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Pension funds earmark EUR 47 billion for climate projects

Denmark's pension sector aims to invest roughly EUR 47 billion in climate change mitigation projects ahead to 2030. Several international investors support the initiative.

Photo: MHI Vestas/media@owf-deutsche-bucht.de

The Danish pension sector pledges to invest DKK 350 billion (EUR 47 billion) in green projects up to 2030, Danish Prime Minister Mette Frederiksen informs at a press conference in New York City late Sunday CET.

Torben Möger Pedersen, vice chair of Insurance & Pension Denmark as well as chief executive of PensionDenmark, says the pledge entails "binding commitments".

"The money will go to everything from investments in, for instance, wind farms, energy-optimized buildings and in companies that actively contribute to the green agenda," Pedersen says.

"We will naturally provide ongoing updates on how things are progressing towards the goal," he adds.

10 percent of pension capital

The extra DKK 350 billion corresponds to more than 10 percent of Denmark's aggregate pension capital being channeled into green projects up to 2030.

However, that figure could very well become larger if attractive investment opportunities arise," Pedersen says.

The announcement is made up to Monday's UN Climate Change Summit held in New York City.

Denmark's PM is ecstatic.

"Danish pension funds choosing to commit DKK 350 billion for green investments is a gigantic step," Frederiksen says.

Institutional investors such as pension funds are primarily concerned with securing returns on invested capital on behalf of their constituents – and that is no less applicable concerning green ventures.

Development aid

Several analyses have shown, however, that climate investments rarely directly benefit the world's poorest countries.

This is often criticized by NGOs, because some the poorest nations are also those that bear the brunt of climate change.

Frederiksen holds that pension funds should "of course" accumulate returns on investments. Regarding climate aid for the poorest countries, she refers to the Danish government's wish to attach more green development projects to the country's coming fiscal budget bill.

"We have additional proposals for making our development aid greener," she says.

Late Sunday night CET, she announced that Denmark earmarks DKK 150 million per year for climate fund Global Climate Facility. That cash pool will help channel green investments to the countries "where money is otherwise unavailable".

International investors

A series of international investors support the Danish government and pension sector's pledge, including New York State Common Retirement Fund, the Netherlands' Pensioenfonds Zorg en Welzijn (PFZW) and Storebrand Asset Management from Norway.

These institutional investors have more than EUR 470 billion in assets under management.

CEO Peter Damgaard Jensen of Danish pension company PKA has an active cooperation with the the country's Ministry of Climate, Energy and Utilities as well as the organization World Climate to disseminate the initiative to governments and investors throughout the rest of the world.

"I appreciate the support we have already received for organizing further investments in climate change mitigation from New York State Common Retirement Fund, PFZW and Storebrand. This is a big recognition of the joint initiative taken by the Danish government and pension sector, and this shows that our collective efforts create ripple effects and can, for instance, serve as an example for the rest of the world," Jensen says in a press statement.

English Edit: Daniel Frank Christensen

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