One of the world’s largest pension funds, Dutch fund ABP, has announced plans to divest its €15bn of holdings in fossil fuel companies and projects within 18 months.
The fund has holdings in about 80 companies in the fossil fuel sector, including Royal Dutch Shell. These holdings account for some 3% of its total assets.
Following months of campaigning by green groups and activist investors, ABP announced late on Tuesday (26 October) that it will sell its holdings in all fossil fuel firms and projects by the end of the first quarter of 2023. It will then re-invest in renewable electricity generation, electricity transmission and the transport sector.
ABP’s chair Corien Wortmann-Kool has stated that the fund will engage with new holdings in the energy and transport sector to push them to accelerate sustainability plans.
Wortmann-Kool said: “The ABP board sees the need and urgency for a change of course. We part with our investments in fossil fuel producers because we see insufficient opportunity for us as a shareholder to push for the necessary, significant acceleration of the energy transition at these companies.
“We want to contribute to minimising global warming to 1.5C. Large groups of pension participants and employers indicate how important this is to them.”
Additionally, Wortmann-Kool gave a statement to Dutch broadcaster NOS, claiming that the recent climate reports from the UN’s Intergovernmental Panel on Climate Change (IPCC) have been a key driver behind the decision.
ABP was notably the subject of a lawsuit filed by climate activist group Fossil Free in September. The group argued that ABP’s continued support for the fossil fuel sector was not consistent with its pledge to align with the Paris Agreement.
Other groups to have put pressure on ABP over climate grounds this year include Follow This.
The fund said in a statement that it does not expect the divestment commitment to affect its long-term returns.
ABP’s announcement came as 72 faith institutions and the cities of Glasgow, Paris, Copenhagen, Seattle, Auckland and Rio De Janeiro committed to divest from fossil fuels. Timelines will vary from organisation to organisation for the commitments, made through the Stand Earth climate action group.
Also, in related news, the Scotland-based Global Ethical Finance Initiative (GEFI) has this week published a new roadmap to help pension providers make the transition to net-zero. The roadmap came as Make My Money Matter and Route 2 published research revealing that the investments of UK pension schemes enabling the release of 330 million tonnes of carbon every year – more than the national domestic emissions footprint.