Daily ESG Briefing: Dutch pension fund ditches Oil & Gas, turns engagement focus to energy consumers

The latest developments in sustainable finance

Dutch pension fund Metaalpensioenfonds PME has sold out of all oil and gas extraction and distribution and redesigned its engagement programme to focus on large consumers of fossil-based energy. The metal workers scheme said research had shown its beneficiaries are generally supportive of stricter climate policies, and that the decision to divest would not affect total returns. Eric Uijen, chairman of the executive board, said: “Everything points in the same direction, worldwide CO2 emissions must and will be drastically reduced in the next 10 years… That is why we will invest more in sectors that enable the energy transition, such as grid management and energy storage”. Marcel Andringa, the fund’s executive director of balance sheet and asset management, added: “Due to our climate policy, the share of fossil oil and gas companies had already shrunk considerably. A number of individual companies had dropped out due to dialogue and exclusion. We have now completely said goodbye to our interests in fossil oil and gas companies.” The fund did not disclose the level of assets divested as a result of the decision. 

Norwegian Government Pension Fund Global, Norway’s giant sovereign wealth fund, has divested four new companies on the back of guidance from the country’s Council on Ethics. Israeli firms Elco, Electra and Ashtrom have all been axed over their links to Israeli settlements in the West Bank, which the fund says poses “an unacceptable risk”. Oil & Natural Gas Corp has also been excluded because of “an unacceptable risk that the company is contributing to serious violations of the rights of individuals in situations of war or conflict”. The state-owned Indian firm is engaged in oil production in South Sudan.

Saudi Arabia’s sovereign wealth fund and stock exchange have partnered on a trading platform for carbon offsets and credits, according to reports. The country’s Public Investment Fund and Tadawul Group, which runs its domestic exchange, have launched a Riyadh Voluntary Exchange Platform to help companies and institutes reduce their emissions by trading approved “carbon equivalent credits certificates”. 

US sustainable finance network Ceres has launched a new initiative called Ambition 2030, aimed at decarbonising electric power, food, oil and gas, steel, banking and transportation.  The engagement project will bring together investors, other stakeholders, and the highest emitting North American companies in each of the six sectors to secure more ambitious and transparent climate plans from firms. Stewardship will be based on Climate Action 100+’s sector-specific strategies, which have been launched recently. 

Investors’ are often less able to influence biodiversity outcomes than other environmental issues because of the dominance of unlisted companies in soft commodity supply chains, according to Fitch. A new report claims that, despite growing interest from the investment community, “biodiversity loss is a systemic phenomenon, which creates challenges for integration in investment strategies”. Limited exposure to relevant sovereign bonds, as well as “the ethical problem of engaging sovereigns on policy issues” are also challenges, the report says. 

A shareholder resolution is calling for one of the world’s biggest iron ore miners, Fortescue Metals Group, to intervene in the creation of rules to protect Australia’s aboriginal communities and land from future developments. Following public outcry over the destruction of culturally important rock shelters by Rio Tinto last year, the Australian Government is working on a bill to give Aboriginal people more say over decisions that may impact their land. But the bill has been criticised by Aboriginal groups, and now the Australian Centre for Corporate Responsibility has filed a proposal asking Fortescue to endorse further talks before the rules are approved.