Even though 2050 are almost three decades away decisive action is required already today and Alliance Members have to set a range of interim targets for their engagement efforts and investment strategies by 2025 that can produce the required change well before this decade has ended.

As a member of the Net-Zero Asset Owner Alliance, PensionDanmark has in our capacity as investor, endorsed working towards a world economy with Net-Zero Green House Gas emissions before 2050 in order to limit the global rise in temperature to 1.5°C. Measures to achieve this include active ownership and investments in climate-friendly technologies.

In 2020 we sat interim targets on the way to fulfill our net-zero commitment; targets that require change well before the decade has ended. These interim targets based on the Target Setting Protocol implies a maximum 1.5°C warming above pre-industrial levels – the most ambitious target defined in the 2015 Paris Agreement.

The interim targets include:

  • Sector targets: By the end of 2024, we aim to reduce our climate footprint, scope 1+2+3, within four main sectors: Oil and Gas by 20%, Utilities by 35%, Cement by 10 % and Shipping by 15 %. The sector targets are developed with input from the OECM model and TPI on sector pathways.

PensionDanmark has two overall climate goals: First, to have a well-diversified investment portfolio that produces satisfactory returns for our members with the lowest possible carbon footprint. Secondly, to invest in companies and projects that both fulfil our return expectations and embarks on a green transition or produce solutions to global climate challenges. Due to these goals, we have chosen to focus on sectors with a substantial negative climate footprint. The companies in these sectors face demand for a green transition but the global economy depends on their production; hence the best strategy is to promote and invest in those companies that lead the green transition or are ready to downsize their activities and pay large cash holdings to their investors in the form of dividends.

  • Engagement targets: PensionDanmark has set engagement targets that includes supporting collaborative and single engagements, backing SBTi approved targets and net-zero commitments and contribute to consultation papers aimed to make a real world change. For instance, PensionDanmark has committed to execute 20 engagements before 2025 as well as engaging in minimum 5 climate change policies and practices with Asset Managers and contribute to minimum 5 AOA-papers.

The Alliance is encouraging Asset Owners to drive real world impact through engagement with corporates, e.g. through CA100+, and policymakers. PensionDanmark engage in dialogue with authorities and other stakeholders regarding societal issues, particularly how private investors can become involved in creating new and innovative solutions.

  • Ownership of green infrastructure:By 2025, PensionDanmark aim to own 1,300 MW of green power capacity – an increase of 200 MW over 5 years.

PensionDanmark has been invested in green infrastructure for the past ten years and had by the end of 2020 investments in wind and solar cells worth EUR 1.7 billion – equivalent to some 1,100 MW of operating green power capacity. Including committed capital, PensionDanmark has allocated more than EUR 3.3 billion to renewable energy infrastructure all over the world. The derived CO2 savings for 2020 amount to just below 1.9 million tonnes. PensionDanmark is furthermore inclined to participate in minimum three roundtables with DFI´s to enhance blended finance of climate solutions in the Least Developed Countries.

  • Sub-portfolio targets: By the end of 2024, the climate footprint of our portfolios of listed equities and corporate bonds are to be reduced by 45% compared to 2018.

The Alliance has recommended that its members should aim for a reduction of minimum 22-32% in the climate footprint of their portfolios before 2025. PensionDanmark has had focus on reducing our footprint for both listed equity and real estate since 2017. This has resulted in a real estate portfolio, which is already ahead of a 1.5 °C pathway by 2019. Our listed equity portfolio already have a relatively limited climate footprint, some 60% of MSCI ACWI.