Taking social responsibility and contributing to the green transition are important priorities for us. As such, we are committed to making all our investments carbon neutral by 2050 and to ensuring that our investments are aligned with the climate targets of the Paris Agreement to limit global warming to 1.5°C. We are therefore pivoting our investments in a more climate-friendly direction as this also supports our ambition to deliver attractive, long-term returns on our customers’ pension savings.
We are adding this extra dimension to our climate work to ensure that our initiatives are anchored in science and are based on the latest research. Committing to the Science Based Targets initiative means that independent climate experts must validate our targets to ensure that the future temperature rating of our investments enables us to meet the goals of the Paris Agreement.
“Our climate action is twofold in that we are reducing carbon emissions from our investments in the most climate-damaging sectors while also investing DKK 100 billion in the green transition by 2030. This is a good start, and by committing to the Science Based Targets initiative, we can ensure that our work is based on science and that our investments are in line with the Paris Agreement," says Søren Lockwood, CEO of Danica Pension.
For example, we have reduced the carbon footprint of our equity and bond investments by 17.5% since 2019 and have almost quadrupled our investments in the green transition to DKK 37 billion. At the same time, we are also ahead of our carbon reduction targets for the utilities and cement sectors and are making reasonable progress in the automotive and shipping sectors, although we need to accelerate our efforts within the steel, energy and aviation sectors.
Our ambition to make a real difference for the climate, and this requires us to set science-based targets. At the same time, we believe that companies taking action to support the green transition will make better investments in the future.
- Søren Lockwood, CEO, Danica Pension
Scientific approach to make a real difference for the climate
Our commitment to the Science Based Targets initiative is particularly important because climate research is constantly evolving. By committing to the initiative, we can target investment towards those companies that are implementing Paris-aligned transition strategies, and we will exercise active ownership to promote green initiatives in the companies we invest in.
“Leading us in all that we do is our ambition to make a real difference for the climate, and this requires us to set science-based targets. At the same time, we believe that companies taking action to support the green transition will make better investments in the future. This guides us in our selection and exclusion of companies, and sharpens our focus on influencing companies to move in a greener direction. It is a long haul, but I firmly believe that this approach enables us to contribute to a greener society and to deliver attractive returns to our customers,” concludes Søren Lockwood.
The next step is for the Science Based Targets initiative to validate our climate targets, which we expect will happen in the first half of 2023.
Our climate goals
We are committed to making all our investments carbon neutral by 2050 and to ensuring that our investments meet the climate targets of the Paris Agreement to limit the global temperature increase to 1.5°C. To ensure progress, we have set the following investment targets:
- Investments in equities and corporate bonds must be linked to a temperature increase of 2°C in 2030 (measured by scope 1 and 2 emissions) from 2.5°C in 2020
- iInvestments in equities and corporate bonds must be linked to a temperature increase of 2.2°C in 2030 (measured by scope 1, 2 and 3 emissions) from 2.8°C in 2020.
The targets must be validated by independent experts from the Science Based Targets initiative, and after 2030 we will set new temperature targets, which must also be validated.
Our climate initiatives
We are implementing a number of initiatives to help us meet the temperature goals:- We target our investments towards companies and projects that contribute to the green transition. By the end of Q3 2022, we had invested DKK 37 billion in the green transition, with the target being DKK 50 billion invested by the end of 2023 and DKK 100 billion by 2030.
- We reduce carbon emissions from our investments. We are currently reducing the carbon intensity of our investments in the five highest-emitting sectors by between 15% and 35% towards 2025.
- Furthermore, we are working to achieve a 69% reduction in carbon emissions from our investments in real property by 2030. By year-end 2022, we had reduced these emissions by 36% from 2019 levels.
We continue to set new targets to ensure that we can achieve our long-term ambitions and are aligned with the goals of the Paris Agreement. Read more about our temperature targets here on page 37 or about our climate initiatives here.
About the Science Based Targets initiative
The Science Based Targets initiative is a partnership between the UN Global Compact, CDP, WWF and the World Resources Institute. The organisation helps companies set science-based climate targets that enable them to meet targets of the Paris Agreement to limit the global temperature increase to 1.5°C by the end of this century (from pre-industrial levels). The targets are assessed and validated by the initiative’s independent climate experts.
