As part of the work to achieve the Danish climate goals, the Danish financial sector has promised to invest EUR 47bn (DKK 350bn) in green assets by 2030.
This is the biggest contribution the sector has made to the green transition, and not least, to the Danish national goal of reducing CO2 emissions to 30 percent of 1990 levels by 2030, so far.
As CEO of Pensiondanmark and chair of the financial sector's climate partnership, Torben Möger Pedersen is the industry's spokesperson for climate policy.
"From the financial sector's perspective, we want to contribute to realizing the goal of reducing carbon emissions by 70 percent by 2030, which was approved by a big majority in parliament in 2019. However, we have also emphasized that we need to do this in a way that is financially responsible," he says, adding:
"This means that investments must live up to the requirements for reasonable returns."
The EUR 47bn (DKK 350bn) commitment was made under his leadership, and now, the question is how global investments can help to achieve a national goal, like the 70 percent emissions cut target.
The goal to reduce carbon emissions by 70 percent is a national ambition, but the EUR 47bn (DKK 350bn) can be invested globally. Why haven't you set an investment target in Danish assets?
"We could have done that, but we didn't. We are global investors, and the climate crisis is global. Working to reduce CO2 emissions outside of Denmark has just as much significance for keeping the temperature increase below 1.5 degrees, and the Danish pension sector is so big relative to the Danish economy that we would have been forced to invest elsewhere, anyway," Möger Pedersen says.
I guarantee that Danish green projects will not close down due to lack of financing, as long as they live up to the reasonable return requirements
"That being said, a significant portion of the green investments are based in Denmark," he says, adding:
"For example, we have committed to financing energy islands in the North and Baltic seas, and we have also recently announced that we are co-investors in what will be Europe's largest power-to-X project, Esbjerg Havn."
The climate partnerships are about Danish climate impact. Why haven't you committed to spending billions of kroner within Denmark?
"We haven't put a figure on it, but I guarantee that Danish green projects will not close down due to lack of financing, as long as they live up to the reasonable return requirements. In the pension sector, there is a lot of focus on both commitments and investment potential."
Even if you hadn't committed to spending EUR 47bn (DKK 350bn), would you have reached that total anyway?
"We were also asked that back when we announced the goal at the UN climate summit. When we calculate everything in 2030, I would guess that our total green investments will actually far exceed our target. We are currently very far ahead," he responds.
May raise the bar
In November, Danish industry association Forsikring & Pension (Insurance & Pension, -ed) reported that the sector had invested EUR 6.7bn (DKK 50bn) in the green transition in just one year. The EUR 47bn (DKK 350bn) commitment may therefore be achieved three years before schedule, which raises new questions.
If it already looks like you will far exceed your target, is it ambitious enough?
"That is a good point, which I will discuss with the industry. It might be that we reconsider the project in the fall and find that we have the opportunity to set the bar higher," Möger Pedersen says.
Won't your global investment portfolio become more green automatically, without you doing anything?
"You are of course right that the world is moving in that direction – but that isn't happening on its own. It is doing that because a lot of good forces are pushing it that way, including investors," Möger Pedersen says.
English edit: Catherine Brett
(This article was provided by our Danish sister media, FinansWatch.dk)