Nordic and UK pension funds commit USD 130bn to clean energy investments

Nordic and UK pension funds have made a collective financial commitment to invest USD 130bn in clean energy and climate investments by 2030.

The commitment, which was revealed at the COP26 climate conference in Glasgow this week by the CEOs of the pension funds, will also see pension funds report annually on the progress of their climate investments. It includes asset owners from Sweden, Norway, Finland, Denmark, Iceland, the Faroe Islands and the UK, with a pension fund from Greenland also declaring its support.

Danish Prime Minister, Mette Frederiksen, said: “Green transition requires massive investments. Governments have to do their part and commit to a new green future. But we also need private investors on board. In 2019, Danish pension funds committed to invest USD 55bn in the green transition by 2030. I am proud that we have inspired others and that Nordic and UK pension funds are now ready to invest USD 130bnin total by 2030.”

The commitment was praised by the Climate Investment Coalition (CIC) which issued a release on the commitment and works directly with committing institutional investors to ensure that commitments are being implemented, tracked and reported on annually.

CIC co-chair, Peter Damgaard, said: “These ambitious pension funds are taking critical steps to ensure pensions take advantage of the enormous opportunities of the green transition, help spur immediate solutions to lower carbon emissions while protecting our savings against the ravages of climate change. As we look ahead beyond COP26, we aim to grow these financial commitments, raising investor ambition to create a far-reaching impact by 2030.”

Icelandic Pension Funds Association managing director, Þórey S. Þórðardóttir, said its country’s pension funds have committed to investing more than USD 4bn in green energy solutions, in addition to the USD 1.2bn already invested in climate-friendly initiatives.

“The pension funds are committed to continued investment in projects that use geothermal power, as well as other sustainable energy sources, distribution methods, and consumption. The objective is to expedite developments that promote cleaner energy for use in transportation and business activities in Iceland.”

Insurance and Pension Denmark CEO, Kent Damsgaard, said: “Denmark is a pioneer country leading the way for other countries to invest in the green transition and I am happy and proud to see that the Danish commitment has caused a ripple effect inspiring the Nordics and the UK to follow and make green commitments. With this USD 130bn commitment, we are aiming for a bigger momentum.”

Norway’s KLP has also pledged to invest €600m each year in climate solutions such as renewable energy, in addition to the science-based decarbonisation of its portfolio. Sweden’s Skandia has a goal to allocate at least USD 5bn in assets that have a role to play in climate change

Skandia CEO, Frans Lindelöw, said: “This decade is crucial for the world to achieve the Paris Agreement's goal of net-zero climate emissions by 2050, but the global need for investment amounts to trillions of dollars. If public and private capital mobilises and cooperates, the gap can be closed. With our commitment to the Climate Investment Coalition, we want to show that the finance and pension industry is serious about climate transition."

Finland’s Varma Mutual Pension Insurance Company also has a target to reach a 20 per cent climate allocation by 2025. “Our goal is to influence, together with other investors, how fund managers take climate perspectives into account in their operations. We also actively highlight the fact that preparing for climate change offers significant investment opportunities,” president and CEO, Risto Murto, said.

    Share Story:

Recent Stories

Podcast: The benefits of private equity in pension fund portfolios
The outbreak of the Covid-19 pandemic, in which stock markets have seen increased volatility, combined with global low interest rates has led to alternative asset classes rising in popularity. Private equity is one of the top runners in this category, and for good reason.

In this podcast, Munich Private Equity Partners Managing Director, Christopher Bär, chats to European Pensions Editor, Natalie Tuck, about the benefits private equity investments can bring to pension fund portfolios and the best approach to take.

Podcast - The power of three: Using Common Contractual Funds to improve tax outcomes for investors
Large asset owners are still investing in equities in a way where they are taxed on their income. The implication is that they get a poorer return. They need to, and can, improve this, but how?

In this podcast, AMX Head of Client and Manager Development, Aaron Overy, and AMX Product Tax Specialist, Kevin Duggan, discuss with European Pensions Editor, Natalie Tuck, about three options to help ensure good withholding tax outcomes for institutional investors.
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.