Greenpeace has launched a campaign placing pressure on the Luxembourg Fonds de Compensation (FDC) to divest from fossil fuels, after highlighting the fund’s current investments in oil and gas.

The campaign group argued that, despite claiming to conduct sustainable and socially responsible investments, the fund provided more than half a billion euros to oil, gas and coal companies, including Shell, BP and Chevron.

Analysis by Greenpeace Luxembourg stipulated that the FDC had continued to invest in coal, oil and gas companies throughout 2019, with more than €256m invested in some of the world’s largest coal companies, and more than €385m in oil and gas companies.

The campaign described this as a “deceptive marketing scheme” and called for immediate measures from both parliament and Prime Minister Bettel to ensure the withdrawal of public funds from these fossil fuel corporations.

Greenpeace Luxembourg climate justice campaigner, Myrna Koster, commented: “In view of the FDC’s negligence, we call on our parliament and the Bettel government to take immediate action and divest public funds from environmentally harmful companies.

“In addition to protecting our livelihoods and human rights, divesting from fossil fuels is essential to secure the pensions of present and future generations.”

The campaign group highlighted a number of other large pension schemes who have already set a precedent for divesting from fossil fuels, such as the recent announcement of the Swedish AP1 pension fund.

Greenpeace Luxembourg climate and finance campaigner, Martina Holbach, added: “More and more banks, insurance companies, pension and investment funds are ending their financial support of oil, gas and coal.

“But neither the climate crisis nor the carbon bubble seem to interest the FDC managers and the Social Security Minister Romain Schneider. They are compromising the future of the planet and putting the future of pensions at risk.”

The group’s analysis also stipulated that several of the sustainably managed sub-funds, including some environmental, social governance (ESG)-certified funds, are invested in “global polluters”, such as Shell, Total, and BP.

In response, FDC chairman, Fernand Lepage, said: "As an institutional investor, the FDC is aware of its environmental, social and good governance responsibilities and takes them into account in the definition of its investment strategy and in its investment decisions. Furthermore, FDC's investment policy is fully in line with its mission and legal framework.

"During the last revision of the investment strategy, it was retained that all managers mandated by the FDC who actively manage funds must take into account a sustainable investment approach.

"In addition, dedicated sub-funds have been created in which only investments in green bonds and in companies that intend to generate a social or environmental impact in addition to a financial return are targeted. €335m had been invested into these sub-funds by the end of 2019.

"It is in this context that LuxFLAG has awarded 10 'ESG' or 'Environment' certifications to the FDC. These certifications cover more than 70 per cent of the securities actively managed within FDC’s SICAV, i.e. approximately €6.7bn.

"FDC's responsible investor policy does not exclude any particular themes or entire sectors. As things stand at present, the investment policy, as laid down by the legislator, does not allow the FDC to make such exclusions.

"Such exclusions would therefore require a change in the legal framework applicable to the FCD. In this context, a portion of the reserve, although minimal, is invested in the sectors in which the companies incriminated by Greenpeace operate.

"The FDC points out that for example the €256m referred to by Greenpeace represents only 1.2 per cent of the total reserve entrusted to the FDC."

In an FDC update on its investment exclusion list, it stated that, at the end of June 2020, the 10 labelled sub funds were administered “according to sustainable or socially responsible investment criteria”.

Since 2011, the fund has utilised an exclusion list of companies that do not comply with international standards, as outlined in the ten principles of the United Nations Global Compact.

In addition, the FDC also places some companies “under observation”, typically where investigations have not yet been completed, or for which engagement is still ongoing to place pressure on the firm, and stop the condemned practices.

The FDC states that it supports an engagement process through its “financial weight”, with the aim to “change the policy and the mode of governance of the companies in question”.

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