8. Pension Funds – Climate Heroes

Gas Free Pensions

My Pension Fund can make a difference – here is how.

My worries about what I trust my pension fund to do, and what they do, did not only keep me awake that one night. It kept circling in my head. On the other hand, Oliver was a really nice guy and I did not want to ruin the other garden parties of this summer with this complex and worrisome talk. Besides, he was not impartial, so if I wanted to know if the investments of my pension funds indeed made any difference, he might not be able to give the correct answer.

So I decided to enlist the help of our modern Jack of all trades: Google.

Pension funds are a heap of all pension contributions, invested in stocks (and bonds and other things that Oliver made sound very complicated). If a stock is wanted by a lot of people, the price goes up. Banks see a high share price as an indication that the company is analyzed as being a good company, and will loan out more money to such a company. Big companies have an easier time doing business this way.

Now, not all investors analyse detailedly all their investments all the time. In a lot of cases they just check up what another investor says or has done. And if a few of the big investors not invest in a company, and say so publicly, the others follow suit. And then the share price is slowly going down. You could see that with tobacco investments. This indeed makes doing business a bit more difficult, the “big company” effects are gone for that company.

So, maybe a single pension fund will not change the whole world, and yet it will be noticeable. And when a few do, publicly, the impact is real. 

That made me happy. It means that if a few pension funds band together, they can really make a difference. I even found that such an alliance already exists: the NetZero Asset Owner Alliance (NZAOA)(1). These 25 pension funds (as of day of writing) have promised they will share tips and tricks and to do their best to invest in a way that they at least keep to the Paris agreement. 

And the last bit that made me happy is a letter I found. The letter (2) is from a guy named Larry Fink. He is CEO of Blackrock, the biggest investment firm on Earth. So I guess he knows how the business works and what is relevant in that business.

He writes that sustainability is “a defining factor in companies’ long-term prospects.” And “Every government, company, and shareholder must confront climate change.” 

Ah, that means he says about the same thing as Hannah. She will be surprised to hear he is agreeing.  And if even he says it is relevant that big investors like pension funds must take up their part, then who am I to disagree?

So what can I do? I will not talk to middle salaried employees on garden parties – I will talk to the bosses. I will support respective motions on general assemblies. I will send letters to my own pension funds, pointing out the methane gap in their portfolio (3) and ask them to urgently remove gas investments from their portfolio (as well as divest from other fossil fuels obviously). Even if they only join the NZAOA, that would give hope for our common future.

There are active people all over Europe urging their pension funds, governments and public investors to care for our world: to use the power of their money to realise economic change for the better, to target a stable climate on our planet for humanity. A peaceful future needs this sturdy foundation foremost.

Please join us realise this: send off a letter, sign a petition. If you have a little more time help out any group with a skill you might have. We have plans for: writing, blogging, coordinating, researching finance, keeping structure, keeping spirit high or finding more fun people to work together. Our group spirit comes up with many great plans, that we still want to realise.


Sources

(1) UN-convened Net-Zero Asset Owner Alliance explained in short https://www.unepfi.org/net-zero-alliance/ 

(2) BlackRock (2020) Larry Fink’s Letter to CEOs: A Fundamental Reshaping of Finance https://www.blackrock.com/corporate/investor-relations/larry-fink-ceo-letter 

(3) In the meantime, lots of Pension Funds especially in the Nordic countries have phased out fossil fuel shares like coal or tar sand, the ugly ones. Not so their shares of gas companies, the pretty looking ones. It demonstrates how unaware shareholders are of the dangers the pretty looking ones pose. As can be seen again in the case of Denmark’s MP Fund in June 2020, where a motion addressing gas shares was voted down.