AMSTERDAM -ABP, the largest Dutch pension fund with around 500 billion euros ($530 billion) in assets, expects to cut a large number of companies from its portfolio to restrict its investments to those that make a real effort to become climate neutral.
The new policy could halve the number of companies in ABP's portfolio, investment director Dominique Dijkhuis told Dutch financial daily FD in an interview published on Friday.
"We need to take a hard look at which companies fit our new vision. Companies that can't or don't want to contribute to the transition are too risky for us," Dijkhuis said.
"We will invest in fewer companies and we will take bigger stakes in them."
Dijkhuis did not specify which companies would no longer be eligible for ABP, nor how long the overhaul would take.
"We are still in the process of decision-making," ABP spokeswoman Asha Khoenkhoen told Reuters.
"These are large investments, so we have to be careful in our communications about them. It will take time."
Pressure has mounted on the financial industry to use its muscle to accelerate change in the real economy, after U.N. scientists warned earlier this year time was running out to hit a mid-century goal of capping global warming.
While a growing number of asset owners such as pension schemes and insurers have tightened their investment criteria, for example by ditching fossil fuel stocks, the move by ABP would mark one of the most wide-ranging steps taken so far.
ABP said last year it would divest 15 billion euros of fossil fuel investments, which marked a major turnaround as only months before, it had said exiting fossil fuel investments would "not be the solution" to global warming.
Dijkhuis said ABP would demand that companies commit to being climate neutral by 2050, and would also set progressively strict interim goals.
The financial sector will not be excluded from this policy, as it will have to target loans into sustainable investments, Dijkhuis added.
ABP's own investments will also be geared towards sustainable projects, as the fund looks to directly invest in the building of offshore wind farms.
($1 = 0.9408 euros)
