ABP, the government and education pension fund, receives many calls from universities to accelerate sustainability.
In response, ABP announced last week that the climate footprint has decreased.
But investments in fossil fuels do not appear to have declined.
There is a lack of a clear strategy, professors tell NU.nl.
ABP hopes that in 2021 investments in the 'affordable and renewable energy' category will for the first time exceed investments in fossil fuels, such as oil, gas and coal. That sounds like a big milestone, but is it?
The tipping point seems to be falling out of the blue, says professor of transition science Derk Loorbach of Erasmus University. "The definition of sustainable is somewhat stretched, and with regard to fossil investments, relative growth is at best a bit curbed."
"The realized CO2 profit seems more the result of the dynamics in the wider world than of targeted policy. I find it quite dramatic that they have hardly managed to realize a change in investments in ten years."
'Fossil investments give 20 years of CO2 emissions'
Like the European Union, the United States and Japan, ABP's long-term goal is to be CO2 neutral by 2050.
But professor of sustainable construction Andy van den Dobbelsteen of TU Delft believes that as an investor you should not pursue the same goals as countries, because investments can last for decades.
"The money that goes to fossil energy companies now will be invested in infrastructure that will produce and burn coal, oil and gas in the future, and those investments will have to recoup their money and generate a profit for at least 20 years."
"That means that if you still support fossil activities in 2050, they will certainly contribute to CO2 emissions until 2070. That is why I think that 2030 should be the absolute limit for investments in fossil fuels - we asked that in our letter to ABP. "
Necessity and risks of fossil investments
ABP says that fossil-free investing is not realistic, but different scientists think differently. For example, there are also increasing financial risks associated with fossil investments, precisely because worldwide sustainability is accelerating and stricter climate goals are being set. For example, coal-fired power stations have to close prematurely, or tar sand fields are no longer profitable.
Van den Dobbelsteen: "ABP rightly says that there should be a CO2 tax. But why doesn't ABP already charge such a CO2 price internally? They themselves take an enormous risk on the returns from fossil investments they have outstanding."
Fossil investments are part of ABP's diversification policy to invest the total assets of nearly 500 billion.
But it is not necessary from a financial point of view, says professor of finance Bert Scholtens of the University of Groningen.
He investigated the financial consequences of phasing out fossil investments.
"Our research shows that a pension fund such as ABP can divest investments in fossil companies without significantly affecting investment performance."
'Engagement' versus phasing out strategy
Dirk Schoenmaker, professor of banking and finance at Erasmus University, sees that ABP is now investing in sustainable energy.
"Above all, there is a lack of a clear strategy for phasing out fossil investments."
ABP says it chooses to stay in touch with fossil energy companies to encourage them to go green.
"Via this 'commitment', ABP could require oil companies to set out a clear path to become CO2 neutral," says Schoenmaker.
Scholtens has doubts about it.
"Our research shows that the engagement strategy is not effective, because fossil companies do not have the resources to transform their business model."
"ABP should not accept it if oil companies first increase their production until 2030, followed by empty promises for 2050."
Dirk Schoenmaker, professor of banking and finance
Then there comes a point when the roads part, says Schoenmaker: "If an oil company does not visibly shift its focus, ABP will have to divest. ABP should not accept it if oil companies first increase their production until 2030, followed by empty promises for 2050. "
Critical shareholders such as Follow This, who call on Shell and other oil companies to become more sustainable more quickly, are not getting any support from ABP.
"These are not extreme resolutions," says Van den Dobbelsteen.
"But ABP votes against or abstains. As far as I am concerned, they are sending a totally wrong signal with their sustainability story."
Pension funds PME and PMT, from the metal and electrical sector, do support the Follow This resolution, as do insurers Nationale-Nederlanden, Aegon and Achmea.