PFZW, the €161bn pension scheme for the Dutch health care sector, has pledged to reduce by half the emissions of carbon dioxide (CO2) from its portfolio by 2020 by both divesting fossil fuel companies and engaging with others in the portfolio.
In a statement issued two weeks before the COP21 summit in Paris, PFZW said that over the next four years, it would divest around 250 companies. “The sale of the equity investments that produce the highest CO2 emissions is taking place in the energy, utilities and materials sector, where by far the greatest gains can be achieved.” By 2020, PFZW will have completely exited the coal sector and have reduced its exposure to other fossil fuel firms – i.e. those in oil and gas – by 30% against the current level.
PFZW also said that during the period of “phased exclusion,” it would engage with remaining investees to get them to lower their CO2 emissions. “In this process, preferably together with other long-term investors, pressure will be exerted on companies to remove fossil fuels from their business operations as much as possible,” the pension scheme said. PFZW’s investment operations are carried out by PGGM, its in-house asset manager.According to PFZW, accompanying the divestments will be a strategy of targeting companies with low CO2 emissions and a huge increase in investments in sustainable solutions. PFZW’s exposure to such investments, including renewable energy, “green” property as well as those related to water access and food security, is to increase fourfold to 12% of total assets by 2020.
Said PFZW: “In addition to preserving financial return, the fund strives to exchange a negative side effect (CO2) for a positive side effect of the investments: environmental gains. This reflects an important ambition of our members, namely that pension capital should contribute to a world worth living in for future generations.”
PFZW is now the second large Dutch pension fund to announce deep cuts in its CO2 emissions. Just a month ago, ABP, the €356bn pension giant for Dutch civil servants, unveiled a new responsible investment strategy which entailed a 25% reduction in emissions of the greenhouse gas by 2020. The strategy also called for a doubling of investments in renewables and environmentally friendly technologies to €58bn by then.