AP Pension tightens its grip on fossil investments
17 March 2023
As part of AP Pension’s climate strategy, the pension company is now tightening the criteria for fossil investments. With the tightening, a further 73 companies have been added to AP Pension’s exclusion list of companies in which the pension company will not invest customers’ pension savings. Among the excluded companies are Shell and TotalEnergies.
AP Pension is now tightening its grip on the criteria for fossil investments, including within coal, utilities, tar sands and oil and gas. The tightening takes place as part of AP Pension’s climate strategy, where the company has a stated goal that all investments in 2050 must be climate neutral. For AP Pension, with its investments, it will help support the Paris Agreement’s goal of keeping global temperature increases to a maximum of 1.5 degrees.
The tightening means, among other things, that AP Pension adds a further 73 fossil fuel companies to the company’s exclusion list. This means that there are now a total of 187 fossil fuel companies that do not meet AP Pension’s new stricter criteria. Among the new companies on the list is Shell, where AP Pension has investments worth DKK 91 million. In total, with the new stricter exclusion criteria, AP Pension will sell investments in eight fossil fuel companies for approximately DKK 310 million. The divestments take place during the first quarter of this year and include shares and corporate bonds.
Companies in the fossil sector, including coal, utilities, tar sands and oil and gas, play a central role in the climate fight to achieve the Paris Agreement’s goal of keeping temperature increases to a maximum of 1.5 degrees in 2050. That is why we are now tightening our grip on fossil investments, as we will not support companies that make it difficult to reach the target in the Paris Agreement, says head of responsible investments at AP Pension, Anna Maria Fibla Møller, and continues:
As a result of our new and tighter criteria, we are divesting oil and gas companies that invest in new oil and gas fields and that have not drawn up ambitious business plans to realign themselves in accordance with the objectives of the Paris Agreement. This is what we mean, for example. is the case with Shell and TotalEnergies, which we are now divesting, says Anna Maria Fibla Møller.
Dilemma filled area
According to Anna Maria Fibla Møller, working with fossil investments is an area full of several dilemmas.
It is a dilemma for AP Pension how we best handle oil and gas companies that invest in new oil and gas fields in our investment universe. On the one hand, these companies have a large negative impact on the climate, but on the other hand, we are willing to invest in those companies that have a credible plan to transform their business so that it is compatible with the Paris Agreement. A concrete example is Eni, which we are invested in and have chosen to put on our watch list. In addition to monitoring the company closely, we will also increase our efforts within active ownership, explains Anna Maria Fibla Møller and continues:
If the dialogue is ineffective, then the road to exclusion is short for us. We have a responsibility as an active owner to push the companies we have in the portfolio in the right direction. We cannot have an ambition for our investments to be climate neutral if we are not prepared to make demands on the companies we invest in, says Anna Maria Fibla Møller.
In addition to the companies that AP Pension is now excluding, the pension company has also identified four companies that are part of externally managed funds where AP Pension does not have a decisive influence on the portfolio. Here, AP Pension has called for divestment. This is a total amount of approx. DKK 4.5 million.
The new and tighter strategy for fossil investments is part of AP Pension’s work to meet the goals of the Paris Agreement, which also includes membership of the climate initiative Paris Aligned Investment Initiative and the Net Zero Investment Framework. As part of this, AP Pension must put forward several sub-goals towards 2050. Towards 2025, the company will reduce the climate footprint from its shares and corporate bonds by 37 percent, and it will set new sub-goals every five years.
Facts:
With the new and tighter strategy for fossil investments, AP Pension will no longer invest in:
• Companies where a share of five percent or more of the turnover is related to the extraction of thermal coal, or they have expansion plans.
• Companies where a share of 25 percent or more of turnover is related to energy production with thermal coal, or they have expansion plans.
• Companies where a share of five percent or more of the turnover is related to the extraction of tar sands.
• Companies where a share of 20 percent or more of the turnover is related to -extraction activities within oil and gas. In addition, a holistic assessment of the remaining oil and gas companies has been made.
In AP Pension’s holistic assessment, AP Pension compares the companies’ business models with the goals of the Paris Agreement by, among other things, taking into account:
• The companies’ investments in exploration for new oil and gas fields.
• Whether the companies can present a business model and future plans that are in line with the goals of the Paris Agreement.
• The companies’ climate ambitions in the form of CO2 reduction targets.
• The companies’ lobbying activities.
