Danish mutual pensions provider Velliv is in the process of ridding its investment portfolio of the securities of upstream oil and gas companies following a change of approach in its climate efforts.
Sandra Metoyer, head of sustainable investments at Velliv, told IPE that the Copenhagen-based pension firm’s board approved a new approach to upstream – exploration and production – oil and gas equities and corporate bonds two weeks ago.
As a result, she said, Velliv is divesting DKK3.4bn of the stocks and bonds of that category of company which it currently holds among its total DKK100bn of equities and corporate bonds.
At the end of 2022, Velliv had total assets of DKK325bn.
Metoyer said the new approach to investment in fossil fuel companies involves looking at oil and gas companies, focusing on upstream activities as well as at utility companies involved in fossil fuels.
“Basically what we’re saying is we want to continue to invest in the companies that have a strategy that is in alignment with the Paris Agreement, where we can see that they have high ambitions, a plan to transition,” Metoyer said.
“We no longer want to invest in companies where we see that they are not quite there when it comes to their strategy and their long term plan with regard to the green transition,” she said.
The divestment list includes oil giants BP, TotalEnergies, Shell, according to Velliv.
Metoyer said the firm’s external managers have been given an update to Velliv’s exclusion list, and the divestments are now being carried out by these suppliers.
In a statement on its new position on fossil fuel investments, Velliv said the world needed a transition from fossil fuels to green energy in order to achieve the objectives of the Paris Agreement.
“Unfortunately, today – eight years after the conclusion of the Paris Agreement – we continue to find that a great many fossil fuel companies have not faced up to the seriousness of this,” it said.
“We see that several utility companies have already taken up the green transition and replaced fossil energy sources with green alternatives, but we do not see the same development among energy companies, despite the fact that investors, through active ownership and dialogue, have tried to influence companies in a more sustainable direction,” Velliv said.
Metoyer told IPE that while the initiative Climate Action 100+ had been going on for five years now, and there had been progress, overall Velliv did not think the big oil and gas companies took the talks seriously enough.
“We don’t believe that the companies truly want to change their long-term business models to do something other than explore and pump oil, and that’s basically what it boils down to,” she said.
“We do believe in active ownership, but after these five years, we don’t really trust that they really want the green transition,” said Metoyer.
This was the case for all upstream oil and gas companies, she said, adding: “They all have continued expansion plans.”
But regarding the possibility of future re-investment in the sector, she said Velliv hoped the upstream oil and gas companies would get the message, and understand that they did have a role to play.
“We want nothing more than to have a shorter exclusion list,” Metoyer said.
Last August, Velliv set clear targets for climate action, planning to cut investment portfolio CO2 emissions by 60% in 2030 and be CO2 neutral by 2050.