Lærernes Pension, the Danish teachers’ pension fund, is now selling around DKK2bn (€269m) of coal, oil and gas equities – more than 1% of its total assets – after tightening its criteria for exclusions of fossil fuel investments, the DKK146.1bn institution has announced.

The Copenhagen-based pension fund said in a statement: “Lærernes Pension has decided in November 2022 to tighten the criteria for exclusions of fossil investments.”

The pension fund said it no longer wanted to be invested in companies that searched for and extracted coal for energy, and neither did it want to own firms that searched for and extracted oil and gas and produced energy based on fossil fuels – if the turnover of those activities amounted to more than 5%.

However, in both cases, the pension fund said in Friday’s announcement, there would be an exception for firms having committed to a transition compatible with the Paris Agreement.

“In total, investments worth around DKK2bn must now be sold, after which the money must be invested in other companies,” Lærernes Pension said, adding that it expected most investments affected to be sold before the end of the year.

The pension fund said it would still have investments in companies with revenue from coal, oil or gas following the divestments, however. As well as companies with Paris-restructuring plans and those below the tolerance threshold, these continuing investments could be businesses not covered by the exclusion criteria – for example transport or services associated with fossil fuels, it said.

“Lærernes Pension also has investments through funds that are not listed on the stock exchange,” it said.

“Here we can only introduce the stricter criteria for new investments, while we cannot change the contract terms for investments in funds back in time,” the pension fund said.

Lærernes Pension said it was still looking for a good, long-term return on pension savings, and believed it continued to have good opportunities to achieve that.

“Our investments will continue to be spread over several thousand companies,” the pension fund said.

“In addition, the exclusions can reduce Lærernes Pension’s risk of loss caused by companies’ failure to change their business models,” it said.

Back in June, Lærernes Pension set a goal of net-zero greenhouse gas emissions by 2050 at the latest for its portfolio, following the Net Zero Investor Framework and it also joined the international investor collaboration Climate Action 100+.

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