How one climate-conscious investor engages with fossil fuel companies

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Peter Damgaard Jensen is the CEO of Pensionskassernes Administration A/S, a Danish investment manager with a portfolio that includes pension funds. He spoke at the World Bank Group about carbon pricing and engaging with fossil fuel companies to reduce climate risks.

"We are supporting the price on carbon because we think it is the most cost effective way of having influence on the way companies use carbon and have carbon emissions.
In PK (Pensionskassernes Administration A/S), we have just started a policy especially targeting companies that are very dependent on coal. We do that because we think coal is the first fossil, not fuel, but fossil product that will get out of the market because it is the product with the highest CO2 emissions.

So, we are targeting companies that more than 50 percent of their production either is coal mines or is utilities. If they are up to 100 percent, we are going to divest, especially coal mines because we think it will be very difficult for them to change. I mean, if you are a coal mine, you are a coal mine. But we are going into a dialog with companies that have less than 90 percent, between 50 to 90 percent in either as a coal mine or utility.

The first thing we will do together with other investors is ask: Are you aware you have a problem? It might sound a bit simple, but that is the first step, which we agree with the company that they actually have a problem looking into the future if they are so heavily dependent on coal. Moreover, our experience from other areas is that many companies are aware that looking forward they have a problem.
Then the second question we ask of course is: What are you going to do about it? Many companies actually have a policy, and there we go into a dialog if this policy is realistic and if it is possible to execute.
The third question we ask, if they are going to do something, is we ask how they are going to execute it and when. Because you can have a very nice plan, but if you’re not going to anything about it, then it only is going to be a plan. And many companies, we have seen that in other areas, actually have a plan on how they are going to execute it.
The important part for us is that the companies are moving in the right direction. We think that will make it a more valuable company because they are tackling the problems they have."


Peter Damgaard Jensen

CEO of Pensionskassernes Administration A/S

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