Denmark’s P+ is setting a climate goal for all investments – carbon neutrality by 2050 – and said it will lower its threshold for the exclusion of companies failing to meet its expectations, as part of a series of changes to the pension fund’s sustainable investment approach.
The member-owned scheme for Danish professionals with higher academic qualifications, which covers lawyers, economists, engineers and others, also said it would blacklist coal and oil companies as part of the ESG overhaul.
Anders Eldrup, chair of P+’s supervisory board, said: “With increasing emphasis, our members – at annual general meetings and at other times – have been saying they want the pension fund to play a more active role in the green transition.
“We have therefore set ourselves an ambitious goal that all investments in our portfolio must be CO2-neutral by 2050,” he added.
He said the supervisory board had decided to divest from all coal companies, unless they derived less than 5% turnover from the fossil fuel, and could provide evidence of a green transition process.
The pension fund, which was formed last year from a merger of the pension funds JØP and DIP, is also assessing all utility firms with a view to divesting any making more than 25% of their turnover from electricity produced using coal, Eldrup said.
P+ said it would also divest from all oil firms with more than 30% of turnover from the production of oil, and which did not want to discuss a conversion of their business strategy.
“We aim to achieve the goal of this work in the course of 2021,” Eldrup said.
The pension fund said it was adopting tougher exclusion rules, and would draw a clearer line in the sand vis-à-vis companies failing to meet the pension fund’s objectives.
Eldrup said the pension fund believed that dialogue and active ownership could create real change, and that it was P+’s primary tool.
But he added: “If the companies in our portfolio refuse to enter into a dialogue with a view to restructuring, we will divest the shares.”
P+ also said that while many investors only imposed climate criteria on their listed equities, it would go a step further and look at all investments including bonds and unlisted investments.
It also said it would increase transparency surrounding its investments, pledging to publish an overview of holdings in those companies that put the heaviest burden on the climate, with justifications for each of these, as well as information on its active ownership work.
“The world cannot always be divided into black and green companies, and as a responsible investor we are constantly faced with dilemmas where there are no easy answers,” Eldrup said.
By being more transparent, he said, the pension fund was aiming to increase the general discussion about responsible investment, both within its sector and beyond.
P+ also said it planned to launch a green investment option in 2021, and had decided to join the Net-Zero Asset Owner Alliance.