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Denmark’s largest commercial pension fund just offloaded its US$170 million stake in Shell Plc
Bloomberg News
There’s a growing list of institutional investors in Europe who are stripping oil and gas stocks out of their portfolios, in a move they say reduces the risk of ending up with stranded assets and financial losses.
The latest to do so is PFA, Denmark’s largest commercial pension fund with roughly US$110 billion of assets under management. The investor has just offloaded its US$170 million stake in Shell Plc based on an assessment that the company’s capital expenditure on renewables is worryingly low.
“There was a cry to them to engage more in the transition,” says Rasmus Bessing, head of ESG investing and co-chief investment officer at PFA. “But especially over the last year or so, a bit more perhaps,” Shell has been signalling it wants to “go in a different direction,” he said.
A spokesperson for Shell referred to a comment made by chief executive Wael Sawan at the company’s annual general meeting on May 21, when he said shareholders “have strongly backed” its strategy. “Our focus on performance, discipline and simplification enables us to invest in providing the energy the world needs today, and in helping to build the low-carbon energy system of the future.”
Other institutional investors also are losing patience with oil and gas holdings. Stichting Pensioenfonds ABP, Europe’s biggest pension fund with about US$550 billion of assets under management, said in May that it exited all its liquid assets in oil, gas and coal — a portfolio that was worth about US$11 billion. It has said it plans to divest a further US$5 billion of less liquid fossil-fuel assets.
In France, new sustainable investing requirements mean asset managers using the label will need to purge their portfolios of an estimated US$7.5 billion in combined fossil-fuel assets, a development that will hit companies including TotalEnergies SE and Shell.
In the U.K., both the Church of England Pensions Board and the Church Commissioners for England, which together oversee about US$17 billion in assets, said last year that they’ll start blacklisting oil and gas majors.
Sweden’s AP7 fund, which manages more than US$100 billion, has exclusion policies targeting a range of oil producers, including Saudi Aramco and India’s Oil and Natural Gas Corp. It blacklisted Exxon Mobil Corp..
AkademikerPension, a Danish pensions investor, axed the last remaining oil and gas holdings in its US$20 billion portfolio at the end of 2023 and is now in the process of offloading companies that provide equipment and services to fossil-fuel producers.
For now, the impact on returns of such divestments has been “neutral to slightly positive,” says Troels Børrild, head of responsible investments at AkademikerPension.
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