The fourth largest pension fund in Denmark has apparently divested itself of investments in five Canadian oil producers, and is assessing another 44 oil and gas companies, amidst concerns that fossil fuel companies are at risk of becoming stranded assets and facing long-term heavy financial losses.
The news was reported by the Financial Times this week, which revealed the Danish pension fund had already pulled investments from five Canadian oil producers, citing concerns that the businesses were not lining up well in a “low-carbon future” and that potential heavy losses could make the companies a financial risk.
“We have decided to divest from certain companies involved in energy and carbon-intensive extraction methods, which we do not believe fit in a low-carbon economy,” said Pelle Pedersen, head of responsible investment at PKA. “This is not to say the oil and gas sector will be disrupted tomorrow, but we have to accept what is happening right in front of our eyes. The energy sector is changing [at a very high] speed.”
PKA is one of the largest pension service providers in Denmark, manages assets on behalf of three separate pension funds with 275,000 members, and has a total asset market value of €33.6 billion.
PKA is also apparently set to assess whether to divest from a further 44 oil and gas companies upon investigating of their preparations for a low-carbon future.
Pension funds and other large investors are almost universally anticipating a transition to a low-carbon future, and are therefore taking steps to mitigate their losses. There are those investors looking to make socially-aware investment decisions, but as the transition continues to gain momentum, the business case for divesting from fossil fuel companies and production is becoming more and more clear. Last year, Norges Bank, Norway’s $900 billion government pension fund, began excluding companies from its wealth fund based on whether a company generated more than 30% of its revenue or activity from coal.
Currently, the global divestment movement is valued at $5.45 trillion, with 707 institutions and over 58,000 individuals combining to divest from fossil fuels (according to figures from the Fossil Free campaign).
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