The CIO of Denmark’s Danica Pension has warned it could be harder to produce investment returns from companies that do not have a climate-friendly business plan, as the Danske Bank subsidiary pledged to reduce carbon footprint of its portfolio.
Publishing its first climate report, Copenhagen-based Danica Pension reported CO2 emissions related to its equity and corporate bond investments were 33 tons per DKK1m (€134,000) invested at the end of 2019 — which it said was 21% less CO2 than the global benchmark for these asset classes.
Poul Kobberup, Danica Pension CIO, said: “If the companies do not set a climate-friendly course, there may be an increased risk that they just don’t have a relevant long-term business model, which could harm our ability to generate returns.”
Kobberup said gathering the CO2 data gave the fund a precise overview of how investments were performing in climate terms, and allowed it to compare them.
“At the same time, we can discuss the individual company’s climate strategy with management and how they can reduce the climate impact, so that they can, for example, be at the forefront of the stricter climate regulation to come in the future, and the increasing demand for green solutions,” he said.
It still made sense from a return perspective to invest in companies with a small climate footprint within their specific industry, Kobberup said, adding that Danica Pension would focus on reducing CO2 emissions further in the next few years.
The pension fund, which had DKK450bn in total assets at the end of the first quarter, attributed its relatively low carbon emissions to having fewer investments in sectors with high emissions, such as energy production and supply.
In addition, it said, it invested in shares in the automotive and energy industries whose carbon footprints were smaller than the sector average.