Climate ranks high on Danish pension fund’s agenda
Kasper A. Lorenzen, Group CIO for Danish pension fund PFA, managing DKK 730bn (€98bn) assets under management, said that climate considerations will be high on its agenda. He said that extra sustainable and climate-friendly investment choice continues to be successful among investors while governments around the world too are announcing new ambitious climate goals, such as US President Joe Biden’s plans to invest US$2,000bn in climate and infrastructure.
The Danish fund has started work on the climate front by anchoring the new pan-European guidelines for sustainable financing. Additionally, the fund is a part of the UN Net Zero Asset Owner Alliance, which aims to be climate-neutral by 2050. Lorenzen said that the fund is working on setting sub-goals and follow-ups in this area. “While we have been working systematically for some time on the climate footprint of our equity investments, we are now in the process of spreading our efforts to the rest of our investment portfolio. In this context, it is also absolutely crucial for us to have a dialogue about the assets we invest in, and if necessary, get rid of those that do not support our long-term climate ambitions,” added Lorenzen.
PFA will be setting a five-year carbon dioxide (CO²) reduction target before this summer for all its listed shares, corporate bonds and property investments, aligned with Paris Agreement goals. The fund will also ensure that its pension product Climate Plus is carbon neutral before 2025.
In the first quarter of 2021, PFA generated an investment return of DKK 10bn (€1bn) for market rate customers, with its equity portfolio yielding total returns of 5.9%. High risk profiles were more successful while bond-heavy, low-risk profiles were affected by rises in interest rates.