Denmark’s fourth-largest pension fund has pulled its investments in five Canadian oil producers over concerns that fossil fuel businesses are at risk of heavy losses as governments globally attempt to tackle climate change.
PKA, which oversees the retirement income of 300,000 Danish workers, last month divested from Athabasca Oil, Canadian Natural Resources, Cenovus Energy, Imperial Oil and Suncor Energy. The pension fund, which oversees $35bn of assets, will assess whether to pull out of another 44 oil and gas companies once it has investigated to what extent these businesses are preparing for a “low-carbon future”.
Pelle Pedersen, head of responsible investment at PKA, said: “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. 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.”
Big investors are scrutinising their exposure to fossil fuels in the wake of the 2015 Paris agreement, where more than 190 countries agreed to fight rising temperatures. This has prompted fears that coal, oil and carbon-intensive industries could suffer financially as governments attempt to tackle global warming.
Paul Fisher, senior associate at the Cambridge Institute for Sustainability Leadership and former deputy head of the Bank of England’s Prudential Regulation Authority, said: “It is not surprising that we see a large pension fund that is no longer prepared to take the increasing risk associated with oil assets, which do not have a long-term future.”
Tom Sanzillo, director of finance at the Institute for Energy Economic and Financial Analysis, the research organisation, said oil and gas holdings are producing “substantially less value” for investors than in the past.
Mr Sanzillo, who was the deputy comptroller of New York State in 2007, where he oversaw a $156bn pension fund, added: “Oil and gas have been major contributors to pension funds for decades. But that is changing. Investors are rightfully concerned about what the future course of investment is going to be for the companies, looking at it both from a financial and a climate angle.”
Danish pension fund PKA dumps Canadian oil