PFA introduces new climate-focused pension solution

PFA introduces PFA Climate Plus, which is a pioneering sustainable pension product that makes it possible for customers to place their retirement savings in specially selected climate-focused investments. PFA Climate Plus will be CO2-neutral in 2025 at the latest.

Over a number of years, PFA has systematically worked with integrating responsibility and sustainability into the way the customers savings are invested, among other things, based on the goals of the Paris Agreement and the UN Global Goals. Now, PFA takes its climate ambitions a step further and offers its customers the possibility of, in a simple manner, using their pension savings to engage in the green transition. PFA Climate Plus lets the customers significantly step up how much their pensions contribute to cutting CO2 emissions.

“As Denmark’s largest pension company with more than 1.3 million customers, PFA has a special responsibility to contribute to a sustainable development of society. The investment of pension savings is one of most significant ways in which an individual can make a difference. In support of this, PFA wishes to take the lead and - together with the customers - take part in accelerating the sustainable transition,” Group CEO Allan Polack says.

Significant CO2 reduction goals

In PFA Climate Plus, all asset classes will consist of specifically selected companies that actively work on reducing the world’s CO2 emissions and having a positive impact on the climate combined with investments in green assets and selected projects such as offshore wind farms and sustainable properties. No investments will be made in oil, coal or gas.

PFA Climate Plus will, as a starting point, emit 60 per cent less CO2 than the MSCI World Index and be completely CO2-neutral in 2025 at the latest. The ambition is a CO2-negative portfolio by 2030, meaning that it will pull more CO2 from the atmosphere than the investments emit.

“With PFA Climate Plus, we wish to set a new standard for sustainable pension investments to counteract the vast climate changes, which are a cause for concern for many of our customers.  At the same time, we want to make it as easy as possible for the individual customer to decide how much of the savings the customer wishes to place in this especially climate-focused pension portfolio,” Allan Polack says.

The selection of assets in PFA Climate Plus will be a two-step process. First, we look at PFA's overall investment criteria – including return potential and PFA’s policy for responsible investments and active ownership. Then, we include climate-focused criteria to assess the potential of the assets with regard to their contribution to the green transition.

Climate-friendly investment of pension savings should be easy and flexible

The basis of PFA Climate Plus is that climate-friendly investment of pension savings should be both easy and flexible. Therefore, the new offer will be a part of the existing market rate universe, which the customers already know from PFA Plus with four different risk profiles and automatic gradual reduction of risk as retirement approaches.

In the long term, PFA Climate Plus will have the same level of risk and return expectations as the overall market rate product PFA Plus. However, as there are fewer potential investment objects available as a result of the climate-focused selection criteria, the return may fluctuate more in isolated periods. The long-term return expectations will be the same.

Based on these assumptions, it will be up to the individual customer to decide how much of the customer's total savings that should be invested in PFA Climate Plus.

“It has been central that the solution is as simple and intuitive as possible. The only thing the customers need to decide on is how large a percentage that should be invested in PFA Climate Plus. Then PFA takes care of the rest. It only takes a few clicks, and we are of course also ready to offer advice. Climate considerations will become an integral part of the investment guide, which our customers use for determining their risk appetite and how to invest their pension savings,” Allan Polack says.

PFA’s customers will get access to PFA Climate Plus during the summer 2020, and the product has been developed through dialogue with a number of PFA’s corporate and organisational customers.

Further information

Kristian Lund Pedersen, Chief Press Officer, (+45) 39 17 58 79 or klp@pfa.dk