Dutch pension fund PFZW has completed a $3.02 billion (EUR 2.8 billion) divestment of stakes in fossil fuel companies, leaving only seven oil and gas firms in its portfolio.

PFZW retained its investment in seven companies: Cosan S.A., Galp Energia, Granuul Invest, Neste Oyj, OMV A.G., Raízen S.A., and Worley Limited. The pension fund said in a statement that the companies have a “compelling climate transition strategy” and are “convincingly committed to switching from fossil fuel to low carbon energy sources”.

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Galp, Neste and OMV are working towards having at least 30 percent of their production from climate solutions by 2030. Worley is working towards increasing revenue from facilitating alternatives to fossil fuels, while Cosan, Granuul Invest and Raízen already produce energy primarily from sources with a low carbon footprint, according to the release.

The divestments mark the completion of a two-year program for PFZW, which sold its stakes in 310 companies, including oil majors such as Shell plc, BP plc, and TotalEnergies SE. The pension fund said it had “significantly intensified” its dialogue with fossil fuel firms to “produce verifiable transition plans that support the goal of the Paris Climate Agreement”.

“The intensive shareholder dialogue over the past two years with the oil and gas sector on climate has made it clear to us that most fossil fuel companies are not prepared to adapt their business models to ‘Paris’”, PFZW Chair Joanne Kellermann said. “While the largest companies in this sector do invest in sustainable forms of energy, the switch from fossil to low carbon is not nearly fast enough”.

“Incidentally, this reflects the slow pace we see globally in the transition to renewable energy. The seven companies we will continue to invest in are the only ones that show a switch is possible. At the same time, it is disappointing that there are only seven. We encourage the biggest players in the oil and gas sector to also accelerate the switch to a cleaner energy mix. During the COP28, it was once again concluded that haste is an absolute necessity. In addition, many of our participants let us know that they value a rapid energy transition”, Kellerman continued.

Kellerman said that the pension fund is now looking at “large fossil fuel consumers” such as power companies and material producers with a high carbon footprint, urging them to “develop ambitious transition strategies” that align with the goals of the Paris Climate Agreement.

“We are increasingly investing in companies that contribute to improving the climate and the energy transition. This should contribute to PFZW’s ambition of having 15 percent of its total assets invested in climate solutions by 2030, [that is] solutions that contribute to the United Nations’ climate SDGs. Two billion euros will be allocated over the next two years to investments in companies with measurable impact on the climate and the energy transition”, Kellerman added.

PFZW is working towards a climate-neutral investment portfolio by 2050. The pension fund is targeting 50 percent absolute carbon reduction by 2030 for equities, liquid credit and real estate, she noted.

PFZW’s move follows a string of divestments from fossil fuel firms by other pension funds and institutional investors. Danish pension fund AkademikerPension in October 2023 completed its divestment of stakes in upstream oil and gas firms, with its most recent divestment being in Italy’s Eni SpA. The fund’s stake in Eni was $4.64 million (DKK 33 million) before the decision to divest.

Norway’s largest pensions manager KLP in December 2023 divested from Aramco primarily because the oil and gas producer’s energy transition plan failed to meet expectations, according to an earlier report.

The Church of England in June 2023 decided to quit oil and gas companies. Over half of the Church of England’s 42 dioceses, which have their own investment bodies, have now vowed to exclude fossil fuels from their investment portfolio, according to Christian group Operation Noah.

Source: RigZone

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