What are our fossil exclusion criteria?
As part of our climate strategy, we have tightened our criteria for fossil investments. This means that our exclusion criteria for fossil companies are now:
- Companies where 5% or more of revenue is related to the extraction of thermal coal, or they have expansion plans
- Companies where 25% or more of revenue is related to energy production with thermal coal, or they have expansion plans. A holistic assessment has been made of companies that are around the threshold values.
- Companies where 5% or more of revenue is related to the extraction of tar sands
- Companies where 20% or more of revenue is related to oil and gas upstream activities (exploration, drilling, and extraction of oil and gas). Since the oil and gas sector plays a crucial role in the climate fight, AP Pension has also chosen to make a holistic assessment of companies that are below this threshold.
It is a dilemma for AP Pension on how best to handle oil and gas companies that invest in new oil and gas fields within our investment universe. The International Energy Agency (IEA) states in its net zero by 2050 scenario that investments in new fossil extraction, which begin in 2022 or later, are not compatible with the goal of the Paris Agreement. However, AP Pension is willing to support companies with extraction plans as long as they have developed ambitious business plans to transition in accordance with the goals of the Paris Agreement. We have developed a holistic approach that addresses this challenge by, among other things, closely examining the companies’ business models and transition to climate neutrality.
The criteria are based on data and assessments from the Transition Pathway Initiative (TPI) and the Climate Action 100+ Net-Zero Benchmark, and have been further supplemented with information from the companies’ annual reports, etc.
Read more about our methods for assessing utility companies here
Read more about our methods for assessing oil and gas companies here
In February 2022, we concluded that Eni is working on transitioning its business plans to become compatible with the Paris Agreement.
Therefore, Eni has been placed on our watchlist, as we hold shares in the company. We will engage in active ownership with Eni, and the company will be closely monitored.
BP, TotalEnergies, and Shell have been placed on our exclusion list. See the list of excluded companies here.
We have also identified four companies that cannot be divested, as they are in externally managed funds where we do not have decisive influence over the holdings. We have encouraged divestment in these cases.