Danish pension administrator PKA and Dutch pension fund manager PGGM appeal on governments to critically assess policies and regulation that obstruct investments in green growth. In a joint position paper
PKA and PGGM present four recommendations to policymakers.
The two pension providers currently manage EUR 215bn on behalf of 2.8 million members and have both climate risks as a focus area. PKA has already invested EUR 2bn in projects that provides attractive pensions to their members and helps to mitigate climate change at the same time.
In order to meet the ambition of its largest client PFZW, PGGM will quadruple investments in solutions for climate change in the coming four years. These impact investments will bring both financial and societal returns. In the same period, PGGM will halve the CO2 footprint of the investment portfolio and further integrate climate change risks and opportunities in all investment activities.
Addressing climate change is a key area of focus for PGGM and PKA. Because of our long investment horizon, we need to consider and prepare for scenarios that potentially have material impact on our investment portfolios in the long run. Climate change is an important factor in those scenarios.
PKA and PGGM have now published a joint report
which emphasizes how climate change affects pension assets and makes suggestions how investors and policymakers could respond to climate change:
- Innovative de-risking models, which blend public and private finance are needed to overcome the constraints that climate related investments in developing countries face: high political and financial risks.
- We strongly advocate mechanisms that put a price on carbon, as they are best at shifting capital and knowledge towards the most efficient solutions.
- Policymakers should increasingly support and explore the opportunities within energy efficiency in order to drive innovation, unlock private capital and mitigate risk of energy price volatility.
- Closer cooperation between public and private parties aiming at creating a stable investment environment is necessary to boost impact investing.
The two pension providers, both having roots in the care and welfare sector, have collaborated on strategic areas for several years. Therefore, working together on an important topic as climate changes is a natural continuation of the shared beliefs, according to Peter Damgaard Jensen, Chief Executive Director of PKA:
’’PKA has for several years invested in green projects, and lately we divested from pure coal mining companies and initiated dialogue with other coal related companies to re-duce their exposure to coal. If we are to increase our green investments substantially, we need policy makers to commit to ambitious climate goals and provide investors with attractive incentive structures. We hope this report will serve as an input to the debate at COP21.”
Else Bos, Chief Executive Officer of PGGM adds:
’’Executing the ambitious investment policy of our large client means that PGGM will have to be innovative to be able to halve the carbon footprint of its portfolio and quad-ruple its impact investments by 2020. We have already taken important steps towards that goal. These steps have convinced us that accommodating policies and regulation are essential to meet these ambitious targets.’’
PKA is a member owned Danish pension administrator. As of November 1, 2015 PKA has EUR 29 billion under management and represents 270.000 participants on behalf of three pension funds from the healthcare and welfare sector. Through our member democracy, we involve our members in the future of PKA. It has been so the last 60 years and we will continuously strive to provide our members with financial security throughout life.
PGGM is a cooperative Dutch pension fund service provider. Institutional clients are offered: asset management, pension fund management, policy advice and management support. On June 30, 2015 PGGM had EUR 186,6 billion in assets under management. The PGGM cooperative has approximately 700,000 members and is helping them to realize a valuable future. Either alone or together with strategic partners, PGGM develops innovative future solutions by linking together pension, care, housing and work.www.pggm.nl