Green investments in the Danish pension industry have increased by 12 per cent in the past year despite global uncertainty and political challenges, according to a report from Insurance and Pension Denmark (I&P Denmark).

Updated figures revealed that the industry has now invested DKK 385bn in the green transition, DKK 42bn more than a year ago.

The investments were calculated using the EU's environmental taxonomy and Article 2.17 of the Disclosure Regulation, which defines the framework for sustainable investments.

I&P Denmark CEO, Kent Damsgaard, said the increase had come despite challenges posed by inflation, uncertain supply chains and unrest about the political framework conditions for green investments in many parts of the world.

"In light of the fact that the investment environment is challenged, the industry is on the right track towards achieving the conditional commitment made by the pension industry to reach DKK 450bn by 2030," he suggested.

In connection with the UN General Assembly in New York in 2019, the Danish pension industry made a conditional commitment to invest an additional DKK 450bn in green investments towards 2030.

As of 1 January 2023, the commitment was calculated according to the EU's new environmental taxonomy and the criteria for other climate- and environment-related investments in the so-called disclosure regulation.

Damsgaard claimed that the increase in investment resulted from "good return" opportunities found by pension companies.

"Pension companies have a fixed task of ensuring the best possible return for savers, so the progress in green investments testifies to the fact that many companies have still been able to see some good opportunities for returns in the sustainable area," he explained, adding that it was a "really gratifying development."

However, Damsgaard warned that if more capital were to be drawn to the area, clear and long-term framework conditions for investment were "crucial."

"This is especially true for renewable energy, infrastructure and energy supply," he continued, "where very large sums must be invested at the start of the projects.

"It is a large and risky task to set up an offshore wind farm, for example. If investors cannot sell the power or permits are suddenly withdrawn, as we saw the other day in the US, it causes investors such as pension companies to hold back," Damsgaard added.

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