ExxonMobil, Shell Among 10 Oil companies Dumped By Danish Pension Fund

Denmark’s Magistre & Psykologer (MP) Pension has dumped 10 of the world’s biggest oil firms, continuing its green investment goals.

The 10 companies the plan excluded are ExxonMobil, BP, Chevron, PetroChina, Rosneft, Royal Dutch Shell, Sinopec, Total, Petrobras, and Equinor.

“MP Pension wants to take responsibility for the green transition and secure the members’ long-term return,” the fund said in regards to the ESG divestment.. The $20 billion plan said it removed the 10 companies because MP believes that the oil firms’ long-term business models are not compatible with the goals of the Paris Agreement, which seeks to reduce the world’s carbon footprint as a means to stave off climate change.

Last year, the plan’s board of directors decidedto sell shares in oil, coal, and tar sands companies if MP deemed their goals to be unaligned with the Paris Agreement. Companies that are cooperating with the Paris goals are exempt from being divested. The pension has given itself until 2020 to decide which companies will be sold.

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“We must assess over 1,000 oil companies by the end of 2020. That is why we have had a special focus on the world’s ten largest oil companies. The total market capitalization of these ten companies exceeds DKK 9,200 billion. MP’s share in the ten companies amounts to DKK 644 million ($95.3 million). This corresponds to 2/3 of all MP’s equity investments in oil,” said Anders Schelde, the fund’s chief investment officer.

“In the MP’s estimation, all this data shows that the ten companies are not and cannot be compatible with the Paris agreement by the end of 2020. Of course, we have considered whether we should wait to sell the shares until 2020, as there can be a positive turnaround. But we would rather draw a line in the sand now that we do not believe in this context that we can influence the companies further by the end of 2020, ”said Schelde.

Should their practices improve, MP could eventually reinvest in the companies.

“We hope that these ten companies will take the green transition much more seriously and that they will take on a much greater responsibility to convert their businesses into renewable energy. When they hopefully have done so, we would very much like to invest in the same companies again. But it requires a significant change in all ten companies, ” Schelde said.

Other Danish funds have divested from coal, tar sands, and oil recently. In July, $17 billion PenSam added 26 more oil firms to its exclusion list, which also adheres to the Paris Agreement’s goals.

Tags: Denmark, Divestment, ESG, MP Pension, oil and gas, Pension

KLP, an $80 billion Norwegian pension fund, is pressuring agribusiness companies and their investors to end activities in Brazil that are contributing to the destruction of the Amazon rainforest. In particular, the fund named Archer Daniels Midland (ADM), Bunge, and Cargill as companies it is looking to confront in its efforts.

The fund cited a BBC report that said there have been more than 75,000 fires in Brazil so far this year, an 85% increase according to the Brazilian National Institute for Space Research.

“We are deeply concerned by what is taking place in the Brazilian rainforests,” Jeanett Bergan, KLP’s head of responsible investments, said in a statement. “Therefore, we have engaged companies which undertake significant trade in agricultural products from Brazil because we want rapid dialogues and concrete actions given this extremely serious situation.”

She said the fund has also contacted companies’ largest investors and banks in order to exert pressure on the companies “so that they do not contribute to devastating environmental damage.” KLP said it has invested $14 million in shares and loans in ADM, Bunge, and Cargill, which supply Brazilian soy.

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According to nonprofit organization Amazon Watch, cattle ranching and soy production are the main causes of deforestation in Brazil, with ranching alone leading to approximately 80% of Amazon deforestation. Brazil’s cattle herd exceeds 200 million heads and generates $123 billion annually. It also said soy cultivation has “exploded,” leading to the destruction of more than 40,500 square miles of native forests since 2008. Brazilian soy accounted for 14.3% of the country’s total exports, generating $31 billion in 2017.

The fund has already excluded JBS, the world’s biggest meat company, from its investments due to corruption, and said it is putting pressure on investors who still hold shares in the company.

“Foreign investors have enormous influence over what happens in the Brazilian Amazon. In particular, big banks and large investment companies play a critical role, providing billions of dollars in lending, underwriting and equity investment,” said Amazon Watch in a recent report. “This capital and financial security enables agribusiness to maintain and expand operations, causing further devastation to the Amazon.”

Bergan said the fund will start a dialogue with the agribusiness companies, and that they expect answers within a week.

“We will also look into Norwegian companies which import soya products from Brazil in order to evaluate this and urge them to do all they can to protect the rainforests,” she said. “Furthermore, KLP calls on international investors and Norwegian businesses with suppliers in Brazil to cooperate and have an impact upon Brazilian authorities to prevent forest fires.”

In May, KLP announced that it is excluding companies that derive more than 5% of their revenues from coal-based activities. The fund said the 5% threshold was chosen because its difficult to attain accurate figures from companies on all revenue below this level.

As a result of the decision, KLP has excluded 46 companies from investment, and sold off stocks and bonds worth approximately NOK3.2 billion ($356.6 million). In 2014, KLP decided to exclude companies that derive more than 50% of their revenues from coal-based activities, and lowered that to 30% of revenues in 2017. The decision means that KLP has stricter guidelines than the Norwegian government has proposed for the Government Pension Fund Global (GPFG), which is allowed to invest in companies that have up to 30% of the revenues from coal-based activities.

Tags: Amazon, Archer Daniels Midland, Bunge, Cargill, ESG, KLP, Norway, Pension