3 min read
Dewi Dylander | Deputy Executive Director, PKA (Pensionskassernes Administration)
Phenix Capital Oct 7, 2021 11:05:56 AM
Our members primarily work in the healthcare sector and are very concerned with sustainability in general – hereunder the environment, labour, and human rights, which means that there has been a particular push from them for us to invest responsibly and sustainably.
We want to accommodate our members’ wishes and therefore we began our responsibility journey back in 2000 when we excluded all companies producing controversial weapons. We then excluded all tobacco manufacturers in 2006, implemented a 90% coal tolerance in 2015 which then was further restricted to 20% in 2020, and lastly a 0% tolerance for coal mines and oil-sand.
This has further developed into comprehensive guidelines and politics on responsible investments as well strategic initiatives such as our microfinance, green bonds, and sustainable housing investments with a focus on biodiversity. We have introduced three ambitious strategic initiatives: a coal initiative from 2015, an oil and gas initiative from 2017, and lastly our transportation initiative from 2019.
The common denominator for these three strategic initiatives is that they through active ownership encouraged companies within the given sector to rethink their business model and put forward ambitious plans to become more sustainable and responsible. The companies that did not show any signs of improvement or rejected our dialogue were placed on our exclusion list effective immediately.
Furthermore, we will publish our first TCFD report in October 2021 and have in that connection intentions of setting concrete reduction goals for 2025 on the way to becoming 100% carbon neutral by 2050.
Lastly, we have implemented a 15% ESG tilt on our equity portfolio to enhance our green profile and ensure a more sustainable portfolio.
At PKA we continue to seek new opportunities within the field of impact investing as we are certain that this is the future of stable investing and thus the best way to ensure our members a good return on their investments.
IS THERE ONE THEME WITHIN THE SDGs THAT YOU SPECIFICALLY IDENTIFY OR SIMPATHISE WITH?
Our Board has decided that whilst all SDGs are important and should be considered, we at PKA have an extra focus on goals 5, 6, 7, 8, 9, 11 and 13.
CAN YOU HIGHLIGHT SOME OF THE LEARNINGS FROM PKA’s 20-YEAR JOURNEY, ESPECIALLY BEING ONE OF THE CLIMATE LEADERS IN THE DANISH MARKET?
One of the most important learnings is to stay motivated and continuously seek new opportunities. We have been able to be at the forefront because we dare to take a risk, such as we did back in 2011 with our first offshore windmill farm investment in Anholt in the North Sea. Since then, we have increased our green investments to 4,85bn EUR and have set a goal to have invested 7,1bn EUR in green investments by 2025.
Most recently in 2021, we invested 13m EUR in the green battery factory Morrow. Morrow will collaborate with a range of industrial companies, including Haldor Topsøe, ABB, Siemens og Elke regarding the development of green batteries. The factory will deliver batteries to more than 700.000 electric vehicles and employ 2.500. The factory uses 100% renewable water power to produce the batteries with the lowest possible CO2 emission.
PKA is eager to invest in PtX technology as this is likely to be a significant part of the solution to our current energy problem i.e., fossil fuels and their detrimental environmental consequences. We are therefore investigating where we can invest in the development of this technology alongside other investors and the government. Technology innovation such as PtX is of particular interest to PKA as this is one of the areas where we can potentially be first-movers.
We explore the market for climate solutions as well as social investments. We were early to get involved with microfinance back in 2010 which has since grown to 110m EUR invested in three funds and this year we pledged to have 1,34bn EUR in social investments by 2025.
Lastly, I will highlight that we cannot do this alone. We engage internationally through investor coalitions that enable us to have a greater impact on a global scale.
Back in 2019, the UN Secretary-General requested Denmark to take on a leading role regarding SDG 7: Affordable and clean energy, which resulted in the CiC. The CiC helps to mobilize ambitious financial investments towards clean energy and climate solutions in the coming decade, to help strengthen a green recovery and reach the goals of the Paris Agreement.
The CiC entailed Danish pension funds to commit 47bn EUR towards green investments by 2030, which was announced at the UN Summit in 2019. Currently, the Danish pension funds have fulfilled 35% of the goal which is significantly ahead of the initial plan.
WHAT ARE YOU LOOKING FORWARD TO IN THE COMING YEAR?
We look forward to seeing the implementation of the EU regulations (disclosure and taxonomy), as this will inevitably have a significant effect on how companies conduct business.
It will be interesting to see how companies rethink their business models and especially in light of COP26 we are certain that more investors will pledge to support the green transition.
Lastly, we are also looking forward to seeing how innovations such as Power-to-X technology will develop and what opportunities that will provide for us as investors.
PKA is one of Denmark’s largest pension companies with 335,000 members and investments of $350bn.