Major Danish pension funds have defended themselves after being called out by a campaign group for the amount they are investing in fossil fuel companies – particularly in those stocks which are expanding their capacity for such fuels.
The non-governmental organisation (NGO) ActionAid Denmark (Mellemfolkeligt Samvirke) has published a new report in the last few days entitled “The Danish pension sector climate failure”, criticising the country’s pension funds for having investments in companies that are expanding their fossil fuel capacity.
But in responses to the report, Danish pension funds topping some of the report’s negative rankings have said the report contained inaccuracies, failed to acknowledge nuances in the behaviour of fossil fuel companies, and did not cover the pension sector’s progress in investing in the green transition.
The NGO, which has also launched a searchable public database containing data on the sector’s fossil investments, said it aims to stimulate the Danish pension sector and other investors to divest all fossil companies.
ActionAid Denmark highlighted PFA, Danica Pension and PensionDanmark as the three Danish pension funds with the highest amount in Danish kroner invested in fossil fuel companies.
The report also presented several other rankings with different parameters, such as fossil-fuel investments per member and as a proportion of the total portfolio, in which pension fund names appear in a different order.
The organisation said in the report: “More than six years after the Paris Agreement was adopted and after many green promises and new climate policies, the 16 largest Danish pension companies continue to invest DKK46bn (€6bn) in fossil fuel companies that are the primary cause of the escalating climate crisis.”
It said all 16 pension firms invested in companies that, contrary to scientific recommendations and the goal of keeping temperature rises below 1.5°C, were expanding their fossil fuel capacity, adding that the pension providers together had DKK22bn invested in such expansion.
“Pension companies cannot both call themselves sustainable and invest in fossil fuel expansion,” ActionAid Denmark said in the report.
Lægernes Pension, the Danish doctors’ pension fund, said the report showed that it was among pension firms that had little invested in fossil fuels.
Peter Rasmussen, head of responsible investments at Lægernes Pension, said: “The survey basically confirms what we already knew,” adding that this was completely in line with the pension fund’s strategy and the wishes of its members.
“And if we look at the pension fund’s green investments, they are more than 10 times higher than the fossil investments,” he said, in a statement from the pension fund.
But the DKK108bn labour-market pension fund took exception to the report singling it out as the one with the highest amount of fossil fuel investments per member, saying the amount had to be seen in relation to the fact that doctors had average pension savings that were more than DKK2m per member.
“The doctors’ savings are thus more than twice as large as the Danes’ pensions on average,” Rasmussen said.
He said the pension fund had joined the UN Net-Zero Asset Owner Alliance in 2021, and the consequence of its new climate goals was simple: “If the fossil fuel companies don’t reduce their climate footprint in line with the objectives, there will be no room for them in our portfolio,” he said.
PensionDanmark’s head of ESG, Jan Kæraa Rasmussen, told IPE that while the pension fund was among those with the most fossil fuel investments in absolute terms, according to the survey, this was natural, given it was one of Denmark’s largest pension companies.
However, in terms of investments per pension customer, he said PensionDanmark only had DKK5,510 invested in fossil fuels, which was significantly lower than the industry average according to the survey, he said.
“In relation to the proportion of the company’s total balance sheet, PensionDanmark will also not be in the top five companies with the most investments in fossil companies,” Keraa Rasmussen said.
He also said that NextEra – a US company counted by ActionAid as among those expanding their fossil fuel capacity or looking for new oil fields – was the one in question in which PensionDanmark had the largest position.
“Elsewhere, the company is often highlighted as the ‘US Ørsted’ and is undergoing a significant transformation of the US electricity supply – half is now produced with low-emission technologies,” Keraa Rasmussen said.
At PFA, Christian Storm Schubart, head of ESG, said: “In general, there is a significant difference in how fossil fuel companies approach the climate transition. This part does not appear in the categorisation presented in the report.”
It was factually incorrect that PFA had DKK4.7bn invested in the coal industry, he said, as a large part the pension fund’s investments noted in the report were utility companies, which also supplied solar and wind energy.
“Specifically, approximately 50% of our investments in the survey come from utilities, which ActionAid Denmark describes as being fossil companies.
“We have only just been presented with the report and have not read it in depth, but this indicates that it is a wrong basis for comparison,” Storm Schubart said, when asked by IPE for a response.
He made a number of other points, and said PFA had committed itself to achieving zero CO2 emissions by 2050 and, as a sub-goal, reducing CO2 emissions by 29% by 2025.
“In relation to oil and gas, we have narrowed our holdings to two companies, both of which have ambitious plans for a green transition,” he said.
A spokesman for Danica Pension said the Danske Bank subsidiary was fully committed to supporting the transition to more green energy and achieving the goals of the Paris Agreement.
“Regretfully, the report does not cover our vast progress in investing in the green transition where we have increased these investments from DKK10bn in 2019 to DKK33.5bn today,” he said, adding that the pension firm’s ambition was to have DKK100bn invested in the green transition.
‘We are in an ongoing dialogue with the respective energy companies as a means of pushing and supporting them to transition their business to low-carbon energy sources and we will continue to exercise active ownership as we firmly believe it is the most effective tool to influence these companies to take steps to reduce their reliance on fossil fuels in the future and take part in the green transition,” he said on behalf of Danica Pension.