Pension fund ABP plans to dispose of fossil fuel shares

ABP announced the policy change on Tuesday, October 26. For years, protest groups have been trying to influence the pension fund to do so, and universities themselves even got involved in the protests too.

Shares in fossil fuels constitute roughly three percent of ABP’s total securities portfolio, representing a value of 15 billion euros. According to the pension fund, the sale will not have an adverse effect on pensions.

Climate scientists and activists have been warning of global warming caused by the combustion of fossil fuels for decades. However, the pension fund claims that only the most recent climate assessment reports are said to have given the decisive impulse for the change of course.

Discussion
Initially, ABP hoped to use its position as shareholder to persuade oil and gas companies to adopt a more sustainable course, but that policy has been abandoned. “We do not believe that our influence as a shareholder is enough to get these companies to switch from fossil fuels to renewable energy,” explained the pension fund. “We are also complying with the request to withdraw from the fossil fuel industry, which was made by a number of groups of pension fund participants and employers.”

However, ABP will continue to invest in major consumers of fossil energy, aiming to encourage them to make a faster switch from fossil fuels to renewable sources, the pension fund said in its FAQ. “This mainly concerns companies in the automotive, aviation and power generation industries.”

ABP also has shares in “fossil fuel production and storage facilities”, according to an interview with Board Chair Corien Wortmann, published in Dutch on their website. “We want to divest those as well, but that is going to take more time.”

ABP is Europe’s largest pension fund and one of the world's biggest companies of this sector. Joining the fund is compulsory for employees in the public and education sectors in the Netherlands. One in six Dutch people gets a pension from ABP or will do so in the future, according to the fund.

Yields
Before announcing the change, ABP's target was to have fully climate-neutral investment portfolio by 2050. At the time, the organisation justified itself by saying that it did not want to take any big financial risks. "Imposing too many restrictions on our investors could be detrimental to the yield.”

Protest group Fossielvrij is among the ones glad to hear the news. “We owe this mega victory to years of campaigning done by teachers, civil servants, water board officials, scientists, police officers and young people”, tweeted the group.