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Environmental due diligence and assessment important consideration when developing investment plans

Four environmental advocacy organizations called on Stichting Pensioenfonds ABP, Heerlen, Netherlands, on Monday to halt all new investments in fossil fuel companies and commit to phasing out such existing investments.  The €456 billion ($502 billion) pension fund’s investments in fossil fuels rose to €16.5 billion as of Dec. 31 from €14 billion in 2015, according to a report by consultant Profundo, commissioned by the groups.

In addition, ABP’s investments were 97 million tons carbon dioxide equivalent in 2018, equivalent to more than half of the carbon dioxide emissions of the Netherlands, the report found. ABP also as much as tripled its stakes in two Russian oil companies, Gazprom and PJSC Rosneft Oil Co., said Kees Kodde, the Greenpeace Netherlands’ campaigner, in a news release.  “ABP is still massively invested in coal. ABP holds investments in 96 coal companies all over the world whose installed coal-fired capacity amounts to 558 gigawatt, one fourth of the world’s total coal-fired capacity,” Heffa Schucking, director of German non-profit Urgewald said in a news release.

In response to the call by non-profit groups, a spokesman for APG Asset Management, the manager of ABPs assets, said Monday: “We are aware of the analysis by these NGOs, as we recently invited Both ENDS, Fossielvrij NL, Greenpeace Netherlands and Urgewald to discuss the outcomes at our office in Amsterdam.”

Profundo’s analysis found the total emissions from equity investments, corporate bonds, sovereign bonds, and real estate have decreased by 9.6% from 2015 to 2018, rather than saw a 28% reduction that ABP has reported.

“In our measurements we achieved a 28% reduction, while the NGO report calculates a 32% reduction,” the ABP spokesman said, noting the fund’s assets under management have grown to over €456 billion as of June 30, from €351 billion at the end of 2015, causing its overall exposure to energy investments to increase.  “We strongly believe that (ours) is the best method to (calculate) reduction of carbon dioxide emissions, as do most leading investors worldwide,” the spokesman added, noting that counting emission volume in the rest of the value-chain, including the supply of raw materials or the use of products can produce unreliable data.

Responding to the call to not continue to increase its exposure to Russian energy companies the spokesman said ABP did not change its exposure to Gazprom and Rosneft, adding the growth in positions is likely driven by higher oil prices and market effects.  “On Rosneft’s plans for Arctic drilling, we have asked them questions on this topic, in which they said that they are doing the necessary due diligence and environmental assessment before proceeding to develop investment plans. In our view there are strong financial as well as environmental considerations for avoiding drilling activities in the Arctic,” the spokesman said.

ABP is finalizing its new responsible investing policy for the coming years, the spokesman said, including setting new targets for asset classes other than equities in 2022.

Source – Pensions and Investments

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