![]() Our view right now is that we should prioritize engaging with these companies,” Mangset says. ![]() hydrogen and ammonia, potentially coupled with CCS). floating wind structures) and future energy carrier solutions (e.g. These companies must combine their activities with an increased focus on carbon capture and storage, development of renewable energy production technology (e.g. For oil and gas, there are arguments that these companies must play an important role in reaching the Paris agreement. “Our view is that coal and tar-sand extraction should be immediately stopped, since the carbon intensity is the highest, and substitutes exists. In KLP’s net zero framework, all our alignment-assessments are based on provisions that are given by third parties, and this is the one reason why we will remain exposed to oil and gas,” Mangset explains.Īccording to Mangset, it is also arguable whether divestments are always more effective than engagement in pushing the Paris agenda. And there are different pathways for oil and for gas. Oil and GasĪlthough KLP will not divest from its investments in oil and gas, cement and steel production or other high-emission sectors, it is aiming to ensure that these investments comply with the Paris Agreement by 2025. “While oil and gas activity can continue, it needs to be significantly reduced the next decades. “This gives us the incentive to close the data gap, and to potentially increase our PAP by doing so,” Mangset adds. Investments with “No Data”, will be assumed to have 0% PAP. “Using a combination of an emission intensity indicator and temperature score, we get an assessment on present day performance and the future ambition of a company,” Mangset continues. ![]() These investments face a requirement to reduce emissions intensity by 7% on average each year from 2020-2030 and to be aligned with a sustainable temperature path. “Other investments with data coverage” refers to the remaining part of KLP’s portfolio for which “there are no sector benchmarks or reference pathways that we can apply in practice”, according to Mangset. “Given acknowledged reference pathways defining how each sector should transition in line with the Paris agreement, based on the CREEM and PACTA methodology, we calculate the weighted average performance, which can be translated to what we term the Paris Alignment Percentage,” Mangset says. “High Emitting Sectors”, includes real estate, oil and gas, utilities, cement, steel, car manufacturing and aviation. “Green Investments” are close to zero CO2 emissions, such as renewable energy, sustainable forestry and zero-emission ferries. ![]() The definition of these categories is linked to the way we analyse and claim our level of Paris alignment,” Mangset adds. The PAP shows the share of companies in our portfolio that have emissions or emission reductions in line with the 1.5-degree ambition. We use the best available methods for each category to calculate KLP’s overall Paris Alignment Percentage (PAP). “We have defined four categories in KLP’s investment portfolio. To comply with this commitment, the Norwegian pension provider will disclose its alignment with the Paris Agreement. At the core, we build on the Science Based Targets initiative (SBTi),” Mangset explains. Our conclusion is that there is no single standard or indicator we can use to assess our different investments against the 1,5-degree target., Therefore, we have picked from various standards and practices in the market. “We have assessed several standards and frameworks, data from various data providers and observed best practices in the market. Companies will be required to set goals for future emission reductions in line with the 1.5☌ target. KLP will also reduce the carbon intensity of the portfolio by 7% per year. Among other things, KLP will now invest US$25 million in a fund specialising in direct investments in renewable energy. At the moment, 3 of KLP’s funds classify as Article 6 products under the EU’s Sustainable Finance Disclosures Regulation (SFDR), with another 43 funds as Article 8 and the remaining 9 funds as Article 9.Īsides from the general temperature alignment, Norway’s largest pension company also announced it would increase its green investments by NOK6 billion every year. As of 2019, 46% of KLP’s portfolio was aligned with the 1.5☌ target.
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