https://www.dw.com/en/danish-pension-fund-dumps-oil-majors-on-climate-change-concerns/a-50288283
[links and images in online article]
Danish pension fund dumps oil majors on climate change concerns
The $20 billion fund says oil companies including ExxonMobil and Royal
Dutch Shell are not doing enough to meet goals set out in the Paris
Agreement. But the fund has ruled out a blanket ban on fossil fuel
companies.
A Danish pension fund has said it would sell its stake in major oil
companies as their business models are incompatible with the goals set
out in the Paris climate agreement.
MP Pension, a $20 billion (€18 billion) pension for Danish M.A's,
M.Sc.'s and Ph.D's who are employed in public sector universities and
upper secondary schools, said it will dump its stakes in 10 of the
world's largest oil companies, including ExxonMobil, BP, Chevron,
PetroChina, Rosneft and Royal Dutch Shell.
The divestments amount to nearly $100 million, or 0.5% of the fund's
total portfolio.
"We found that none of the oil majors has a business model that is
compatible with the goals of the Paris Agreement and thus we decided to
sell them all," Anders Schelde, the fund's chief investment officer,
told DW. "We put them all on our blacklist, our exclusion list."
The fund reviewed the corporate strategies of the companies to figure
out how serious they were about tackling climate change, their capital
expenditure to see if they were building new fossil fuel projects and
finally their lobbying efforts, in order to ensure they were attempting
to meet climate goals.
Dirty investments
MP Pension's decision comes as asset managers across the world review
their investments in oil, gas and coal companies at a time the world is
struggling to limit the global average temperature rise to below 2
degrees Celsius above preindustrial times, as agreed in Paris in 2015.
In March, Norway's $1 trillion asset manager — the world's biggest
sovereign fund — said it would shed its stakes in oil and gas explorers
and producers. But the fund fell short of expectations that it would
dump all its oil and gas investments for good. It said it would remain
invested in major oil companies such as Shell, BP, Total and ExxonMobil,
in which it owns significant stakes.
The Norwegian government stressed the move was based solely on financial
considerations rather than climate concerns and that it did not reflect
any particular view of the oil industry's future prospects.
MP Pension's latest announcement is part of a decision the fund made in
2016 that its investment strategy should be aligned with the goals of
the Paris Agreement.
But the fund's latest move is not only based on climate concerns.
"Our first and foremost concern is future investment returns," Schelde
said. "The companies that we are divesting have delivered poor returns
in the past 4-5 years and we feel for the next 10-20 years they would
continue to be poor."
Sticking with fossil fuels
MP Pension does not plan to completely move away from investments in
fossil fuel companies.
"We are not ditching fossil fuels entirely. For example, we do not
exclude companies that focus on gas because we feel gas is an
intermediary fuel that we will be needing to replace, for instance,
coal, which has a carbon intensity roughly double that of gas," Schelde
said.
"We realize that fossil fuels will remain part of the energy mix for
many years, even 100 years. But we need to bring down the amount of
carbon that we emit into the atmosphere."
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