Our vision on fossil investments
By remaining invested in the fossil fuel industry PGGM Investments can exercise shareholder rights on behalf of its clients, maintain influence over the fossil fuel companies and push the energy transition forward. We believe these companies should and can play a key role in that transition, hence creating new climate solutions that we would like to see in our investment portfolio. Choosing divestment will reduce our carbon footprint and lower reputational risk but it will not have a positive impact on real world emissions. As such, we use divestment only as a last resort and prefer to use our long-term capital investments to realise positive impact on the world and more specifically on the much-needed energy transition.
By remaining seated at the table, alongside other shareholders, we can use engagement and voting rights to influence the companies and steer them in the right direction, to set targets and adopt cleaner technologies. Fossil fuel companies have the know how, scale and risk capital to be in a position to lead the energy transition but still need investors to finance them. Withdrawing all investments is counterproductive since it removes capital needed to finance the transition. Moreover, the world is still heavily dependent on fossil fuels and the implementation of sustainable alternatives will not entirely cover all our needs in the upcoming years. For example, the materials needed to build a windmill cannot be produced without the use of fossil fuels. This means that alongside engagement with the supply side of the energy sector, the demand side requires attention too. Can we move a large oil and gas producer towards improving sustainability, towards making a concrete contribution to the energy transition? We want to give that a serious chance.
Such a meaningful dialogue will have to be accompanied by visible action at shareholders’ meetings, in word and in deed. We gave a clear shot across the bows at Shell’s shareholder meeting in May 2021. For the first time, we voted in favour of a resolution of Follow This that called on the management of Shell to publish CO2 targets that are in line with the Paris Climate Agreement. At the same time, we voted against Shell’s proposed climate strategy: we did not find it credible.
As such, we support PFZW position to remain invested only in those companies who show willingness, capacity, and the according actions to transition. This also means PFZW does divest companies that significantly underperform their peers in terms of greenhouse gas emissions. Beginning February 2022, PFZW shared its tightened policy on investing in the fossil fuel sector.
In the coming two years, PFZW will stop investing in companies in the fossil fuel sector that do not commit to the Paris Climate Agreement and the increased ambitions of COP26. The divestment will be gradual, with PFZW only remaining invested in fossil fuel companies that have a convincing and verifiable climate transition strategy in line with ‘Paris’ by 2024. PFZW has set a target of 1.5 degrees Celsius on a total portfolio level. Investments in ‘fossil’ will decline over the next two years – by no means all companies in this sector are expected to be ready or willing to commit to ‘Paris’.
Key words are: shareholder influence and taking responsibility. PFZW intends to use its influence to make an impact: if major players in the global energy infrastructure can be incentivised to develop climate solutions, the energy transition will gain real momentum. With this new policy, PFZW is giving PGGM an important but also difficult task. We gladly accept the challenge, because it fits the profile that PGGM wants as a sustainable pension investor. But it will also demand a lot from our ability to really make this impact for PFZW, in addition to that other important task: profitable investing.
Read more about our vision regarding climate change here.
- Stable financial results
- Asset management
- How our clients’ investments contribute to the SDGs
- How we mitigate our negative impact
- Active ownership
- ESG integration
- Optimal risk management of investments
- Dealing with climate risk as financial risk
- Enterprise Risk Management
- Our organisation in numbers
- Great Place to work
- How we remunerate our people
- Diversity and inclusiveness
- Working and COVID 19
- Measuring up to the best
- Control of costs
- Future proof business operations
- Our focus on innovation and research
- Data management