Danish mutual pension provider Velliv announced it is making changes to its environmental, social and governance (ESG) policy, imposing a stricter rule for coal and oil sands activities, and has divested 37 stocks on fossil fuel grounds.
The rule change means Velliv will exclude businesses generating more than 5% of turnover from the extraction and use of coal and oil sands – a lowering of the 25% threshold it had before.
The Copenhagen-based pensions firm said the latest divestment round included holdings in 25 oil and gas firms following a decision earlier this year to exclude them, and that together with the stocks falling foul of the new coal and oil sands criterion, it was selling 37 companies, divesting around DKK250m (€33.6m) of existing investments altogether.
Anders Stensbøl Christiansen, chief investment officer at Velliv, said: “The extraction and use of coal and oil sands has long been in the spotlight as one of the major climate sinners.
“We have now taken the step fully and dropped investments in companies with an interest in the extraction of coal and oil sands,” he added.
Stensbøl Christiansen said it was never easy to “draw the famous line in the sand” as an investor, but it was important that Velliv ensured its customers’ returns, had facts about the consequences of its choices and focussed on contributing to the green transition.
Thomas Kjærgaard, Velliv’s head of ESG, told IPE the list of exclusions included industry giants such as Anglo American, BHP, Imperial Oil, PetroChina and Saudi Arabian Oil.
“The world is too complex and full of choices”
Anders Stensbøl Christiansen, chief investment officer at Velliv
Regarding the divestment of oil and gas companies, he said: “Velliv decided earlier this year also to exclude 25 companies including Exxon as a consequence of the existing policy’s ambition to reduce its risk from worst-in-class companies, and commitment to support the Paris agreement.”
When asked if the pension provider was considering excluding all companies involved in coal and oil sands extraction, he said: “We continuously monitor the development in the energy sector in order to optimise both our portfolio’s risk and take steps to support the Paris agreement.”
Stensbøl Christiansen said Velliv supported the UN’s global and climate goals, but added that in practice, things may not always happen as quickly as many people would like.
“I think most Danes can also recognise this fact from their everyday lives, where we want to help with the green transition, but cannot always do it to its full extent. In addition, the world is too complex and full of choices,” the CIO said.
As an investor, he said it was about both the price and availability of sustainable investment options, as well as the quality and expected returns of provided by such opportunities.