The €15bn pension fund for the Dutch hospitality industry Horeca & Catering has now sold most of its investments in fossil fuels. Since the end of last year, the fund ditched some €250m in shares and bonds of companies that make more than 50% of their sales from fossil fuels. Firms that derive any revenues from coal or oil sands have been excluded altogether.
As a result, the pension fund has sold its stakes in oil majors such as Shell, Total and Exxon Mobil, among others. In addition, the pension fund has also dumped its investments in firms that are involved in the transport, storage and/or distribution of oil and gas as well as any remaining stakes in oil refineries.
Bas van Ooijen, portfolio manager at Horeca & Catering, stressed the decision was taken for ethical reasons though he believes it will not negatively impact returns going forward.
“We have looked explicitly at the expectations for the sector for the future. We believe this decision will not cost us any returns,” he said.
Horeca & Catering had already been reducing its investments in the sector in recent years, and the remaining allocation that has now been sold accounted for 2% of the scheme’s total investment portfolio. The proceeds have been re-invested in existing mandates, Van Ooijen told IPE.
“The decision to sell out of fossil fuels follows from an evaluation of our responsible investment policy in 2020,” he said. “Climate change is an important part of this policy. Over the years we have come to realise that our investments in fossil fuels obstruct the fight against climate change.”
Paris Aligned? Yes and no
The pension fund still owns some €80m in high-yield bonds of oil and gas companies, and said it needs a little more time to sell these. Horeca & Catering is only the second pension fund in the Netherlands to announce its ambition to become fossil-free in the short term.
In July, the pension fund for the country’s social security provider UWV was the first one to do so, as part of its move to adopt a Paris Aligned Benchmark (PAB).
Van Ooijen said Horeca & Catering is keeping with its original, non-PABs despite selling off its exposure to fossil fuels.
“However, the limits we have imposed on our maximum allocation to the fossil fuels sector have been derived from the methodology of the Paris Aligned Benchmark,” Van Ooijen noted.
The pension fund had a pre-existing goal to reduce the carbon footprint of its total investment portfolio by 25% in 2022. Though the sale of its fossil fuels investment contributes to this goal, Van Ooijen could not say whether this would be enough to reach its CO2 reduction target.