The Danish pension fund for doctors said it is taking a tougher stance on climate issues at the annual general meetings (AGM) of large banks and the largest CO2 emitters it invests in, as it moves from using mainly exclusions to shrink its own carbon footprint, to persuading investee companies to go greener.

Lægernes Pension announced yesterday: “From and including 2024, the pension fund will only support board candidates at companies that meet concrete climate requirements.

“With this policy, Lægernes Pension wants to send a clear signal that companies must take their climate responsibility seriously and deal with climate risks,” the DKK120bn (€16.1bn) institutional investor said.

The new policy, which was adopted at the pension fund’s 2023 AGM, includes 165 of the world’s largest CO2 emitters and 26 banks, and covers almost 200 companies, the fund said.

The new requirements include nine specific parameters that companies must meet, the pension fund said, including the formulation of CO2-reduction targets in the short and medium term, the integration of climate targets in business and investment plans, and linking the achievement of climate targets to management remuneration.

“For the banks, there are additional requirements to set targets for the emissions they finance through lending and investments, as well as to phase out lending to fossil-energy sources and other sectors with large CO2 emissions,” said Lægernes Pension.

The pension fund also announced it has met all its 2024 targets to cut the climate footprint of investments a year ahead of schedule – at the end 2023.

The targets, set after a 2022 AGM vote, were for reductions in the climate footprints of the pension fund’s listed equities, corporate bonds and Danish real estate of 25%, 30% and 55% respectively by the end of 2024, compared with the end of 2019.

In its 2023 ESG report, Lægernes Pension said those emissions-reduction targets – the first step towards achieving the objective of CO2-neutral investment – had been achieved in particular by reducing or excluding investments in CO2-intensive sectors and companies.

“By doing that, we’ve picked the low-hanging fruit,” the pension fund commented.

However, the path ahead towards CO2 neutrality required the companies in Lægernes Pension’s portfolio increasingly to reduce their emissions in line with the Paris Agreement, the pension fund said.

“Alternatively, we risk more companies and sectors having to be de-selected. The result may therefore be that eventually, there will be too few investment opportunities to create the return needed to finance members’ pensions,” it said.

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