Luxembourg’s €20bn pension reserve fund Fonds de Compensation (FDC) is to publish a sustainability report in the third quarter of 2020, after pressure from environmental campaign group Greenpeace Luxembourg (GL).
Fernand Lepage, president of FDC, said in a letter to GL last month that the report would include a detailed analysis of the carbon footprint and climate change-related financial risks of the fund’s investments.
The commitment follows legal proceedings initiated by GL in the Grand Duchy’s Administrative Court last September.
GL had previously written to Romain Schneider, minister for social security and who is responsible for the fund, asking for specific information on how FDC planned to align its investments with the objectives of the Paris Agreement.
The letter also requested disclosure of the climate finance risks associated with FDC’s investments. But GL said the minister did not reply.
As a result, GL appealed to the Administrative Court, which ruled last December that Schneider had not respected his legal obligation to answer the letter.
The judge confirmed that the information requested by GL about greenhouse gas emissions and climate-related financial risks associated with FDC’s investments is considered as environmental information within the meaning of the law on access to environmental information.
However, the judge also ruled that the minister is not obliged to possess or collect this information; neither is he obliged to comply with the Paris Agreement.
At the time, Philippe Penning, lawyer for GL, said the judgment emphasised that the minister for social security is only required to supervise, but not to actively shape the pension fund’s investment policy in the interests of the general public and the environment.
FDC’s commitment to publish a sustainability report has therefore been made voluntarily.
Martina Holbach, GL climate and finance campaigner, said: “Greenpeace welcomes the FDC’s decision to commission a detailed analysis of the carbon footprint and the climate-related financial risks of its investments.”
But she called on FDC ultimately to end all financial support of the fossil fuel industry and other polluting companies, and align its investments with the Paris Agreement.
Holbach told IPE: “However, given the urgency for climate action and in order to address the financial risks associated with fossil fuel and other carbon-intensive investments, reporting under the Task Force on Climate-related financial disclosures should become mandatory for Luxembourg’s sovereign funds as well as for its investment fund industry, which is the second largest in the world.”
In its statement, GL said FDC’s decision to deliver the climate change assessment was an important precedent for the country.
It said: “Luxembourg’s financial regulator does not yet consider the reporting and disclosure of this information as a core responsibility, acting in the best interests of pension fund beneficiaries and financial investors.
“While the government is promoting Luxembourg as a green financial hub, the country’s €4.7trn investment fund industry is simply not obliged to monitor, or inform on, the carbon emissions it finances.”