Quantcast

$20 Billion Fund in Denmark Divests From 10 Major Oil Companies, Citing 'Poor Returns'

Energy
Aerial view of Denmark's Baltic Sea Coast. schneider_photografie / Pixabay

A Danish pension fund has said it would sell its stake in major oil companies as their business models are incompatible with the goals set out in the Paris climate agreement.


MP Pension, a $20 billion pension for Danish M.A's, M.Sc.'s and Ph.D's who are employed in public sector universities and upper secondary schools, said it would dump its stakes in 10 of the world's largest oil companies, including ExxonMobil, BP, Chevron, PetroChina, Rosneft and Royal Dutch Shell.

The divestments amount to nearly $100 million, or 0.5 percent of the fund's total portfolio.

"We found that none of the oil majors has a business model that is compatible with the goals of Paris Agreement and thus we decided to sell them all," Anders Schelde, the fund's chief investment officer, told DW. "We put them all on our blacklist, our exclusion list."

The fund reviewed the corporate strategies of the companies to figure out how serious they were about tackling climate change, their capital expenditure to see if they were building new fossil fuel projects and finally their lobbying efforts to ensure they remained in sync with the climate goals.

Dirty Investments

MP Pension's decision comes as asset managers across the world review their investments in oil and gas and coal companies at a time the world is struggling to limit the global average temperature rise to below 2 degrees Celsius above preindustrial times as agreed in Paris in 2015.

In March, Norway's $1 trillion asset manager — the world's biggest sovereign fund — said it would shed its stakes in oil and gas explorers and producers. But the fund fell short of expectations that it would dump all its oil and gas investments for good. It said it would remain invested in Big Oil companies such as Shell, BP, Total and ExxonMobil, in which it owns significant stakes.

The Norwegian government stressed the move was based solely on financial considerations rather than climate concerns and that it did not reflect any particular view of the oil industry's future prospects.

MP Pension's latest announcement is part of a decision the fund made in 2016 that its investment strategy should be aligned with the goals of the Paris Agreement.

But the fund's latest move is not only based on climate concerns.

"Our first and foremost concern is future investment returns," Schelde said. "The companies that we are divesting in have delivered poor returns in the past 4-5 years and we feel for the next 10-20 years they would continue to be poor."

Sticking With Fossil Fuels

MP Pension does not plan to completely move away from investments in fossil fuel companies.

"We are not ditching fossil fuels entirely. For example, we do not exclude companies that focus on gas because we feel gas is an intermediary fuel that we will be needing to replace for instance coal, which has a carbon intensity roughly double that of gas," Schelde said.

"We realize that fossil fuels will remain part of the energy mix for many years, even 100 years. But we need to bring down the amount of carbon that we emit in the atmosphere."

The company has also prepared an "inclusion" list that would include fossil fuel companies making good progress toward a greener future.

"So far there are no companies on that list. It's still empty. But I hope it grows as we move forward," Schelde said.

Reposted with permission from our media associate DW.

EcoWatch Daily Newsletter

Scanning electron micrograph of Yersinia pestis, which causes bubonic plague, on proventricular spines of a Xenopsylla cheopis flea. NIAID / Flickr / CC BY 2.0

A middle-aged married couple in China was diagnosed with pneumonic plague, a highly infectious disease similar to bubonic plague, which ravaged Europe in the middle ages, as CNN reported.

Read More Show Less
Milk made from almonds, oats and coconut are among the healthiest alternatives to cow's milk. triocean / iStock / Getty Images Plus

Dairy aisles have exploded with milk and milk alternative options over the past few years, and choosing the healthiest milk isn't just about the fat content.

Whether you're looking beyond cow's milk for health reasons or dietary preferences or simply want to experiment with different options, you may wonder which type of milk is healthiest for you.

Read More Show Less
Sponsored
Greta Thunberg stands aboard the catamaran La Vagabonde as she sets sail to Europe in Hampton, Virginia, on Nov. 13. NICHOLAS KAMM / AFP via Getty Images

Greta Thunberg, the teenage climate activist whose weekly school strikes have spurred global demonstrations, has cut short her tour of the Americas and set sail for Europe to attend COP25 in Madrid next month, as The New York Times reported.

Read More Show Less
The Lake Delhi Dam in Iowa failed in 2010. VCU Capital News Service / Josh deBerge / FEMA

At least 1,688 dams across the U.S. are in such a hazardous condition that, if they fail, could force life-threatening floods on nearby homes, businesses, infrastructure or entire communities, according to an in-depth analysis of public records conducted by the the Associated Press.

Read More Show Less

By Sabrina Kessler

Far-reaching allegations about how a climate-sinning American multinational could shamelessly lie to the public about its wrongdoing mobilized a small group of New York students on a cold November morning. They stood in front of New York's Supreme Court last week to follow the unprecedented lawsuit against ExxonMobil.

Read More Show Less
Sponsored

By Alex Robinson

Leah Garcés used to hate poultry farmers.

The animal rights activist, who opposes factory farming, had an adversarial relationship with chicken farmers until around five years ago, when she sat down to listen to one. She met a poultry farmer called Craig Watts in rural North Carolina and learned that the problems stemming from factory farming extended beyond animal cruelty.

Read More Show Less
People navigate snow-covered sidewalks in the Humboldt Park neighborhood on Nov. 11 in Chicago. Scott Olson / Getty Images

Temperatures plunged rapidly across the U.S. this week and around 70 percent of the population is expected to experience temperatures around freezing Wednesday.

Read More Show Less
A general view of the flooded St. Mark's Square after an exceptional overnight "Alta Acqua" high tide water level, on Nov. 13 in Venice. MARCO BERTORELLO / AFP / Getty Images

Two people have died as Venice has been inundated by the worst flooding it has seen in more than 50 years, The Guardian reported Wednesday.

Read More Show Less