PFA will reduce carbon emissions by 29 per cent by 2025
Denmark’s largest pension company, PFA, is now escalating its green ambitions, and by the end of 2025, it will have reduced its carbon footprint by 29 per cent relative to 2019. This way, PFA will increase its already ambitious climate efforts, which include the launch of a special climate pension last year and the divestment of a large number of energy companies and fossil credit bonds.
The carbon footprint of Denmark’s largest pension company will be significantly reduced in coming years. This will take place as part of PFA’s membership of the UN-supported initiative Net-Zero Asset Owner Alliance, where 40 of the world’s biggest investors support the Paris Agreement and have agreed to set significant carbon reduction targets for every five years leading up to 2050.
“This green transition must be accelerated. Unfortunately, the climate report from the UN’s climate panel underlined that carbon emissions must be reduced drastically. We are now choosing to set a new intermediate goal which will set a clear direction for how we invest the funds of our numerous pension customers,” says Allan Polack, Group CEO at PFA.
PFA will reduce carbon emissions from its listed shares, properties and credit bonds, starting from 2019.
“At PFA we believe that a long-term return and a low carbon footprint will increasingly be correlated going forward. PFA supports the Paris Agreement’s goals of limiting carbon emissions, and it is our assessment that the green transition will lead to some interesting investment opportunities, allowing us to generate solid returns for our customers while reducing the climate impact from our total investments,” says Allan Polack.
PFA has already reduced its carbon emissions
For many years, PFA has focused on sustainability, and for example, today it invests in the world’s largest offshore wind farms, Hornsea 1 and Walney Extension Offshore Wind Farm, in six solar cell parks in England and in Scandlines’ hybrid ferries.
Last year, PFA divested its shareholdings in 16 of 18 energy companies and, between 2019 and 2021, reduced carbon emissions from credit bonds by over 35 per cent.
During the summer of 2020, PFA launched a special climate pension, PFA Climate Plus, where customers can choose to invest in a particularly climate-friendly manner. The preliminary experience here is that there is no contradiction between good and green returns - if anything quite the contrary. Since its launch, PFA’s recommended profile C has yielded a return of 26.5 per cent in PFA Climate Plus (including CustomerCapital and with 20 years to retirement) versus 22.8 per cent in the regular PFA Plus product.
“PFA’s journey towards a more climate-friendly portfolio started several years ago. We have shown that we are good at making sure that generating high returns and reductions in carbon emissions go hand in hand. Since its inception, the return on Climate Plus has been fully competitive and even a little higher than the return on our original market interest product, PFA Plus. The experience we have gained will be important in the coming years when we need to shave off 29 per cent of the carbon emissions while seeking the best return,” says Allan Polack.
New carbon intermediate goal every fifth year leading up to 2050
PFA’s participation in Net-Zero Asset Owner Alliance means that the company is liable to set new, tougher intermediate goals for carbon emission reduction every fifth year leading up to 2050.
“Short-term goals on a five-year basis help ensure a high level of ambition and a more stringent focus on climate every time we invest. Specific actions are necessary now if we are to succeed. Both in the short term and in 2050,” says Allan Polack.
- PFA has 1.3 million customers and over DKK 600 billion under management
- Net-Zero Asset Owner Alliance consists of 40 institutional investors which together have approx. USD 6,600 billion under management.