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Holland’s ABP fund defends fossil fuels investments

Oil_pumpsDutch pension fund ABP – the fifth largest in the world with assets of over €450 billion – has come under criticism from Greenpeace for increasing investment in fossil fuels.

The scheme’s investments in coal and oil companies increased to €16.5 billion last year from about €14 billion in 2015, according to analysis backed by a group of NGOs including Greenpeace Netherlands.

The report claims that ABP has doubled investments in Gazprom and tripled financing for Rosneft – both Russian companies that are drilling for oil and gas in the Arctic region with a plan for mass expansion in the pipeline.

“Dutch pension money shouldn’t be used for boosting the climate emergency,” said Greenpeace Netherlands campaigner Kees Kodde.

The fund has 3 million pension savers and pensioners in total. It invests in over 4,500 companies worldwide, with around 94% of its investments outside the Netherlands, according to the study carried out by research firm Profundo on behalf of the NGOs.

“ABP claims to reduce fossil fuels, but the emissions from its investments in oil and gas are rising,” said Kodde.

According to ABP, its positions have not changed significantly regarding investment in Gazprom and Rosneft.

“Growth is likely driven by higher oil prices and market effects rather than a shift in strategy,” a spokesperson for the fund said.

Regarding Rosneft’s plans for Arctic drilling, ABP has asked the company questions and said it will monitor the situation closely.

“In our view there are strong financial as well as environmental considerations for avoiding drilling activities in the Arctic,” the spokesperson said, pointing out that it has previously held dialogue with Shell on the same matter, with the oil giant coming to the same conclusion.

The fund holds investments in 96 coal companies all over the world whose installed coal-fired capacity of 558 gigawatts amounts to one fourth of the world total, according to the study.

Other NGOs involved in the research were Both ENDS, Fossielvrij NL and urgewald.

ABP has said that it is aware of the research backed by the NGOs, and has invited them to discuss the outcomes at their Amsterdam office.

“As one of the largest pension funds in the world with influence on companies and governments, we feel a responsibility to invest in a socially responsible and sustainable way,” a spokesperson for the fund said.

The fund’s assets under management grew from €351 billion at the end of 2015 to over €456 billion at the end of the second quarter this year. For this reason, the spokesperson said, overall exposure to energy investments has also increased.

However, according to ABP, it has set “ambitious” targets to reduce the carbon footprint in its portfolio.

“We continuously set steps to contribute to the low-carbon transition. For example, in 2018 we established a dedicated fund to finance the energy transition in the Netherlands, and we sold seven coal-fired power utilities,” the spokesperson said.

“We ask power utilities that we remain invested in to stop coal power expansion and develop strategies towards to renewable energy.”

ABP highlighted that the report confirmed emissions from its listed equity portfolio have decreased significantly over the past years.

“In our measurements we achieved a 28% reduction, while the NGO report calculates a 32% reduction. These positive results are a direct consequence of our active steering on reducing CO2 emissions in our listed equity portfolio since 2015,” the spokesperson said, adding that the methodology used by the report and ABP differ.

“We strongly believe that this (ours) is the best method to steer on reduction of CO2 emissions,” the spokesperson said.

Counting emissions in the rest of the supply chain (such as supply of raw materials or use of products) results in double counting and unreliable data, according to the representative.

ABP is currently finalising its new responsible investing policy for the coming years, with “ambitious goals in the field of climate change, energy, and other areas”.

Both ENDS, another NGO involved in the research, called on ABP to do more to tackle climate change.

“Now that ABP is developing new sustainability targets for 2025, we expect ABP to bring its policies in line with the Paris Climate Accord and keeping the temperature rise below 1.5 degrees – this means they need to divest from all fossil fuel companies in the short term,” said senior policy officer Cindy Coltman.

Over the last few years there has been a pronounced trend for some asset owners to ditch investment in fossil fuel companies, including the UK’s National Trust and Norway’s sovereign wealth fund this year.

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