Danish pension provider PFA has highlighted how views on investing in weapons are changing, as its director of responsible investments, Rasmus Bessing, detailed the provider’s work in the area in 2024, and what to expect in 2025.

Bessing noted that accountability work is” fraught with dilemmas” and characterised by the geopolitical upheavals created by the Covid-19 pandemic, Russia's invasion of Ukraine and President Donald Trump's redefinition of the US role.

He detailed how views on weapons investing are changing: "Previously, many customers were critical when we invested in weapons, but now we are equally criticised if we don't.

“Similarly, there is a change in the view on investments in nuclear power, as energy policy has now also become security policy. In addition, there is also an increasing focus on China, which we are still invested in, but where the political and economic risks have increased as a result of geopolitical polarisation.”

As a result of President Trump’s re-entry to the White House, Bessing said it has already resulted in a large number of US banks and asset managers withdrawing from international cooperation on how the financial sector can contribute to the green transition.

“This is a clear signal that the world is changing rapidly,” Bessing said.

Looking back over 2024, PFA focused on climate, diversity and labour conditions through ongoing dialogue with the French energy giant, TotalEnergies, and active participation at general meetings in both Denmark and abroad.

"We have prioritised being where we believe the need is greatest, or where we have the largest investments and thus also the best opportunities to exert influence. This year, for example, we have had a special focus on the mining sector, which is central to the green transition, but also has great potential for improvement when it comes to the environment, climate and labour conditions. We have helped to change this in collaboration with investor colleagues and NGOs," he says.

As examples, he highlighted two of the world's largest mining companies, Rio Tinto and BHP, which, under pressure from PFA and others, have committed to presenting plans to reduce their methane emissions, increase transparency about their total carbon footprint and generally tighten their climate targets.

Furthermore, 2024 saw PFA prioritise supporting green shareholder proposals. During the year, PFA voted in favour of such proposals 65 times, while being more critical of the companies' climate plans.

"Our experience is that despite another year of severe floods, heat records and forest fires, the climate has slipped slightly down the companies' agenda. Instead, the focus has shifted to the geopolitical and trade conflicts that unfortunately also characterise our world. Therefore, it has been important for us to keep companies committed to the green agenda, and we have voted at the general meetings of companies that account for 95 per cent of the CO2 emissions from our investment portfolio," Bessing said.

He also defended PFA’s investment in TotalEnergies, which has not always been popular because critics believe the energy provider is not investing enough in renewable energy, and it has continued to develop new oil and gas fields. However, PFA CEO, Ole Krogh Petersen, still believes that PFA is helping to make a positive difference.

Bessing explained: "This year, we have had a critical dialogue with Total and generally encouraged them to step up their climate ambitions. This has happened both at their annual general meeting, where we were on the podium, and through our role in the investor initiative Climate Action 100+, where we at PFA have been appointed as a partner in the dialogue with Total.

“Although we are far from agreeing with everything they do, it is still our experience that the opportunities for green progress are greater with us than without us. If nothing else, 2024 has shown that the green agenda needs more – not fewer – investors to speak up for it.”

He added that, despite the criticism, TotalEnergies is one of the leading companies in the development of offshore wind and solar energy, and he therefore sees reason to keep the faith and push for improvements.

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