Latest news with #AkademikerPension
DW
08-08-2025
- Business
- DW
Why are investors still financing fossil fuels? – DW – 08/08/2025
Financial players who have committed to climate action continue to inject trillions into the fossil fuel industry. What happened to divesting from oil and gas? In 2016, a Danish pension fund had a change of heart that is rare in the financial sector. At the time, AkademikerPension had $1 billion in investments in what were considered the safe financial havens of oil giants like ExxonMobil, Shell and BP. But as global temperatures continued to rise, that didn't sit right with the company board. Members studied different climate scenarios available at the time and saw that continued investment in fossil energy was not going to make financial sense in the long term. "That was really the main conclusion for us driving our decision to divest the sector," said Anders Schelde, the fund's chief investor. The decision was not only about achieving "good investment results," but about doing it "in a responsible manner," he added. So, the fund pulled its $1 billion out of the oil companies with a view to using it in a more climate friendly way. The move was an active statement, but it did not dent the fortunes of the fossil fuel industry. The sector still receives an annual trillion dollars in investments and saw a bumper 2024 with oil, gas and coal use reaching global highs. In addition, new exploration licenses issued, collectively cover an area the size of Sweden. Even as global temperatures — inextricably linked to emissions from burning fossil fuels — continue to rise, predictions are for more growth in the sector. While many say they'll invest in renewables, in reality investors are slow to follow through. So, what's holding them back? Most new energy capacity now comes from solar or wind, which are both much cheaper to install than digging for coal or drilling for oil. But a report by Bloomberg's market research branch, BNEF, found that for every $100 (€88) banks invest in such renewable infrastructure, they put $112 into fossil fuels. In its latest World Energy Investment report, the International Energy Agency (IEA) said higher energy demand for artificial intelligence, data centers and the desire for energy independence is driving investment in renewables. But to meet the targets agreed in global climate talks, "the annual investment required in renewable power still needs to double," according to the IEA. At the same time, "the fossil fuel industry is still very profitable, with high returns in the short term," said Nadia Ameli, professor in climate finance at University College London. That's reflected in the investment habits of around 60 of the world's biggest banks, which have injected around $7 trillion into the fossil fuel industry since the 2015 Paris Climate Agreement, according to a 2024 report published by several NGOs. In Paris, the world pledged to try to keep global warming to 1.5 degrees Celsius (2.7 degrees Fahrenheit) by burning less coal, oil and gas. Whether in the form of bonds or syndicated loans — which sees several banks band together to grant a join loan — much of the cash has repeatedly come from the same financial institutions. Yet many of those banks, along with asset managers and insurers, have pledged to align their investments with reduced emissions by 2050. Ameli said commitments made in initiatives like the Net-Zero Banking Alliance, which aims to support banks in meeting the Paris Agreement goals, were voluntary and have not yet amounted to much. "Even if over time we see some banks reducing their investments, when we look at the total finance provided to the fossil fuel sector, the amount was always the same. So that means someone else stepped in," she said. Speaking off-the-record, one major investment company told DW that as long as fossil fuel demand exists, money will be invested, adding that it's up to politics, tech and consumers to make investors shift their money. Divestment from fossil fuels has grown in recent years. According to a non-profit database, more than 1,600 organizations, including churches, universities and a couple of large funds, have committed to either fully or partly withdrawing their investments from the industry. Motivated by a wish to avoid the financial risk of stranded assets in the case of declining fossil fuel use as the world continues to warm, they also want to take climate action. That means stopping the burning of oil, coal and gas, which are responsible for almost 90% of all planet-heating CO2 emissions. For AkademikerPension that meant moving the $1 billion they had tied up in oil giants, to renewable energy companies like Danish wind energy giant Orsted. Some of that money was in bonds, some in shares. Owning shares means owning a part of the company. Unlike loans or bonds — where the investor charges interest on what they lend — buying shares in a company brings more than just financial gain. Stable share ownership is a vote of confidence for a company and helps to create a buoyant market value. Shareholders in turn gain a seat at the company table, where they can exert influence on activities. To that end, critics of divestment say that rather than pulling investment out of fossil fuel companies, it's better to try and have some internal influence to steer a company's course from within. But the evidence of what is more effective —divestment or engagement — is scant. One US study that looked at ownership of high-emitting businesses, including fossil fuel companies, found reductions in greenhouse gas emissions when stock ownership by green funds increased. And concluded that "green investors make companies greener." According to an overview study, divestment can reduce a fossil fuel company's market value but doesn't seem to impact its carbon emissions. Additionally, Ameli said the overall volume of investment in the sector hasn't changed. "If an investor withdraws support, someone else is ready to step in," reiterated Ameli. Many researchers and investors suggest the best way to exert pressure on a company to cut emissions is engagement, with divestment as a backup. Overall, Anders Schelde from AkademikerPension views the divestment as profitable for their pension fund. "But if you take a short-term horizon, just measure over the last three or four years, it's been a very bad decision," he adds. In recent years, many renewable energy companies, including Orsted, have performed poorly on the stock markets. Ameli said the renewables sector faces different challenges to coal, oil and gas, in part because it is "way more fragmented," making it more difficult to invest large sums. And because it also often generates revenue in local currencies, volatility can influence the profit for investors. Binding regulation rather than voluntary divestment is needed to accelerate change, say experts. "Like a public, transparent assessment of the financial sector of a country and its exposure to the fossil fuel industry," said Katrin Ganswindt, a campaigner at non-profit Urgewald. This is something France is doing. The idea is that laying fossil fuel investments bare increases pressure to transition to renewable energy investments. France has also tightened international standards for green investments, which are often criticized for giving loopholes to fossil fuels. Similar strict rules apply to investors operating throughout the EU. "European countries are leading the way," Ameli said, adding regulations need to target the world's biggest banks to create a ripple effect. "If the biggest investors pull out of fossil fuels, this could trigger a global retreat of banks from the sector," she view this video please enable JavaScript, and consider upgrading to a web browser that supports HTML5 video
Reuters
26-06-2025
- Business
- Reuters
Danish pension fund lifts ban on investments in European defence stocks
COPENHAGEN, June 26 (Reuters) - Danish pension fund AkademikerPension has lifted a self-imposed ban on investment in six of Europe's largest arms makers and some smaller groups, it said on Thursday, citing a worsening security situation and the need to boost European defences. Many of the continent's investment funds exclude weapons manufacturers from their portfolios on ethical grounds, such as their involvement in the manufacture of components for nuclear arms. AkademikerPension's decision to end its ban comes as Europe faces its largest military build-up in recent history, the fund said in a statement. "We believe it is the most responsible thing to do - both in terms of return and social responsibility in the current situation," CEO Jens Munch Holst said. "We don't want a small turnover from nuclear weapons-related activities to prevent us from providing capital to support the building of a European defence," he said. The fund manages 157 billion Danish crowns ($24.61 billion), it said on its website. NATO leaders on Wednesday backed the big increase in defence spending as demanded by U.S. President Donald Trump, and restated their commitment to defend each other from attack as tensions with Russia rise. But there are question marks over how member nations will afford the targeted 5% of output on defence, leading to potentially difficult budget choices. AkademikerPension's change of policy meant that the fund can again invest in Airbus ( opens new tab, Babcock International (BAB.L), opens new tab, Dassault Aviation ( opens new tab, Leonardo ( opens new tab, Safran ( opens new tab and Thales ( opens new tab, it said. Britain's Babcock said it expected to benefit from more UK government spending on defence as it lifted its medium-term forecast on Wednesday. Serco Group, Ultra Electronics and Groupe Reel were also removed from AkademikerPension's blacklist, but it maintained a ban on 46 defence groups globally over links to controversial weapons or human rights violations. ($1 = 6.3788 Danish crowns)
Yahoo
17-03-2025
- Business
- Yahoo
Hedge Funds Get Dragged Into Mandate Tensions Between EU and US
(Bloomberg) -- As money managers adapt to a new reality in which their oil policies risk losing them business, hedge funds are finding they're also being dragged into the fray. ICE Eyes Massive California Tent Facility Amid Space Constraints How Britain's Most Bike-Friendly New Town Got Built Washington, DC, Region Braces for 'Devastating' Cuts from Congress The Dark Prophet of Car-Clogged Cities Saving the Signature Sound of Washington, DC Pension funds in northern Europe are currently reviewing US mandates amid concerns over climate risk. In London, meanwhile, lawyers advising hedge funds say their clients are dropping oil exclusions in order to hold on to US clients. The 'concern is that oil screens may cause redemptions by oil-state investors,' said Lucian Firth, a partner at London-based law firm Simmons & Simmons who advises hedge funds with as much as $20 billion of assets under management. And oil states 'are big investors in hedge funds.' It's a split-screen moment which has fund managers struggling to strike the right balance. State Street Global Advisors has already lost mandates from pension funds in the UK and Scandinavia after retreating from its climate commitments. And PME is currently reviewing a €5 billion mandate with BlackRock Inc., which the Dutch pension fund says is at risk due to 'BlackRock's diminishing ambitions in responsible and sustainable investing.' At the same time, the state pension plan in Republican-led Indiana recently replaced BlackRock with State Street, based on an assessment that BlackRock was too focused on an environmental, social and governance agenda. And the Texas Comptroller of Public Accounts is targeting financial firms it says are 'boycotting' the oil and gas industry. Firth says he has hedge fund clients who are worried that an oil screen on just one fund can be enough to lose US clients, 'even if they have other funds which do potentially invest in oil.' The developments have sent a chill through the wider investment management industry, with many opting to remove clear references from public documents that might place them in one camp or another. But it's a strategy that may backfire, according to Lucie Pinson, executive director of Reclaim Finance, a French nonprofit. 'Financial institutions will need to pick a side,' she said. Anders Schelde, the chief investment officer at AkademikerPension — a Danish pension fund known for its focus on sustainability — said it's important for the fund that external asset managers are 'aligned to some degree with how we think and how we see the world.' And in the current climate, Schelde said 'the odds of a US manager getting to our portfolio going forward have become lower.' The $20 billion fund just pulled a $480 million mandate from State Street. State Street has said that as AkademikerPension does more investment management inhouse, it looks forward to continued discussions about future opportunities. BlackRock has said that it's a 'global leader' in sustainable and transition investing, and that it offers climate-focused clients in Europe a choice of products that deliver performance in line with their preferences. The 'Woke' Factor As US asset managers risk losing more European contracts, they remain under pressure from a newly emboldened Republican Party that's made fighting climate policies a battle cry. Money managers face lawsuits and bans if they're suspected of embracing environmentally friendly investments vilified by the GOP as 'woke' and financially unsound. Those political threats have coincided with a selloff in green stocks, which by one measure have lost about two-thirds of their value since the end of the pandemic. In the same period, big oil, big tech and the wider market have all rallied. To be sure, clean-energy stocks have outperformed both big tech and the wider market so far this year, as they prove more resilient to the global selloff that just sent the S&P 500 Index into a correction. At the same time, there's an awareness in Europe that pulling large mandates from the biggest US firms is far from risk-free. In Switzerland, lawmakers just voted to keep State Street as the custodian of a 46-billion-franc ($52 billion) pension hoard. The bill had been brought forward by a parliamentary committee in January, due to fears that the Trump administration might suddenly order State Street to freeze funds amid growing tensions between Europe and the US. In the event, Interior Minister Elisabeth Baume-Schneider said the bill would have 'damaged the reputation of Switzerland as a financial center,' while Kathrin Bertschy of the Green Liberals said annulling State Street's contract would hurt the perception of legal certainty. US money managers are now navigating a political landscape in which they can be blacklisted from either side of the ESG debate. Late last year, BlackRock, Vanguard Group Inc. and State Street were all sued by a group of states led by Texas for allegedly breaking antitrust law by adopting environmental strategies that hurt the supply of coal. The suit alleges that those investment policies drove up electricity prices. For hedge funds, such developments have coincided with a clear decline in enthusiasm for ESG strategies. For example, a once-popular fund class under the European Union's Sustainable Finance Disclosure Regulation, known as Article 8, has now fallen out of favor, Firth at Simmons & Simmons said. While insisting that 'ESG is far from dead,' Firth said hedge funds now find it more convenient to keep segregated accounts for such holdings. Separately managed accounts (SMAs), which are an 'entirely private' vehicle between an asset allocator and a fund manager, 'are an increasingly common way for hedge fund mangers to deliver strategies to allocators,' he said. (Adds comment from Firth in sixth paragraph.) Nvidia Looks Past DeepSeek and Tariffs for AI's Next Chapter How America Got Hooked on H Mart How Trump's 'No Tax on Tips' Could Backfire for the Working Class The Real Reason Trump Is Pushing 'Buy American' College Presidents on Trump, Tuition and Universities Under Pressure ©2025 Bloomberg L.P.
Bloomberg
14-03-2025
- Business
- Bloomberg
Tesla Dumped by Danish Pension Over Labor Rights, Musk's Actions
Danish pension fund AkademikerPension is blacklisting Tesla Inc., citing the company's record on workers' rights, as well as the growing risks posed by the actions of Elon Musk. 'Patience has a way of running out at some point,' AkademikerPension Chief Executive Officer Jens Munch Holst said on Friday. 'We've now reached that point when it comes to Tesla.'
Bloomberg
13-03-2025
- Business
- Bloomberg
Europe Pension Funds Prepare to Ax Long-Standing Bans on Defense Stocks
Several pension funds in Europe are reviewing long-standing exclusion policies on weapons manufacturers, as they work to update their portfolios to match the political moment. PFA Pension, which oversees about $120 billion, told Bloomberg it's now in talks with its board about removing a ban on holding companies that make components for Western nuclear defense. AkademikerPension, which manages over $20 billion, says it's asking members whether it can increase exposure to arms manufacturers, including those producing controversial weapons.
