Pensions Urge ‘Strong Action’ over Climate Change in Paris

The managers of €215 billion of European pension assets have set out demands for policymakers ahead of next month’s crucial climate summit.

Two of Europe’s biggest pension managers have spoken out ahead of a major climate change summit next month to urge policymakers to support renewable energy development.

“A strong agreement in Paris—including a long-term international emission reduction goal and strong national plans—is essential.”Denmark’s PKA and the Netherlands’ PGGM issued a joint statement laying out four areas of focus for politicians and business leaders when they meet in Paris from December 1.

These include supporting the development of climate-related investment opportunities in emerging markets, the introduction of carbon pricing, the exploration of energy efficient technology, and “close cooperation” between the public and private sectors to improve impact investment opportunities.

“A strong agreement in Paris—including a long-term international emission reduction goal and strong national plans—is essential,” said PGGM CIO Eloy Lindeijer. “Such an agreement will set a clear pathway in favor of a low carbon economy. This will reduce policy risk, incentivize research and development, facilitate the deployment of new technologies, create new jobs, and will contribute to clarity and certainty that is necessary for long-term investment decision making.”

Peter Damgaard Jensen, chief executive director of PKA, said policymakers must commit to “ambitious climate goals” to support his company’s intentions to “increase our green investments substantially”. PKA is one of many asset owners to have removed coal companies from its portfolio.

Pension funds from around the world—including CalPERS, CalSTRS, the BT Pension Scheme, Sweden’s AP funds, and the UK’s Universities Superannuation Scheme—wrote to G7 leaders in May calling for an “ambitious agreement” in Paris to reduce emissions and invest more in renewable energy.

PGGM plans to quadruple its investments in renewable energy and other sustainable technologies in the next five years as well as halve its carbon footprint. Fellow Dutch pension investor APG nearly doubled its sustainable investments from €16 billion ($17.1 billion) to more than €31 billion during 2014.

Last month, the UK’s Environment Agency Pension Fund published its climate change policy, setting out a “global leading objective” to ensure its portfolio and investment processes fit with international agreements to keep the global temperature increase “below two degrees relative to pre-industrial levels”.

A joint report by PGGM and PKA, “Private capital as a force to limit climate change”, is available on PGGM’s website.

Related: The Multi-Trillion Dollar Impact of Climate Change (and Why ESG Isn’t Enough) & How to Make Money from a Changing Climate