One of the world’s largest pension funds, ABP, is selling its €15bn-worth of holdings in fossil fuel companies, including Royal Dutch Shell, claiming it had been unable to persuade the sector to transition quickly enough towards decarbonisation.
Corien Wortmann-Kool, the chair of ABP, the Dutch pension fund for civil servants and teachers, said it would no longer invest in producers of oil, gas and coal, and that it would dispense with its current investments in those sectors by the first quarter of 2023.
The fund said it did not expect the decision to have a negative impact on long-term returns for its pension customers. It will invest instead in electricity companies, the car industry and aviation but Wortmann-Kool claimed the fund would be in a better position to push those companies towards being “more sustainable”.
He said: “We want to contribute to minimising global warming to 1.5C. Large groups of pension participants and employers indicate how important this is to them.
“The ABP board sees the need and urgency for a change of course. We part with our investments in fossil fuel producers because we see insufficient opportunity for us as a shareholder to push for the necessary, significant acceleration of the energy transition at these companies.”
At Shell’s AGM in May, ABP voted in favour of the company’s own climate strategy, under which its emissions would increase over the next decade.
Mark van Baal from Follow This, a campaign group that uses activist investment to pressure oil companies into decarbonising in line with the limits set by the 2015 Paris climate agreement, said: “Today, Shell loses one of their best friends. We hope this is a wake-up call for the board of Shell.
“We hope more critical investors will replace ABP as shareholders in Big Oil. This is a victory for the fossil-free movement and a victory for the fight against the climate crisis. It shows how a group of citizens can make an impact.”
ABF has holdings in about 80 companies in the fossil fuel sector, accounting for almost 3% of its €528bn total assets. In September, the climate action group Fossil Free launched a lawsuit against the fund seeking a ruling on whether ABP needed to divest from fossil fuels in order to align its investment policy with its promise to adhere to the Paris climate agreement.
That followed a ruling in May from a court in The Hague, which ordered Royal Dutch Shell to cut its global carbon emissions by 45% by the end of 2030 compared with 2019 levels, in a landmark case brought by Friends of the Earth.
The Anglo-Dutch company was told it had a duty of care and that the level of emission reductions of Shell and its suppliers and buyers should be brought into line with the Paris climate agreement.
McKenzie Ursch, a legal adviser for Follow This, said he believed the court rulings could have been a significant factor in ABF’s decision.
He said: “This foreshadows a new wave of litigation against major GHG [greenhouse gas] emitters, and indicates that oil majors and large investors have an individual responsibility to combat climate change.”