Europe’s biggest pension fund sells €10 billion in fossil fuels

Coal-fired power plant. (Reference image by Greg Williams, Flickr).

Europe’s biggest pension fund, Stichting Pensioenfonds ABP, has exited all liquid assets in oil, gas and coal worth about €10 billion ($10.8 billion), in an effort to be greener.

The last shares and bonds owned by the fund were sold in the first quarter of this year, Harmen van Wijnen, chairman of ABP’s board of trustees, said in an interview at the fund’s headquarters in Amsterdam. ABP, which had pledged to sell down a majority of the investments by early last year, no longer holds any “liquid assets” in fossil energy producers, he said.

In its latest disclosure since the 2021 commitment to cut €15 billion exposure to fossil fuels, the Dutch fund has gradually divested all stocks, bonds and investments in oil and gas futures contracts linked to fossil fuels, Van Wijnen said.

The fund has said the step is necessary after efforts to engage with fossil-fuel producers and get them to reduce their greenhouse gas emissions proved ineffective.

Still, about €4.8 billion of investments linked to oil and gas remain in the fund’s portfolio as of the end of March. These include holdings in unlisted companies, private equity or hedge funds.

“There are some more infrastructure-related investments that we are still in,” Van Wijnen said.

ABP needs longer to exit these assets as they are bound by long-term contracts. The fund estimates it would take a few years before these investments are fully phased out.

ABP’s actions are part of the finance industry’s response to stricter environmental, social and governance norms, with Europe leading the way globally in creating a regulatory framework to target emissions reductions.

The Dutch fund sees a risk in investing in companies that don’t adapt to the transition toward a low-carbon economy. Firms whose activities are bad for the climate or biodiversity are “no longer suitable” for its investment strategy, the fund said in March.

“We only want to invest in companies that also have a vision and are on a pathway in the transition to a sustainable economy and companies that don’t harm climate or biodiversity,” Van Wijnen said.

With about €520 billion in assets under management, the fund manages the pensions of three million government and education sector employees in the Netherlands. ABP says returns from the sale of fossil-fuel assets have been “easy to replace.”

“Anyone who looks back about 10 years will see that investments in oil and gas producers did not perform exceptionally during that period,” ABP said in a statement.

(By Sarah Jacob and Cagan Koc)


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