Danish pension fund MP Pension said it is too early to excise natural gas stocks from its portfolio because gas is a necessary transitional source of energy, and would prefer to widen its exclusion policy for other fossil fuels instead.
At the scheme’s annual general meeting last week, members rejected a proposal put forward by campaign group Ansvarlig Fremtid (Responsible Future) for the fund to divest from gas stocks.
Prior to the vote, the board of MP Pension – which is in the process of re-naming itself “AkademikerPension” – had expressed its opinion that while agreeing with the spirit and intention of the proposal, it did not find the timing right.
The vote came against the background of other fossil fuel divestment decisions by MP Pension in the last few years, including the vote at last year’s AGM to sell off bonds in companies that extract coal, tar sands and oil, in addition to their equities.
Asked by IPE to comment on the issue of gas divestment, MP Pension CIO Anders Schelde said the fund was currently having a debate with Ansvarlig Fremtid on the significance of gas as a transition fuel.
“They say that ultimately gas must be taken out of the energy mix, and thus we should transition out of it now already today,” he said.
“We say that we agree that gas should ultimately be phased out - so we agree that ultimately it is a transition fuel – but now and for the next 5-10 years or so, gas is still needed,” Schelde said.
Gas was necessary both to phase out coal, but also as a flexible backup energy source when there was little or no production of green energy – no wind, no sun, he said.
“So until we can better store green energy, we still need some gas production,” Schelde said.
“Until we can better store green energy, we still need some gas production”
Anders Schelde, CIO at MP Pension
In light of this, he said, MP Pension found that when it balanced investment return considerations and responsibility, it was too early to include gas in delimitations of its fossil fuel exclusion.
“On an ongoing basis we are evaluating these delimitations, and here and now we would rather tighten them elsewhere,” he said.
“No formal decisions have been made, but we are for instance considering if we should expand the value chain delimitation with regard to coal, to give one example,” Schelde said.
Meanwhile, Thomas Meinert Larsen, campaign coordinator and spokesman for Ansvarlig Fremtid, told IPE that while it was good that MP Pension had divested a large part of its oil company investments, the fund should also sell off certain natural gas companies, unless they presented “credible Paris-aligned business models”.
Among gas stocks the campaign group highlighted in MP Pension’s portfolio are Russia’s Novatek and Italian group Eni.
“We basically think the statement that gas is a transition fuel is heavily overstated and many of those companies are actively exploring more gas reserves, and they should not be in a Paris-compatible portfolio,” he told IPE.
Separately, MP Pension this week announced its participation in two multi-investor ESG initiatives.
Alongside other Danish investors AP Pension and Nordea Asset Management, MP Pension joined a group of 29 investors urging Brazil’s embassies in 10 countries to stop the rapid advance of Amazon rainforest clearance.
The fund also said it was teaming up in a group of major international investors to put pressure on Japan’s Mizuho Bank to stop providing large loans to coal companies around Asia.