After being challenged by Government Accountability Project, a large Dutch pension fund has walked back its prior refusal to release information on its divestment from high-level CO2emitters. The fund’s actions demonstrate the need to watchdog organizations that pledge to pull investments from fossil fuel companies but fail to demonstrate follow-through to the public.
Pensioenfonds Zorg en Welzijn (PFZW), the tenth-largest pension fund in the world and the third largest in Europe, serves healthcare and social workers in the Netherlands. In November 2015, PFZW announced it would reduce its investments in fossil fuel companies. Spokesperson Maurice Wilbrink told Reuters the planned divestments were worth $1.9 billion, or about 0.7 percent of the fund’s total investments of $236 billion.
This past August, Wilbrink said the fund would not release details of these divestments. He told Government Accountability Project that the fund did not want to publicly name these high-level CO2emitters because “the banks and market parties will see this.” Naming the companies being removed from PFZW’s investment portfolio, he said, could cause a “market impact” and may “affect the value” of the companies’ stock.
Wilbrink was asked whether PFZW would release the information even after all of the divestments have been completed at the end of 2019. “We don’t expect that to happen,” he said. By concealing these details, the public would have no way of knowing whether PFZW had kept its 2015 promise.
Last week, however, Government Accountability Project asked Wilbrink why PFZW was giving special treatment to the fossil fuel industry by sparing it from public scrutiny. What is PFZW’s interest in protecting the stock prices and image of companies that harm the environment?
In response, Wilbrink said PFZW will release the information when the divestments are completed. By April 2020, he said, “it will be clear to the public which carbon-related divestments have been completed. Those names will not be part of the [investment] list anymore.”
This is a 180-degree reversal from what Wilbrink said in August, when he acknowledged, “it would be difficult to find out” about the divestments and “very hard for an outsider to see whether these companies are affected.”
Given how PFZW plans to release the information, verifying the divestments still may be a challenge.
Ellen Habermehl, another PFZW spokesperson, said fossil fuel companies will not be included on PFZW’s “exclusions” list of companies banned from receiving investments because they engage in socially objectionable activities. The list currently includes 113 companies that deal in weapons or tobacco or were accused of human rights violations. Fossil fuel companies are not on the list – nor will they be in the future, Habermehl said.
In explaining the double standard, she said “everybody knows that tobacco is a devastating product for health – and the same for weapons.” She said the harm caused by the fossil fuel industry is not as clear-cut, so these companies will not be “named and shamed.”
The only option for citizens wishing to verify the climate divestments is to compare PFZW’s list of investments in April 2020 to the one released a year earlier. This could prove time-consuming: the list contains nearly 1,000 companies and spans many pages on PFZW’s websites.
This exception for fossil fuel companies runs contrary to the transparency philosophy of PGGM, the Dutch firm that handles PFZW’s investments. PGGM’s views also appear to contradict Wilbrink’s assertion that withholding some information is good for market integrity.
PGGM publicly endorsed the recommendations of the Task Force on Climate-related Financial Disclosures, which the industry-led Financial Stability Board established. In June 2017, the task force concluded, “Without the right information, investors and others may incorrectly price or value assets, leading to a misallocation of capital.”
By following its recommendations, the task force said, “information will become more decision-useful…allowing for the more efficient allocation of capital.” Its many suggestions include “more complete, consistent, and comparable information for market participants” and “increased transparency.”Mark Worth is an International Analyst for Government Accountability Project.