ABP invests disproportionately in fossil fuels compared to other Dutch pension funds, however, it also allocates a relatively large share of its assets to renewable energy, research by IPE has found.
The investments in oil, natural gas and thermal coal of the €493bn civil service scheme were worth €15.3bn at the end of 2020. The bulk of the investments concerns shares and bonds of large oil and gas firms such as Shell, BP and ExxonMobil.
But suppliers to the fossil fuels industry are also included. As the share prices of fossil fuel firms have risen sharply this year, the value of ABP’s fossil fuel investments has likely also risen. The fund does not, however, provide more recent figures about the value of its investments.
The other four largest Dutch pension funds together manage about the same amount of assets as ABP, but their combined investments in fossil fuels total just €6bn. This means their investments in fossil energy are worth less than half of those of ABP.
Pension funds use varying definitions of ‘fossil fuels’. For example, Bouw – the pension fund for the construction industry – also considers utilities that use coal or natural gas to generate electricity as fossil fuel investments, while other funds use more narrow definitions.
In general, however, stakes in oil and gas firms form the bulk of pension funds’ fossil fuel investments.
ABP has been under pressure to divest from fossil fuels for some time. Disgruntled members and Fossil Free activists have repeatedly staged protests at ABP offices this year to demand action.
In response to the protests, ABP president Corien Wortmann has promised to reduce the fund’s investments in fossil fuels, but a concrete action is only expected for next year.
ABP is not only the leading fossil fuel investor among Dutch schemes, it is also investing more in the energy transition than almost any other fund.
ABP’s 2.8% total allocation to renewable energy is only matched by PME (see chart). the fund that recently divested from fossil fuels altogether. PFZW and PME are the only two pension funds that invest more in renewable energy than in fossil fuels.
A spokesperson for ABP explained the relatively high exposure to both fossil and renewable energy investments by referring to the fund’s higher than average equity allocation.
She said: “The market share of the energy sector is much lower in fixed income compared to equities. Hence we have a relatively high overall exposure to the energy sector.”
Lack of transparency
Pension funds tend to be opaque about their investments in fossil fuels.
In their annual sustainability reports, investments in clean energy projects are being showcased while information about the funds’ ‘dirty’ investments is hard to find.
Despite all Dutch pension funds – except PME – still being invested in fossil fuels, none of them provides a clear overview of these investments on their websites.
Renewables overtake fossil investments
PME’s decision to divest entirely from fossil fuels, in combination with Bouw’s step to ditch its commodity investments, means that the largest Dutch pension funds combined invest more in renewables than in fossil fuels now.
However, as the share prices of oil and gas firms have risen considerably since the start of the year, this may no longer be the case.
Though Dutch pensions funds are increasing their investments in renewable energy, most of these investments are being made by the largest pension funds.
Mid-sized and smaller pension schemes have only limited investments in renewable energy, and ABP is the only fund with a concrete ambition to increase its allocation further.
The target to invest €15bn in SDG 7 by 2025 is not overly ambitious, however, as ABP’s renewable energy investments already stood at €13.8bn at the end of last year.