PFA Climate Plus

Your pension is your most important climate investment

PFA Climate Plus enables you to invest your pension savings in particularly climate-friendly investments. You can select PFA Plus with the intended investment profile and risk level and then allocate a portion of your savings to extra climate-friendly investments.

PFA Climate Plus is based on three concrete climate goals

When PFA invests pension savings it is always based on responsibility, sustainability and based on the Paris Agreement and the UN Sustainable Development Goals. With PFA Climate Plus you can go one step further in supporting the climate-friendly transition. It is both manageable and flexible since the climate objective is based on three concrete climate goals.

From the beginning, the equity portfolio in Climate Plus emitted 60 percent less carbon than the global equity index (MSCI ACWI)1.

 


    

As we approach 2025, the ambition is for the entire product to be CO2-neutral2.


    

As we approach 2030, the ambition is for the entire product to be CO2-negative2, removing more CO2 from the atmosphere than the investments emit 

1 The MSCI All Country World Equity Index measures CO2 by Scope 1 and Scope 2 (see later in the text) in the listed equity portfolio in tons of CO2 emitted per million USD invested.
2 We attempt to achieve this goal by investing in forestry and technology that removes CO2.

How we will ensure the fulfilment of the climate goals

To make sure that we meet our climate goals while working to secure the best possible return for our customers, we will measure carbon emissions for our portfolios on an ongoing basis and compare them with the global index. As the model shows, the shares in PFA Climate Plus emit 79 % less carbon than the global index, while all PFA's equities currently emit 32 % less carbon.

Source: MSCI - CO2 figures are calculated as  average for the year 2021 based on monthly metrics.
Updated: 03
.02.2022

  

PFA obtains figures from the global equity index, MSCI

PFA’s work with climate goals depends on the ability to measure and monitor our equity investments’ CO2 emissions. This is not straightforward as there is still a lack of adequate data for many assets. Therefore, as a default, PFA only measures systematic CO2 emissions from the equity portfolio and not from e.g. the bond portfolio or our alternatives.

PFA’s assessments and benchmarks are based on data from the MSCI ACWI (All Country World Index), which annually publishes estimates for the CO2 emissions of individual companies. Even though MSCI is currently the market standard for measuring CO2 emissions from an equity portfolio, the data used is still subject to a degree of uncertainty. This is partly because a lot of data is retrospective and may be a year or two old; and partly because there are still many companies that do not even publish data on their CO2 emissions. In the latter case, MSCI itself assesses emissions by using comparable companies in the same industry and locality.

MSCI’s assessment takes into account three different aspects of a company’s CO2 emissions. These are known as ‘Scopes’. While there is reasonably reliable data for Scopes 1 and 2, Scope 3 is subject to great uncertainty and is difficult to calculate. Consequently, it is not currently included in the measurement or benchmark of PFA Climate Plus.

• Scope 1 is the CO2 emitted by a company’s activities – e.g. manufacturing, etc.
• Scope 2 is the CO2for which a company is indirectly responsible – e.g. CO2 from energy produced for the company.
• Scope 3 is the CO2 emitted by the company’s other indirect activities: in other words, sources that companies do not own, control or manage. This might be, for example, the application of a company’s products.    

 

 

PFA Climate Plus investment profile A, investment profile B, investment profile C and investment profile D are savings products that, among other characteristics, promote environmental and social characteristics.  

Read moreRead lessAmong other things, this is done by the products having a strong focus on climate issues. PFA continually monitors whether the companies in the products comply with international norms or conventions for areas such as environmental protection, labour rights and human rights and exercising active ownership via voting and corporate dialogues and by excluding specific companies and countries. With PFA Climate Plus, the energy sector is also excluded to not invest in the extraction of fossil fuels.

The PFA Climate Plus products also contribute to the EU’s environmental targets by, among other things, investing in companies that supply solutions for the stabilisation and reduction of greenhouse gases and/or reduce or prevent negative impacts from current or expected climate changes. In addition, investment has been made in leading companies working with the green transition, companies that are focused on reducing their carbon footprints (including having targets) to be compatible with keeping global average temperatures from increasing more than 2 degrees, green bonds, real estate projects being built/renovated based on sustainable standards and direct investments in renewable energy infrastructure.

The risk profile of PFA Climate Plus is similar to the savings option in PFA Plus. However, the return will evolve differently as the products invest in different assets. Principles, social and business ethical matters are in line with PFA’s policy for responsible investments and active ownership.

Environmentally sustainable investments
The proportion of PFA Climate Plus investment profile A, investment profile B, investment profile C and investment profile D’s environmental sustainability is assessed based on whether the investments’ economic activity actively contributes to one or more of the EU’s environmental targets, whether they do not have a significantly negative impact on the EU’s environmental targets and whether the companies operate in accordance with the OECD’s guidelines for multinational companies and the UN’s guiding principles for the private sector and human rights.

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The calculation of the product’s proportion of environmentally sustainable investments pursuant to the EU taxonomy regulation is presented in the table below. There is only very limited data available on the parameter of environmental sustainability, as companies have only been obliged to report on this (pursuant to the EU’s taxonomy regulation) from 1 January 2023. The proportion of environmental sustainability is therefore based on estimates. The estimates are based on assessments and data from external data suppliers and consultants and will gradually be phased out once reports from the companies are available. The below statement of the proportion of environmentally sustainable investments is therefore not considering the EU’s technical screening criteria as companies are not at present reporting how they are complying with this.

PFA Climate Plus investment profiles’ proportion of investments aligned with the EU’s environmental taxonomy
  Estimated for the EU’s environmental targets 1-6
PFA Climate Plus investment profile A 5.2 %
PFA Climate Plus investment profile B 6.3 %
PFA Climate Plus investment profile C 7.4 %
PFA Climate Plus investment profile D 8.6 %
Note: The figures were calculated on 31/12/21.
Note: The proportion of environmentally sustainable investments is decreasing based on time left until retirement due to the gradual reduction of risk. The calculated proportions are before the gradual reduction is initiated.
Note: The taxonomy regulation defines six climate and environmental targets that economic activities can significantly contribute to in order to be classified as climate and environmentally sustainable. 1. Climate change mitigation 2. Climate change adaptation 3. Sustainable use and protection of water and marine resources 4. Transition to a circular economy 5. Pollution prevention and control 6. Protection and restoration of biodiversity and ecosystems.
Kilde: MSCI and analyses made by PFA and/or external consultants.

In PFA Climate Plus, investments are also made in green bonds, but these have not yet been included in the proportion of environmentally sustainable investments pursuant to the EU’s environmental taxonomy. The work on achieving this continues. The proportion of green bonds is as at 29/10/21 respectively 28 %, 19 %, 10 % and 0 % in investment profiles A, B, C and D with 20 years until retirement.

The “do no significant harm” principle applies only to those investments underlying the financial product that take into account the EU criteria for environmentally sustainable economic activities. The investments underlying the remaining portion of this financial product do not take into account the EU criteria for environmentally sustainable economic activities.

For example, this means that PFA Climate Plus investment profile D, which has an 8,6 % proportion of sustainable investments (pursuant to the EU’s taxonomy regulation) may well have a larger proportion of sustainable investments, but the remaining investments do not meet all of the EU’s criteria for being included in the statement of environmentally sustainable investments under the EU’s taxonomy regulation.

 

Categorisation according to the EU’s Sustainable Finance Disclosure Regulation (SFDR) 
PFA Climate Plus investment profile A, investment profile B, investment profile C and investment profile D are categorised pursuant to Article 8 as partially sustainable products in terms of the EU regulation on sustainability‐related disclosures in the financial services sector (SFDR).

 

Learn more about PFA Climate Plus and how we work with complying with our policy for responsible investments and active ownership

A better climate is a common goal

Climate-friendly investments may include wind turbines and solar energy, but they may also include many other things. Many companies, both large and small, in virtually all industries focus on their climate footprint, and they do so in very different ways. At PFA, we invest in both companies and projects, and here you can find a selection of the investments that are part of PFA Climate Plus.
   

Sustainable hybrid ferries reduce the CO2 emission
PFA involved in major production of sustainable batteries for electric cars



Republic Services Inc.

Republic Services Inc. is an American refuse disposal company that is leading the way in the green transition when it comes to reusing waste or turning it into energy. The company handles non-hazardous waste from households and companies, and it has an environmentally-friendly focus both with respect to handling waste and careful transport. This is why their vehicles are increasingly powered by natural gas rather than petrol. 
  

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Republic Services Inc. is highlighted on CDP’s (carbon disclosure project) A list as a leading climate transition company, and it is the first American refuse disposal company to have validated their goals of reducing carbon emissions leading up to 2030. 

 
Nidec Corp

Nidec is a Japanese manufacturing company that is making massive investments in establishing itself as a market leader in supplying engines for electric vehicles (EVs). Among other things, the company produces a variety of different categories of electric engines such as hard drives and power steering units in cars. Not only does Nidec have strong relationships in the car industry, it also has a long history of cost management leadership and innovation. 
  

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These characteristics are the prerequisites for Nidec’s venture on becoming the leading producer of EV engines and gaining a 40 % market share over the next decade. This development is assessed as being realistic as the car industry transitions from building cars with internal combustion engines to building cars with electric engines and thus achieving zero emissions from the vehicles.  


See the full list of stocks contained in the PFA Climate Plus equity portfolio here

Accenture PLC
adidas AG
Alphabet Inc
Asahi Group Holdings Ltd
Bank of America Corp
Baxter International Inc
BNP Paribas SA
Boston Scientific Corp
Cisco Systems Inc/Delaware
Citigroup Inc
Cleanaway Waste Management Ltd
Colgate-Palmolive Co
CVS Health Corp
Eaton Corp PLC
eBay Inc
Ecolab Inc

Iberdrola SA
Infosys Ltd
Johnson Controls International plc
Microsoft Corp
Nestle SA
Nidec Corp
Novo Nordisk A/S
Novozymes A/S
Orsted AS
Republic Services Inc
Roche Holding AG
ROCKWOOL International A/S
S&P Global Inc
Samsung Electronics Co Ltd
SAP SE
Siemens AG

Siemens Energy AG
Swiss Re AG
Tencent Holdings Ltd
Thermo Fisher Scientific Inc
Trimble Inc
Unilever NV
UnitedHealth Group Inc
Verizon Communications Inc
Vestas Wind Systems A/S
Visa Inc
VMware Inc
Willis Towers Watson PLC
Xinyi Solar Holdings Ltd
Xylem Inc/NY
Yaskawa Electric Corp
Zurich Insurance Group AG

The stock list was updated on 31 October 2021

PFA Plus vs. PFA Climate Plus

More climate-friendly investments but the same risk and return potential

Climate-friendly investments should not have a cost on the return. Therefore, the risk level and expectations for the return in PFA Climate Plus are the same as in PFA’s other savings solution, PFA Plus. However, the return will develop differently because the products are invested differently.

Many of the investments in PFA Climate Plus are also included in PFA Plus, but not necessarily vice versa. This is due to the extraordinarily high climatic requirements, which only a limited number of companies can fulfil. Accordingly, PFA Climate Plus contains far fewer companies than PFA Plus. This can cause major fluctuations in the return because there are fewer assets to balance each other. But a pension involves savings in the long-term and this basically means that you will receive the same risk level and expected return potential by investing your savings in a more climate friendly way with PFA Climate Plus.

Only customers with PFA Plus Market Rate Saving have the opportunity to choose PFA Climate Plus. You can contact PFA on 70 12 50 00 and get an answer on whether you can place your investments in PFA Climate Plus.

 
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Overview of the difference between PFA Plus and PFA Climate Plus

The chart below illustrates a comparison of the two products on the basis of a number of parameters:


Parameters PFA Plus  PFA Climate Plus
Responsible investments and active ownership ✔ 
Extra focus on climate
✔ 
Exclusion of fossil fuels* – 
CO2 emission in terms of the global stock index -30 % -79 %
Goal to be CO2-neutral by 2050 2025
Alternative investments and properties Approx. 23 % currently Approx. 20 % over time
Risk in relation to PFA Plus
Comparable risk with PFA Plus**
Expected return in relation to PFA Plus
Same long-term return as PFA Plus
APR 0,61 - 0,96 % 0,61 - 0,96 %
Scaling down towards retirement ✔ 
* It is an exclusion of oil, gas and coal companies (exclusion of GICS energy classification + BICS Energy ex. Renewables)
** The equity portfolio in PFA Klima Plus consists of fewer shares (approximately 50) and has a core theme of reduced climate impact. This means that the concentration risk is greater in PFA Climate Plus. At the same time, PFA Climate Plus has a so-called scenario risk if, for example, the political and business climate focus shifts significantly in relation to the current one.




Specific criteria for PFA Climate Plus

Here you can see the climate criteria that apply to the various assets of PFA Climate Plus: 

Shares
Like PFA’s other investments, the PFA Climate Plus portfolio is assessed on the basis of the requirements we have set for our responsible investment policy. There is also an additional regard for climate, which means, for one thing, that investments in oil, coal and gas companies are excluded. It also means that the equity portfolio will be far more focused on climate-friendly companies. Whereas the current equity portfolio in PFA Invest includes approximately 1,000 companies, currently the equity portfolio in PFA Climate Plus includes only approximately 50 companies.

Bonds
When it comes to bonds, to a far greater extent than in PFA’s other investments, PFA Climate Plus will use so-called ‘green’ bonds, issued for the funding of measures that help tackle the climate challenge. The same requirements apply to corporate bonds as to shares. There is no investment in bonds from oil, coal and gas companies, and bond issuers must have a climate-positive business model. PFA will also invest in ordinary government and mortgage bonds.

Derivatives
PFA Climate Plus will also use derivatives (financial contracts for assets) based on shares, interest rates, etc. to ensure optimal risk management. Equity derivatives are subject to the same requirements as the equity portfolio in PFA Climate Plus.

Alternative investments and properties
Alternative investments and properties are a very important part of the existing PFA Plus product. The idea is also for PFA Climate Plus to invest approximately 20 % of the portfolio in alternative investments and properties. These investments must also meet the climate requirements that apply to PFA Climate Plus. Therefore, the development of the alternative and property portfolio is expected to be a gradual process.
   

Extra climate-friendly savings solution

Through PFA’s Investment Guide at mitpfa.dk, you can identify your risk appetite and your preference for sustainable investments.
The guide consists of a number of questions and produces a recommendation based on your replies.