Danish pension funds split over international climate alliance membership

Several pension funds are in dialog with an alliance for climate neutral investors supported by the UN. "We just need to get the formalities into place," says Danske Bank's pensions arm. Others highlight that it is hard to relate to the very long-term goals that the members of the alliance commit themselves to.
Torben Möger Pedersen, CEO of Pensiondanmark and cofounder of the alliance. | Photo: Mik Eskestad/Jyllands-Posten/Ritzau Scanpix
Torben Möger Pedersen, CEO of Pensiondanmark and cofounder of the alliance. | Photo: Mik Eskestad/Jyllands-Posten/Ritzau Scanpix

Pensiondanmark, Allianz Global Investors, Folksam Group and Storebrand were among the 12 founding members of an investor alliance, which was launched at the UN climate summit in New York in September with a lot of excitement and big ambitions. The alliance is called the Net-Zero Asset Owner Alliance, and members commit to making their investment portfolios CO2 neutral by 2050.

Since then, MP Pension and PFA have joined the alliance - and more Danish pension companies are looking to follow in their footsteps. This includes Danske Bank's pension unit -- Danica Pension -- who says that he goals of the alliance are completely compatible with the pension company's own investment policy.

"We support the Net-Zero Asset Owner Alliance's goals 100 percent, and we have been in dialog with the alliance for a long time. We just need to get a few formalities completely in place before we join the alliance. We expect that to happen soon," writes head of communications Tim Smidemann in an email to FinansWatch.

However, other pension companies have more doubts about the alliance.

Focus on the now

An anonymous industry source has told FinansWatch that the idea is good, but that the alliance is "all skin and bone".

Sampension says that it has not considered the initiative yet, because it is focusing on the near future instead of the long-term 2050 goal.

"Personally, I struggle a bit with goals that are 30 years away. That is a long time, and doesn't commit the people that set the goal to very much. I am more concerned with what we can do here and now. Our goal to reduce our climate footprint can lead to exactly the same result - CO2 neutrality in 2050," says Søren P. Espersen, head of communications and HR at Sampension.

Topdanmark says something similar. The company is also focusing on more immediate concerns, and has not made any decisions about becoming a member of the alliance.

"Firstly, we need to live up to our goal that 20 percent of Topdanmark Livsforsikring's provisions will be invested in green investments by 2030," says Martin Olsen, press coordinator at Topdanmark, in an email.

Pensam has also not decided whether they will join the alliance. Mikael Bek, who is head of responsible investments, says becoming part of the group comes with a price.

"At Pensam, we know the organization, and we can fully back its intentions. We are currently deciding whether we will officially join the alliance. It is partly a question of resources, as we are already part of a diverse network when it comes to responsible investments, and joining the alliance requires extra work, such as generating more reports," he says.

Founders are happy

Although there are a few concerns about the Net-Zero Asset Owner Alliance, it is generally supported by Danish pension companies.

Industriens Pension is very interested in the initiative. Head of Responsible Investments Christina Gordon Christiansen says that the company already has a policy stating that investments must be in line with the Paris Agreement, where the UN member countries agreed to keep the global temperature rise below 1.5 degrees.

"We have already invested around EUR 1.3 billion (DKK 10 billion) in green assets as a result of our goal to support the Paris Agreement. As the goal of the Net-Zero Asset Alliance is to contribute to the implementation of the Paris Agreement by accelerating the transition to a low carbon economy, it would be natural for us to support the initiative as well," she writes to FinansWatch.

Pensiondanmark, which was among the original members of the alliance, is happy about the new members.

"Today, there are over 25 members and the total AUM is around EUR 4,400 billion (USD 5,000 billion). The goal is to reach double this amount, and we are very happy that our Danish colleagues have joined and can identify with our way of working," says Torben Möger Pedersen, CEO of Pensiondanmark.

He does acknowledge, however, that there are some hurdles to overcome to reach climate neutrality by 2050. For example, the data that is currently used to assess the climate footprints of investments is still relatively new.

"It is clear that there will be a level of uncertainty about the first reports from the alliance members, but that uncertainty will lessen over time," says Möger Pedersen.

"Many of the members of the alliance already have experience in measuring and publicizing climate impact, for example of their equity holdings. So I am sure that it will be valuable from the start," he adds.

English Edit: Catherine Brett

PFA follows Nordic peers and pledges carbon-free future 

Storebrand, Nordea, Folksam add pressure on energy agency to revamp fossil fuel forecasts

Five Nordic pension funds in global alliance on carbon neutral investment portfolios 

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