Dutch fund divests from almost all fossil energy firms

Dutch pension fund PFZW has sold stakes in 310 oil and gas companies, worth €2.8bn ($3bn), as the companies do not comply with the Paris climate agreement.

The fund, which manages pensions for 2.9mn people, was worth €237.8bn at the end of 2023. PFZW announced in February 2022 that it would stop investing in the fossil energy sector, unless companies were Paris agreement-aligned.

PFZW ran a two-year "engagement programme" over 2022-23, targeting fossil fuel companies and encouraging them to "produce verifiable transition plans" that supported the treaty, the fund said. The Paris agreement seeks to limit global warming to "well below" 2°C above the pre-industrial average, and preferably to 1.5°C.

But most fossil fuel firms "have made insufficient steps in the transition to a cleaner energy mix", PFZW said. It retains stakes in just seven listed oil and gas companies — Cosan, Galp, Granuul, Neste, OMV, Raizen and Worley. These firms are "convincingly committed to switching from fossil fuel to low-carbon energy sources", the fund said.

PFZW's goal is to have 15pc of its total assets invested in "climate solutions" by 2030, meaning solutions that match climate-related UN sustainable development goals. It is now targeting fossil fuel consumers, such as utilities and manufacturing companies, "with a high carbon footprint". The fund aims to have a "climate-neutral investment portfolio" by 2050.

Norway's Norges Bank Investment Management on 7 February announced several divestments on climate grounds. The fund, valued at about $1.5 trillion, operates under a mandate from the Norwegian government that requires "that the companies in the investment portfolio have activities that are compatible with global net zero emissions, in accordance with the Paris agreement".

A score card report published today by the Imperial College's Centre for Climate Finance and Investment and think-tank Carbon Tracker assessed 50 financial institutions — banks, insurers and pension funds — and marked those with the strongest climate and energy transition commitments. The research assessed whether financial institutions had explicit policies on ending the financing of new oil and gas projects and unabated coal-fired plants, and publicly supported the IEA Net Zero Emissions by 2050 scenario. Only three banks — Denmark's Danske Bank, Sweden's Handelsbanken and France's La Banque Postale — and nine pension funds and asset managers, including Dutch funds ABP and Akademiker Pension and US fund New York City Board of Education Retirement System, received a gold award. The report noted some carve-outs from some of these institutions for investments in upstream firms as long as it is for carbon capture, utilisation and store and renewable energy. But it found that only very few banks are updating their policies to cover conventional oil and gas financing activities and that most institutions still mostly target coal lending and unconventional oil and gas.

By Georgia Gratton and Caroline Varin