Asset owners across the Nordics and the UK have committed to invest $130bn into clean energy and climate solutions by the end of the decade.
The move, announced at COP26 this morning, is another sign that investors are shifting their focus from reducing portfolio-level emissions to generating real-economy climate impact.
Members of the coalition come from Sweden, Norway, Finland, Denmark, Greenland, Iceland, the Faroe Islands and Britain (see box below). The commitment has been organised by the Climate Investment Coalition, a public-private initiative set up in 2019 by the Danish government, the Institutional Investors Group on Climate Change and Insurance & Pension Denmark.
|List of CIC Members|
|Almenni Pension Fund||Environment Agency Pension Fund||Ilmarinen||Merseyside Pension Fund, Nest Pension||Stapi Pension Fund|
|Bank Employees’ Pension Fund||Festa Pension Fund||KLP||Pension Fund of Commerce||Storebrand Group|
|The Pension Fund for Reykjavík City Employees||Frjálsi Pension Fund||Lifsverk Pension Fund||Skandia||Varma Mutual Pension Insurance Company|
|Birta Pension Fund||Gildi Pension Fund||Lív Group||SL The General Pension Fund|
|Brú Pension Fund||Greater Manchester Pension Fund||LSR – Icelandic Pension Fund for State Employees||SPP|
It covers public and private equity investments, as well as those in green energy infrastructure, green bonds, credit and real estate. Each asset owner is required to report its progress on the goals to CIC annually.
Speaking at the launch of the announcement this morning, Bo Foged, the CEO of Denmark’s biggest pension fund, APT, said its plan to invest $25bn in green investments by 2030, first published last week, “will make ATP the largest green investor in Denmark”. It will invest to reduce the carbon footprint of its listed equities, corporate bonds and real estate portfolios by 70% by 2030, compared with 2018. It will also require all investee companies to disclose their CO2 emissions by 2025.
Norway’s new Prime Minister, Jonas Gahr Støre, also spoke at the event, highlighting his government’s plans to commit Norway’s giant sovereign wealth fund, Government Pension Fund Global, to Net Zero by 2050.
In a report last month, the government said the fund must have “a long-term goal of zero emissions from the companies in which [it] has invested”. It will be given the freedom to invest more in renewables infrastructure and “other climate technology” under the plans.
Støre said at today’s event: “It’s a fund that is meant to last for eternity, but if it’s going to last for eternity, we have to take care of eternity. And that’s why in parliament, my government will propose that this fund should not only be a leading fund – it should be the leading fund in managing climate risk.”
He added that every investment should be stress-tested against a Net Zero scenario, echoing the government’s plans to introduce climate stress tests for investments. It also hinted in its October report at changes to capital requirements to address climate-related financial stability.
Government Pension Fund Global is facing changes beyond climate change, with the government also promising to tighten divestment rules for the fund, “especially [for] companies that break human rights and [International Labour Organisation] conventions on labour rights”. And it will be asked to promote “good tax ethics”.
Norway’s largest non-state pension fund, KLP, is another member of the CIC coalition, having committed to investing €600m annually in climate solutions such as renewable energy.
Iceland’s pension funds have estimated that by 2030 they will have invested 20% of the country’s GDP in green investments, according to Thorey Thordardottir, Managing Director of the Icelandic Pension Fund Association.
Meanwhile, Greenland’s Prime Minister, Múte Bourup Egede, used today’s session to announce that the country is seeking institutional investors to help it tap its hydropower resources. “Greenland holds huge, untapped hydropower resources that exceed our domestic demand many times over,” he said. “In the next couple of years, we will invite investors to develop these resources, together with Greenland, and our plan is to open a call for proposals for a number of the largest hydropower resources we have… It is my hope that we, together with key institutional investors, can mobilise the necessary investment to make Greenland the world’s largest green energy island.”
CIC said that its next move was to mobilise similar commitments from investors in the EU and the US.