Danica Pension investments emit 1.8 million tonnes less CO2 than benchmark

Danica Pension has published a report on the CO2 impact of its investments, which finds that its investments emit 1.8 million tonnes less than the benchmark.

Broken down, its investments in equities and corporate bonds emit 33 tonnes of CO2 per million invested, which is 21 per cent less CO2 than a global benchmark for equities and corporate bonds.

This deficit is equal to just under 370,000 cars or the CO2 load from over 200,000 households’ annual energy consumption. Reduction figures are calculated using the Greenhouse Gas Equivalencies Calculator at the United States Environmental Protection Agency.

For its CO2 report, Danica Pension used a benchmark consisting of global equities (MSCI All Countries World), as well as European and US issues of corporate bonds, with higher (investment grade) and lower (high yield) credit ratings as well as corporate bonds issued in developing countries.

The lower climate impact is mainly due to the fact that Danica Pension has fewer investments in companies in sectors with high CO2 emissions, such as energy production and energy supply. Danica Pension also has investments in companies in the energy supply and automotive industries, for example, with a lower climate footprint than the sectors' average.

The provider said the report illustrates its work to take into account risks and opportunities in climate conditions. It actively uses the information to select investments that can provide attractive returns to customers and as a tool in the dialogue with companies to influence them to be partners in the green transition.

“With the CO2 data, we have a precise overview of how investments are performing in climate aspects and we can compare them. At the same time, we can discuss the individual company's climate strategy with management and how they can reduce the climate impact, so that they can, for example, be at the forefront of the future's stricter climate regulation and the increasing demand for green solutions,” Danica Pension investment director, Poul Kobberup, said.

“If companies do not set a climate-friendly direction, there may be an increased risk that they simply do not have a relevant business model in the long term, which could harm our ability to generate returns.”

He emphasizes that, from a return perspective, it makes good sense to invest in companies with a low climate impact within their specific industry. Therefore, in the future, the focus will be on further reducing CO 2 emissions.

Danica Pension has an ambition to invest DKK 100bn in investments that support the green transition by 2030.

“Going forward, we will increase investments in companies that supply products and solutions for the green transition and in companies that are in the process of restructuring their business to be based on greener forms of energy.

“As more attractive green investment opportunities come, a larger proportion of customers' pension savings will be placed in companies and projects with a low climate impact, and this will reduce the overall CO 2 burden over time. This way, we can use customers' pension funds to make a difference to the climate and secure future returns for the pension industry,” Kobberup said.

    Share Story:

Recent Stories

Mitigating risk
BNP Paribas Asset Management’s head of pension solutions, Julien Halfon, discusses equity hedging with Laura Blows

Europe’s pensions challenges
Francesca Fabrizi meets Matti Leppälä, Secretary General and CEO of PensionsEurope, to discuss the key aims and objectives of the association today.