The French Public Service Additional Pension Scheme (ERAFP) has announced it is tightening its investment policy on fossil fuels.

The board of directors of ERAFP voted in favour of adopting the new policy at a meeting on 16 December 2025, with the changes taking effect from 2026 onwards.

As a result, the eligibility criteria for assets linked to unconventional and conventional hydrocarbons have been tightened, which the pension fund said aligns with its commitment to supporting the energy transition and limiting global warming to 1.5°C as set out in the Paris Agreement.

ERAFP director, Régis Pélissier, said: “The changes made to our policy reflect our desire to take concrete action to limit global warming, while securing the pension rights of our members.

“It allows us to combine targeted restrictions, shareholder engagement and transparency to accelerate the energy transition, while also taking into account the issue of energy security, which is particularly relevant in the current climate.”

EIOPA stated that, since the adoption of its original fossil fuel policy in September 2023, the context has changed. It pointed to recent work by the International Energy Agency (IEA), which found that compliance with the 1.5°C trajectory is now in jeopardy.

The pension fund also highlighted that energy security has become a major issue in Europe, which is heavily dependent on energy imports amid particularly high geopolitical tensions.

“To take account of this new reality, it became necessary for ERAFP to step up its divestment from hydrocarbons, while establishing specific, time-limited criteria to identify the European companies that are most advanced in terms of energy transition and play a major role in energy security,” it stated.

This, it said, will enable it to continue its shareholder engagement activities with the companies concerned. ERAFP also confirmed that its updated fossil fuel policy is fully in line with its fiduciary duty.

As part of the updated policy, the following has been decided.

ERAFP will no longer participate in debt financing for hydrocarbon companies developing new oil and gas exploration or production projects (conventional or unconventional) from 2026, compared with 2030 previously.

It is also strengthening the eligibility threshold set for investment in shares (both current and stock) in companies active in unconventional hydrocarbons. Furthermore, companies whose share of turnover in this sector exceeds 15 per cent, compared with 30 per cent previously, will no longer be eligible.

However, ERAFP confirmed that until 2030, the above measures will not apply to companies whose registered office is located in Europe and whose capital expenditure (CAPEX) aligned with the European green taxonomy represents, on average over the last three years, at least 25 per cent.

Furthermore, ERAFP will make every effort not to increase the scheme's total relative exposure to shares in hydrocarbon-producing companies, bearing in mind that ERAFP's responsible investment framework already excludes companies that are turning away from the energy transition.

It said the implementation of this policy will continue to be monitored by its Investment Policy Monitoring Committee (CSPP). ERAFP will also continue to publish updates on its exposure to fossil fuels and the results of its engagement activities in its sustainability report.

The adopted amendments will apply in 2026, as part of the dialogue with fund managers. The other fossil fuel policy measures adopted in 2023 will remain in place, starting with the reduction of the revenue cap for thermal coal to 1 per cent (down from 5 per cent previously), with the exception of companies aligned with a 1.5°C trajectory certified by the SBTi initiative.

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