Large Danish investors such as PensionDanmark, PBU, Danica, Industriens Pension and Sampension are caught up in a huge Norwegian climate conflict.
The conflict begins north of Norway, deep beneath the waves of the Barents Sea. Here, the subsoil harbours vast quantities of oil and gas deposits.
For the oil companies Equinor, Shell and Aker BP, in which Danish pension funds have invested billions, it is a goldmine that has now grown even bigger.
The Norwegian government has just decided to expand the sea areas where they allow companies to hunt for new oil and gas resources. The extensions include 3 blocks in the Norwegian Sea and 34 blocks in the Barents Sea, corresponding to an area roughly the size of Zealand.
The decision allows oil companies to both extract more oil and gas from already well-known oil fields, and to search for fossil fuels in completely new pristine and environmentally vulnerable marine areas.
This is not in keeping with the Danish pension funds’ climate promises of CO2 reductions and investment in green transition.
According to hearing documents reviewed by Danwatch, oil companies, backed by Danish pension money, are excited by the prospect of new oil discoveries in previously untouched marine areas.
“Shell Norway considers the expansion to be important for the best possible utilisation of the resources on the Norwegian continental shelf,” Shell, the world’s fifth largest oil company, writes in its hearing response to the Norwegian authorities.
FACTS
Danish pension investments in new oil boom
Danish investments in oil companies that, according to hearing documents, support fossil fuel expansion in the North Sea, Norwegian Sea and Barents Sea
“Equinor looks forward to actively participating in this year’s licencing round,” says Norway’s largest oil company about the new opportunities for fossil production from the Norwegian subsoil.
The same support can be found from Aker BP, DNO, Inpex and Harbor Energy.
Danish pension funds maintain investments
Norwegian oil scientist Helge Ryggvik believes that the expansions in the Barents Sea reveal an internal Norwegian climate conflict and the pressure for more fossil fuel expansions applied by subcontractors, unions, politicians and the oil sector on the government.
“The expansions in the Barents Sea are an expression of Norway’s continued hunt for new large oil fields. It goes against climate goals and is not economically viable in itself unless development is subsidised. The expansions reflect strategic and political interests,” says Helge Ryggvik, Senior Researcher at the University of Oslo.
Greenpeace in Norway criticises Danish pension funds that invest in oil companies that are active in the region.
“I believe that Danish pension funds are deceiving their members if they continue to invest in the Norwegian oil industry while claiming to support global climate goals,” says Frode Pleym, head of Greenpeace Norway.
Danish pension funds do not believe that the expansions are in line with the green transition. Nevertheless, they maintain their investments in oil companies, according to a survey conducted by Danwatch.
u”We are concerned about the expected expansion of Norwegian oil fields, which is clearly a step in the wrong direction in the transition away from fossil fuels. We are not in favor of the expansion of the oil fields,” says Ann-Louise Winther, Head of Responsible Investment and Sustainable Development at Industriens Pension.
Despite the concerns, Industriens Pension does not intend to divest its shares worth more than DKK 150 million in Equinor, Shell and Aker BP.
“Our approach is that the reduction of emissions from our portfolio must be achieved through transformation in our portfolio companies and not through divestment,” says Ann-Louise Winther.
The announcements from the oil companies also challenge Pædagogernes Pension (PBU), which has invested DKK 211 million in Shell, which back in 2015 refused to explore for more oil wells in the Arctic, which includes the Barents Sea.
“PBU is critical when Shell with its consultation response keeps the option of participating in a concession round in the Barents Sea open, and this is a matter that our management will take up with Shell in connection with the meeting in The Hague in August,” says Rasmus Juhl Pedersen, Head of ESG at PBU, which manages DKK 90 billion for 125,000 pedagogues.
Danica, which has DKK 755 million invested in Equinor, Shell and Aker BP, states that they are in the process of implementing a new climate strategy and therefore do not wish to comment.
The goal of a carbon-neutral society by 2050
Several of the pension companies’ climate targets are based on the International Energy Agency’s (IEA) scenario of a carbon-neutral society in 2050(Net Zero 2050).
According to the IEA, the prerequisite for meeting the Net Zero 2050 target is that no investments are made in the development of new oil and gas fields other than those already approved before 31 December 2021.
Sampension has promised its 307,000 customers that their total pension assets of DKK 300 billion will “support the UN Paris Agreement” on the way to a “Net-zero 2050 target”.
Both Shell and Equinor, in which you have invested, support the new Norwegian fossil fuel expansion plans in the mentioned areas – does this change your attitude towards the companies?
“Shell, like Equinor, is a dilemma when it comes to responsible investment. Our position remains unchanged for now. That is, we continue to believe that the companies’ climate strategies are flawed. But we also believe that the most responsible thing to do is to work with the companies’ other investors to create the necessary change,” says Jacob Ehlerth Jørgensen, Head of ESG at Sampension.
PensionDanmark also maintains its investments in Equinor and the Norwegian oil industry.
PensionDanmark balances its view that fossil fuel expansion is incompatible with the Paris Agreement and that fossil fuels are still needed.
“Norway has a very clear commitment to the Paris Agreement, with which, seen in isolation, the oil expansion is poorly aligned . But at the same time, we recognise that even though there will be a significant decline in oil and gas consumption over the next 25 years, there will still be a need for gas, especially in Europe,” says Jan Kæraa Rasmussen, Head of ESG and Sustainability at PensionDanmark.
PensionDanmark, Denmark’s fifth largest pension fund, has invested in Aker BP, Equinor, DNO, Habour Energy and Shell, which operate in the Norwegian areas.
“Seen In isolation, the Norwegian expansions will have no impact, but we continuously follow the individual oil and gas companies’ transition and expansion plans, which are addressed in our active ownership,” says Jan Kæraa Rasmussen.
Oil investments are record high
Helge Rygvikk believes that Norway is very far from phasing out fossil fuels.
“Over NOK 200 billion is invested annually in the Norwegian fossil fuel industry. This is close to a record and more than before the COVID-19 crisis. This shows that Norway is very far from phasing out fossil fuels,” says Helge Ryggvik, author of the books “Til siste dråpe – Om oljens politiske økonomi” from 2010, and most recently “På kanten – Norsk oljevirksomhet i Barentshavet og hvorfor det må settes en strek” from 2021.
Greenpeace Norway also believes that the expansions are incompatible with the global climate goals to which the Danish pension funds have committed.
“On average, it takes 15 years to develop a new field. If it has to produce oil and gas for the following 30 years, many times even longer, it goes against the Paris Agreement’s goal of carbon neutrality by 2050,” says Frode Pleym.
Global climate impacts have never been studied
While the oil companies with Danish pension millions in their luggage rejoice over new billions in revenue for both the Norwegian state and themselves, the Norwegian government is criticised by its own advisory body.
The Institute of Marine Research, under the Norwegian Ministry of Trade, Industry and Fisheries, is set up to advise the Norwegian government on environmental and climate issues related to the Norwegian seas.
The Institute of Marine Research can be compared to The Danish Council on Climate Change, and the institute is now criticising the Norwegian government.
“We have a good dialogue with both the oil companies and the government about the expansions. But we find it criticisable that the government has never conducted impact assessments of the climate risks of new oil and gas extraction in the affected areas,” says Henning Wehde, Head of Research at the Institute of Marine Research.
He refers to the Norwegian government’s policy document from 2021. Here, the Norwegian government promises that “(…) new areas must be managed so that renewable energy, climate and environmental considerations weigh heavily. Climate and environment must be assessed more holistically (…)”, the Norwegian government writes .
“They have never complied with this,” says Henning Wehde, who expects the Norwegian government to make a final decision on the expansions over the summer.
In a ruling from 2020, the Norwegian Supreme Court also called on the Norwegian government to investigate the global climate consequences of fossil fuel expansion.
In 2016, the NGOs Natur og Ungdom and Greenpeace filed a lawsuit against the Norwegian state. The accusation was that it is illegal to expand oil and gas areas because the Norwegian constitution states that the state must protect nature.
Greenpeace and Natur og Ungdom lost the case in 2020. However, the judgement formulated a faint hope for the activists about the requirement to disclose calculations of global climate impacts when the state presents plans for the development and operation of new oil fields.
According to Greenpeace, the government has deliberately failed to assess the global climate consequences of Norwegian oil expansion.
“It is beyond criticism that the Norwegian government has not complied with the recommendation from the Supreme Court to investigate the global climate consequences of Norwegian oil and gas extraction”, says Frode Pleym.
Greenpeace Norway has turned its criticism into a new lawsuit against the Norwegian state. The Oslo City Court has ruled in favour of Greenpeace and declared that the expansion of three oil fields is illegal because the state has not carried out impact assessments in relation to global climate goals.
The case has been appealed and is expected to go all the way to the Supreme Court.
