Press release: Fossil investments by pension funds aggravate economic blow
The value of ABP's pension fund investments in fossil fuel companies has fallen by 44% from end of last year to its lowest point on March 16 this year, while the value of the rest of the portfolio decreased by 26%. This impact can be seen in simulations based on the publicly available equity portfolios of Dutch pension funds ABP and Zorg en Welzijn (PFZW), carried out by research agency Profundo on behalf of Both ENDS. The simulations show that the risks of investing in the fossil fuel sector are increasing.
Less recovery in fossil fuel sector
The market recovered partially, but on April 27, 2020 the value of ABP's fossil fuel shares was still 32% below the level at the end of 2019, while the value of ABP's shares in the rest of the portfolio was only 11% lower. A similar trend can be seen for the healthcare workers' PFZW pension fund. "This huge decline is a terrible loss for pension funds and participants," says Cindy Coltman of Both ENDS, "and investments in the fossil fuel sector are even more risky than the rest of the portfolio. It is worrying that pension funds nevertheless still invest in fossil energy. ”
Fossil investments exposed to losing value due to climate risk
60 to 80% of fossil reserves must remain in the ground in order to comply with the Paris climate agreement to limit the global temperature rise to a maximum of 1.5 ° C. Investments in fossil fuel energy and the infrastructure to be built around it will therefore increasingly decrease in value. They could become 'stranded assets' and thus threaten the pensions. Investing in this sector was already a risky business and the Covid-19 pandemic has given this development a significant boost.
Coltman: “You can see this crisis as a dress rehearsal for the climate crisis. Financial shocks and associated human suffering will become increasingly common if we do not phase out fossil fuel use quickly and keep global warming below 1.5 ° C. The climate crisis is only getting worse and people in the Southern Hemisphere in particular are already suffering daily from its consequences. ”
Previous studies by Both ENDS in collaboration with Fossielvrij NL, Urgewald and Greenpeace Netherlands already showed that despite public pressure and despite the financial and climate risks, ABP's investments in fossil fuel companies amounted to at least 15 to 16 billion euros per year in the past four years. The increasingly lower fossil energy prices are therefore severely impacting the pension fund.
Dutch pension funds should phase out their investments in coal, oil and gas companies as soon as possible. As part of the international DivestInvest movement, Both ENDS has been calling upon ABP and other Dutch pension funds to take the big step towards long-term investments in sustainable energy. More and more pension participants also want their pension fund to invest more sustainably. For climate reasons, but also because they see that investments in fossil energy cause their pension to shrink right before their eyes.
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Overzicht beursgenoteerde beleggingen van ABP in Q4 2019
Overzicht beursgenoteerde beleggingen van PFZW op 31 december 2019
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Making pension funds more sustainable
Pension funds have a lot of influence because of their enormous assets. Both ENDS therefore wants pension funds such as the Dutch ABP to withdraw their investments from the fossil industry and to invest sustainably instead.
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Press Release: These five criteria help investors go green
Press release 24 October 2019
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Uganda’s Energy Future
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Press release / 22 June 2020
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Still, more funds are spent on the fossil industry than on sustainable solutions. Banks, pension funds, insurers and governments keep investing in fossil infrastructure which endangers people and the environment. Therefore we call on financial institutions to stop funding the climate crisis.
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Divest from EACOP before it’s too late
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