflect what was really going on within Danish pension fund investment.

“We find it extremely frustrating because the so-called ranking they have produced is blatantly over-simplified, and this is just not a serious way to treat a matter of this importance,” a spokesman for ATP said.

The WWF, taking aim at ATP in particular, said the statutory pension fund had come out second to last in the ranking.

It said ATP had reported back in 2009 that its climate-related investments would make up 10% of the total portfolio within 4-5 years, but that this had not happened.

“Today,” the WWF said, “ATP’s profile is far from green. For example, ATP does not have investments in offshore wind farms that many of the others do, and the fund has not blacklisted any fossil fuel companies.”

Nordbo added: “As a statutory pension fund, one has a particular responsibility to support a societal development that goes in the direction of the transition to green energy, and ATP has not taken on that responsibility at all.”

However, the ATP spokesman said it was simply incorrect to say the pension fund did not have offshore wind farm investments.

“We are heavily invested in DONG, the world’s leading off-shore wind farm utility company,” he said.

He said the pension fund had more than DKK3bn (€403m) invested in this Danish energy company, which generated 85% of its revenue from wind energy business, as well as DKK1.6bn invested in the wind energy firm Vestas.

The pension fund had been penalised in the WWF methodology because it did not have direct infrastructure investments in wind farms, he pointed out.

“Any thorough and serious evaluation of our investor portfolio would document that we are behaving as a responsible investor and generating a high return for our members,” he said, in response to the accusation that pension funds were “gambling” with savers’ money.

Last year, ATP generated a return of 17.2% on its investment portfolio, he added.

PKA, on the other hand, had proved itself to be the greenest of the 16 pension funds analysed, according to the WWF.

Its top position in the ranking was due to the fact it was the only pension fund to have identified climate early on as one of its three areas of focus, and the fact it was one of the pension funds that had invested the most in, among other things, offshore wind farms, it said.

The report showed that only four out of the the 16 pension funds analysed – Nordea Life & Pension, PenSam, PFA and PKA – had excluded coal and oil companies on climate grounds.

But all 16 had significant investments in conventional energy, it said, adding that 12 of them had investments in US oil company Exxon, for example, “which is notorious for its lobbying against climate action”.

The WWF disagreed with what it said was the general view of pension funds that active ownership provided better results than divestment.

“The WWF has serious doubts that it is possible, through active ownership, to get big oil and coal companies to change their course so significantly they would no longer contribute to increasing climate challenges,” it said.

It cited the recent example of Exxon, which it said had at its general meeting last week decided against taking a more climate-friendly line, even though eight Danish pension funds had voted in favour of a greener stance.

PenSam responded to the WWF comments on active engagement, saying it was generally in favour of active ownership.

“We have the opportunity to change things for the better through dialogue,” a spokesman for the fund said.

“By selling, we give up on that opportunity. However, selling is an opportunity if dialogue does not result in the changes sought after.”

Last week, ShareAction and WWF Switzerland published a survey concluding that most of the 20 largest Swiss pension funds do not systematically consider sustainability criteria in their investment decisions.

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