Danish pension company Lærernes Pension has announced it is tightening its criteria for exclusions of fossil fuel investments, which will result in the sale of DKK 2bn of investments.

Under its new policy, Lærernes Pension will no longer invest in companies that search for and extract thermal coal, except in those companies that have committed to a transition compatible with the Parid Agreement.

It will also no longer be invested in firms that search for and extract oil and gas, and produce energy based on fossil fuels, if the turnover of these amounts to more than 5 per cent, with the exception of companies that have transition plans in line with the Paris Agreement.

In total, investments worth over DKK 2bn must now be sold, with this money to then be invested in other companies.

Lærernes Pension said it expected most of these investments to be sold before the end of the year.

The pension company also has investments through funds that are not listed on the stock exchange, with the stricter criteria only able to be introduced for new investments in this space.

Lærernes Pension noted that well over a thousand companies have revenue based on fossil fuels, and many of them are small- or medium-sized companies, with the pension firm using a data supplier to identify the companies.

“However, we must state that from time to time we become familiar with companies that have not been caught by our screening. They are taken up for a specific assessment,” it stated.

“We aim to exclude companies that have not set a long-term objective for a transition that is compatible with the Paris Agreement, but this is a complex assessment.

“There is a long way to go from long-term objectives and calculation of CO2 emissions to determining sub-goals and concrete plans, and then to finding the right commercial solutions to reach the target - and finally to seeing the change reflected in the companies' CO2 emissions.

“We start from some assessment criteria from an international framework and use external data sources to determine whether the companies have set a target.

“The assessments from the data sources are not perfect, and knowledge about what is needed to reach the target is also continuously added. And then it takes time to change a business model. Therefore, going forward, we will also assess the possibilities for improving our method.”

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