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Largest pension fund in Europe warns banks about continued fossil fuel project funding

January 24, 2023

Bloomberg ($):

One of Europe’s biggest investors is putting banks on notice and may start exiting the sector unless it sees proof that claims of portfolio decarbonization are matched by action.

“The financial sector has really lagged,” said Dominique Dijkhuis, a member of the executive board and head of investments at ABP, which is Europe’s largest pension fund. “If you say you’re committing to a climate course and then still actively granting loans to new fossil products, that’s just not aligned.”

ABP is setting “transparent” key performance indicators that financial firms must meet in order to avoid being sold off in the next three years, she said in an interview. Banks need to “take responsibility,” which means looking “very critically” at their fossil-fuel exposures and “maybe move out.”

The remarks reflect a rapidly evolving landscape, as institutional investors, regulators, legislators and climate activists ramp up scrutiny of the finance industry’s role in fueling carbon emissions. That’s as banks making net-zero pledges continue to provide substantial support to oil, gas and coal firms that are expanding their business.

ABP made headlines in late 2021 when it announced it was divesting a €15 billion ($16.3 billion) portfolio of fossil-fuel assets. It’s now keen to cut its indirect exposure to high-carbon assets. “We’re concerned that the financial sector is still invested massively in fossil fuels,” Dijkhuis said.

[Frances Schwartzkopff]

More: Europe's Biggest Pension Fund Issues ESG Warning to Banks

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