Dutch trade union FNV wants pension funds to sell all their stakes in firms that derive the majority of their revenues from the sale of fossil fuels. The move is part of FNV’s new responsible investment policy.
As the country’s largest trade union, FNV is the most influential voice in the boards of many Dutch pension funds.
FNV has now instructed the trustees that represent the union in pension fund boards to try to convince their fellow board members that all fossil fuel investments must be sold.
Dutch lead the way in fossil fuel divestment
The fossil fuel divestment movement has quickly gained traction in the Netherlands in the past two years.
In the summer of 2021, metals and technology industry scheme PME and hospitality industry fund Horeca & Catering were the first funds to divest from fossil fuels.
They were later joined by the country’s largest pension fund ABP and several other schemes including ING and UWV.
The country’s second-largest fund, PFZW, has given oil and gas firms until the end of the year to become Paris aligned.
Outside of the Netherlands, Swedish pension funds AP1 and AP2, as well as Danish pension scheme AP Pension, have also divested from fossil fuel companies.
According to FNV board member Piet Rietman, more needs to be done to avert an imminent climate catastrophe.
Rietman said in a statement on FNV’s website: “Back in 2016, we already called on pension funds to accelerate the reduction of their holdings in the fossil fuels industry. Large funds including ABP and PME have already taken this step, but not all funds have reached that point yet.”
He said that it is “necessary” for schemes to take stronger action “because the climate crisis ultimately threatens everyone’s job”. He added: “CO2 emissions must be reduced. We do not want the money of pension fund members to worsen the climate crisis.”
The FNV has concluded that divestment is a better option than engagement with oil and gas firms. Engagement with companies that derive the vast majority of their revenue from oil and gas extraction “is not credible and therefore divestment is the better option,” Rietman told IPE.
This attitude contrasts with the stance of the Netherlands second-largest trade pension fund PFZW, which is currently trying to convince oil and gas companies to align with the Paris Agreement through engagement.
As recently as last Thursday, Leonne Jansen, a board member of PFZW on behalf of FNV, stated she was not yet ready to sell the fund’s remaining fossil fuel investments.
“Actually, as a pension fund you want to use your money to steer oil and gas companies in a certain direction,” Jansen said. Health care scheme PFZW has given oil and gas companies until the end of this year to become Paris aligned. Companies that fail to do so will then be sold.
Social pressure
The FNV further hopes that by taking the lead, pension funds will spur other financial institutions into action.
“If pension funds are the first movers, insurance firms and banks will follow because the social pressure to divest will then be focused entirely on them,” according to Rietman.
For the time being, the FNV’s divestment drive does not seem to be receiving support from other unions.
The country’s second-largest trade union, CNV, said the discussion about fossil fuel divestment should take place in pension fund boards.
A spokesperson added CNV also has “an eye for our members who work in the energy-intensive sectors and work on innovative solutions to reduce CO2 emissions.”
Encouraging
But Daan Spaargaren, responsible investment strategist at PME, the first Dutch pension fund to divest from fossil fuels in 2021, is enthusiastic about the FNV’s new course.
“I find it encouraging that they are going to push for this,” said Spaargaren, an advocate of pension funds taking an activist stance in the climate discussion.
Still, Spaargaren said the FNV could have gone even further. “It would have been even better if they had also called for the proceeds from the sale of fossil investments to be re-invested to finance the energy transition. After all, the Paris climate agreement also calls for shifting those capital flows from grey to green,” he said.
The FNV has also limited its divestment drive to companies that derive the vast majority of their income from fossil fuels.
PME has also sold firms that rely on this only to a small extent. An example is mining company Glencore, although this only happened after a TV-programme pointed out to PME that Glencore also operates coal mines.
“Glencore only made 9% of its revenue from coal at the time, but that still makes them one of the largest coal producers in the world. That’s why we thought we should divest anyway,” according to Spaargaren.
This article was first published on Pensioen Pro, IPE’s Dutch sister publication.
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