June 9, 2015
WWF-Denmark assessed the 16 largest pension funds in Denmark in a recent study: Responsible for our Future? Danish pension funds and the climate change challenge. This report shows that, although there is an increasing trend towards greener investments, Denmark’s largest 16 pension funds continue to invest significantly in fossil fuels.
As UN Secretary General Ban Ki-moon emphasized during the presentation of the IPCC’s fifth report on climate change, pension funds play an important role as they, through the investments of their pension assets, can help to provide financing for the green transition.
“I have been urging companies like pension funds or insurance companies to reduce their investments in coal and a fossil fuel based economy to move to renewable sources of energy,” said Ban Ki-moon, UN Secretary General in November 2014.
WWF-Denmark’s study looked at two issues:
- Pension fund investments in oil and gas companies involved in economically and environmentally risky oil projects, such as drilling in ice-filled oceans in the Arctic, deep sea drilling, or unconventional oil production (i.e. tar or oil sands extraction).
- Pension funds’ climate consciousness, looking at the extent to which climate considerations and green energy investments are incorporated into the companies’ strategies.
So, how did the pension funds do?
- All the investigated pension funds invest in the fossil fuel energy sector, including in oil and gas companies known for their economically or environmentally risky fossil fuel projects.
- The Danish pension funds hold shares totaling almost US$1.2 billion in 17 high-risk companies. These investments alone lead to potential future CO2 emissions over 4.6 times the size of Denmark’s annual emissions.
- None of the assessed pension funds has set goals for divesting fossil fuel assets.
- Danish pension funds have become increasingly interested in executing direct investments in major renewable energy projects, primarily offshore wind farms.
- Although the assessed pension funds have moved towards greater transparency in general, there is room for improvement.
To conclude, a small number of Denmark’s 16 largest pension funds perform well. However, there is still a long way to go before the Danish pension funds demonstrate a clear understanding of their opportunities to ensure proper management of the clients’ money while simultaneously being responsible actors in the fight against climate change.
To take action on climate change, it is vital that major efforts are made globally to transform the energy sector. This requires massive investments in the fossil fuel industry to be transferred to investments into renewable energy and energy efficiency solutions.
Pension funds can be leaders. Now is the time.
Download the report here.
Hanne Jersild is a senior advisor on climate & energy policy for WWF Denmark, and is based in Copenhagen. firstname.lastname@example.org
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