Danish labour market pension fund PenSam said it has switched weightings in its passively-managed listed global equities portfolio to take account of climate factors, by adopting the MSCI All Country World Index (ACWI) Climate index for the whole €4.8bn allocation.
Torsten Fels, PenSam’s chief executive officer, said: “The MSCI Climate Change Indexes consider both the opportunities and risks associated with the transition to a low carbon economy, enabling PenSam to integrate climate risk considerations in the global equity portfolio.”
Announcing the move, index provider MSCI said its climate change Indices re-weighted securities based on MSCI’s low carbon transition score, which kept track of a company’s exposure to low carbon transition risk, carbon emissions and fossil fuel reserves as well as its exposure to opportunities including alternative energy and clean technology.
A spokeswoman for the €20bn Danish pension fund confirmed to IPE that it had adopted the index for both listed Danish and foreign equities, adding that the fund had only a minor exposure to Danish equities.
PenSam previously used the MSCI ACWI, she said.
Alvise Munari, global head of client coverage at MSCI, said: “It is critical that the investment industry leads the transition to a low carbon economy, before climate change becomes a major threat to financial stability.”
MSCI was trying to aid this transition, he said, by developing tools that analysed “next-generation data” to support clients’ integration of sustainability into their investment processes.
The ACWI Climate Change Index is based on the MSCI ACWI, including large and mid-cap securities across 23 developed and 26 emerging market countries, said MSCI.
Last June, French utility company EDF announced that it was adopting the index for its €28.1bn nuclear plant decommissioning fund, and was planning to switch some of its passive investments into indexed funds using the new MSCI indices.