Denmark’s pension fund for academics, lecturers and psychologists, MP Pension, is selling all its assets, worth DKK 644m (€86.3bn), in the 10 largest oil companies in the world, including Shell and ExxonMobil.

The pension fund has decided to exclude the companies from its investment portfolio due to not having long-term business models which are in line with the Paris Agreement of limiting global warming to a maximum of two degrees.

MP decided in 2018 that it would divest from oil, coal and tar sands by the end of 2020, but notes that companies which have aligned their long-term business models with the Paris Agreement are exempt from the decision.

The companies excluded so far are ExxonMobil, BP, Chevron, PetroChina, Rosneft, Royal Dutch Shell, Sinopec, Total, Petrobras and Equinor.

The exclusions were based on information collected in cooperation with a number of organisations, such as Carbon Tracker, KR Foundation and InfluenceMap. The final decision states that none of the ten companies have a business model compatible with the Paris Agreement, and they all continue to oppose more stringent climate regulation despite public support for the agreement.

It also found that four companies (BP, Royal Dutch Shell, Total and Equinor) have looked at possible future climate scenarios and are showing signs of transition, but the remaining six (ExxonMobil, Chevron, PetroChina, Rosneft, Sinopec and Petrobras) show no or very limited signs of conversion.

Commenting on the exclusions, MP’s CIO Anders Schelde said the company has an ambition of being Denmark's most responsible pension company and to contribute to the green energy transition.

“But we have also conducted analyses and found that it is the right decision in regard to our returns. We do not believe that this sector can deliver a return on par with the rest of the market in the coming years. Demand for oil will decrease as the green transition accelerates."

MP is assessing over 1,000 oil companies by the end of 2020 but decided to focus on the 10 largest companies as their total market share exceed DKK 9,200bn (€1,233bn), while MP’s DKK 644m (€86.3bn) investments correspond to two-thirds of its investments in oil.

“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. We have of course considered whether we should wait to sell the shares until 2020, as a positive reversal can happen. But we would rather draw a line in the sand now, as we do not believe in this context that we can influence the companies further by the end of 2020,” Schelde said.

“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 adapt their businesses towards renewable energy. When they, hopefully, have, we would very much like to invest in the same companies again. But it requires a significant change in all ten companies.”

Acting on members’ wishes, MP is also conducting an impact assessment of divesting its DKK 168m bonds in fossil fuel companies Rosneft and Petrobras.

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