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The Danes’ investments in retail funds are to accelerate the green transition

State of Green
By State of Green, November 12, 2020

At the ‘Climate Investment Summit’ held on 3-4 November 2020, Finance Denmark pledged to dramatically reduce the carbon footprint of Danish private investments in retail funds. Moreover, the Danish pension industry announced that USD 8 billion has been invested in the green transition since Danish pension funds committed at the 2019 UN Climate Action Summit to increase green investments by USD 50 billion by 2030.

At the opening of the Climate Investment Summit, Kent Damsgaard, CEO of the industry association Insurance & Pension Denmark, reported that Denmark’s pension funds have invested USD 8 billion in green projects since the 2019 Climate Action Summit in New York. These investments far exceed earlier predictions in a time of pandemic and general financial instability. If this pace of investment continues, Denmark’s pension funds will reach the target of USD 50 billion in green investments three years ahead of time, according to a Climate Investment Coalition (CIC) press release.

 75 per cent CO2 reduction target

In addition, Finance Denmark came with an ambitious commitment to support private Danish citizens’ investments in the green transition. Finance Denmark, a Danish association for banks, mortgage institutions, asset management, securities trading and investment funds, committed that by 2030 CO2 emissions from investment funds offered to Danish citizens must be 75 per cent below the emissions of the world equity index in 2020. Approx. 775,000 Danes have EUR 135 billion invested in the investment funds offered by members of Finance Denmark. In addition, the Danes have approx. EUR 130 billion in deposit accounts, which also have the potential to be invested.

See fact sheet from Finance Denmark

Public-private cooperation makes a difference

“The next step is to get international institutional investors to join with additional green commitments so we can create a global momentum for green investments.”
– Dan Jørgensen, Danish Minister of Climate, Energy and Utilities

“When the private and public sectors join forces, we can really make a difference in the real world. The Danish pension industry has delivered on its commitment to increase green investments, and now the Danish asset managers have also set an ambitious climate target. The next step is to get international institutional investors to join with additional green commitments so we can create a global momentum for green investments. That is one of my key priorities towards COP26 next year”, said the Danish Minister of Climate, Energy and Utilities, Dan Jørgensen, in the CIC press release.

Reaching the target is a common task

“It is a common task that we reach the goal of the government’s ambition of 70 per cent CO2 reduction by 2030. Therefore, as the first investment industry in the world, we promise to reduce the CO2 footprint for Danes’ private investments, so that their CO2 footprint in 2030 will be 75 per cent lower than the CO2 footprint of the world equity index today,” said Peter Kjærgaard, chairman of the Danish Investment Association, a Finance Denmark unit.

-Related news: Danish pension funds put their money where their mouth is: Ready to finance energy island

The new goal will provide a total CO2 reduction of approx. 430,000 tonnes a year toward 2030. This is equivalent to removing 170,000 cars from the roads.

“As a sector, we want to take responsibility for the Danes making green choices – also when we talk about investments. Ultimately, it will be the Danes’ decision what they invest in. But we believe that together, we can achieve the goal by making products available that contribute to the green transition and by advising the individual customer on the possibilities to let their money work for the benefit of the society that they are a part of, through their investments, ” said Peter Kjærgaard, Danish Investment Association.

New industry recommendations

In order to lead investments in an even more sustainable direction, the Danish Investment Association is also launching a new set of recommendations for the industry on how they should incorporate sustainability into the business. With the recommendations, the Danish Investment Association wants to send a clear signal to set the bar high. Not just on climate, but on sustainability in general.

This applies to everything from analyses of possible investments to concrete investment decisions and to actively – as shareholders in the companies in which the industry invests – push the companies in a more sustainable direction. It should also be easier for customers to distinguish and compare how sustainable the various investments are.

 

The Climate Investment Summit was organised by the Climate Investment Coalition, with, among others, the Danish Ministry of Climate, Energy and Utilities and the financial sector as partners.

 

See fact sheet from Finance Denmark

 

Sources

Finance Denmark (in Danish)

Climate Investment Coalition

Photo by Christian Dubovan on Unsplash

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