Unipension, the €13.4bn umbrella organisation for three Danish pension funds, has become the latest big asset owner to be urged by its own members to divest fossil fuel firms on the grounds that fossil fuels are unsustainable, both economically and environmentally.
At tomorrow’s (April 29) annual meeting for MP Pension, one of the schemes in the Unipension organisation, a vote will be held on a proposal from 23 beneficiaries seeking divestment of oil, gas and coal firms. “We see investment in these companies as inconsistent with the fund’s mission of providing us with a stable pension and with a secure future for our fellow human beings, children and grandchildren,” the beneficiaries state in their proposal.
If a majority of the 400 attendees expected at the meeting in Copenhagen approve the proposal, Unipension, which invests MP Pension’s assets, will have to consider it.
The proposal is not legally binding due to its potential impact on the returns of beneficiaries, a spokeswoman for Unipension said.Currently, Unipension has 1.5% of the assets from all three schemes invested in oil and gas firms and 0.01% in coal firms.
Unipension recommends that attendees of Tuesday’s meeting reject the proposal and has published a 36-page position paper explaining its reasons. While it acknowledges the environmental and financial risks posed by the fossil fuel industry, Unipension stresses that it should not be used as a political tool. “We do not want to make policy, even in the environmental area, using the assets of our members. This is outside our core competence and conflicts with the key aim of creating good and stable returns for our members,” Unipension said in its position paper.
As to the “stranded assets” assumption – that is the possibility that, due to regulation, a large amount of the world’s fossil fuels will be left untouched – Unipension said there was no factual evidence supporting the claim and hence does not discern “a price bubble” among fossil fuel stocks.
Furthermore, “our exclusion of a central and globally integrated industry would pose a significant risk, because the investment universe would be significantly reduced, thereby narrowing diversification possibilities and return potential,” Unipension added.