Denmark-based Magistre & Psykologer (MP) Pension has sold €86 million ($94 million) of equity shares in 10 of the world’s largest oil companies as part of its transition into green energy.
Among these are Royal Dutch Shell, ExxonMobil, BP and Chevron. The market capital of the 10 companies exceeds €1.2 billion ($1.3 billion), according to the pension fund.
MP said the divestment was based on an assessment of the company’s long-term business models, revealing it to be incompatible with the goals of the Paris Agreement’s goal of limiting global warming to below 2 degrees, which MP has supported since 2016.
“MP’s ambition is to be recognized as the most responsible pension fund in Denmark, and we wish to contribute to the green transition,” said Anders Schelde, CEO at MP Pension. “We have based our divestment decision on an assessment of future investment returns of the sector. We do not find that this sector can deliver a return on par with the rest of the market in the coming years. The demand for fossil fuels, including oil, will decrease as the green transition accelerates.”
Four of the companies (BP, Royal Dutch Shell, Total and Equinor) have looked at possible future climate scenarios and are taking steps toward transitioning toward a low-carbon economy. Meanwhile, six (ExxonMobil, Chevron, PetroChina, Rosneft, Sinopec and Petrobras) have no or very limited initiatives to support the transition to a low-carbon economy.
“Based on the data available, it is MP’s assessment that the 10 companies are not compatible with the goals of the Paris Agreement — and will not be so by the end of 2020,” said Schelde. “We have considered whether we should wait to sell our shares until 2020, as positive turn of events and stronger commitments might still emerge. However, we have decided to draw a line in the sand, as we do not believe that we as investors can further influence these companies before the end of 2020.”
The move follows MP’s 2018 decision to divest its listed shares in coal, tar sands and oil activities by the end of 2020. The fund will retain its investments in fossil fuel companies that are taking action to support the Paris Agreement.
The Danish pension fund will assess more than 1,000 companies before the end of 2020.
