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Europe’s third-largest pension fund has sold €2.8bn of its holdings in oil groups including Shell, BP and TotalEnergies because they were not doing enough to produce credible plans for the clean energy transition.
The decision by PFZW is the latest sign of investor worries over the failure of the oil groups to move faster to limit global warming.
It follows a similar move by the Church of England eight months ago and comes after countries around the world agreed to transition away from fossil fuels at the UN COP28 climate summit in December.
PFZW, which has €238bn in assets, said the disinvestments were the culmination of a two-year programme of active engagement with oil and gas companies.
This involved encouraging them to produce “verifiable” transition plans to support the aims of the Paris climate agreement to limit global temperature rises to ideally 1.5C above pre-industrial levels.
PFZW, which manages savings of 3mn workers in care and welfare, decided to sell all its shares in 310 companies including the three European majors.
It leaves the group with just seven listed oil and gas companies in its portfolios, which it said had a “compelling” transition strategy.
“The intensive shareholder dialogue over the past two years with the oil and gas sector on climate has made it clear to us that most fossil fuel companies are not prepared to adapt their business models” to meet the Paris goals, PFZW chair Joanne Kellermann said.
PFZW, through its asset management division PGGM, will step down from leading climate negotiations with Shell on behalf of the Climate Action 100+ (CA100+) investor group comprising $68tn in assets.
The Church of England has also walked away from the negotiations with Shell, although is still involved with CA100+.
PFZW’s move came as scientists on Thursday said the average global temperature has for the first time temporarily breached the critical benchmark of 1.5C above pre-industrial levels over a 12-month period.
Investor frustrations have grown since the Russian invasion of Ukraine in February 2022 elevated the need for energy security above climate change, with governments encouraging an increase in the production of oil and gas.
Fossielvrij NL, a group that campaigned for PFZW to divest, said the action showed the pension fund “recognises that fossil fuel companies such as Shell and BP will not move away from their core business”.
Last month, a group of 27 investors filed a shareholder resolution at Shell, calling on the oil and gas company to set a medium-term target to cut its greenhouse gas emissions.
Shell said it regretted the decision by PFZW and would continue to invest “heavily” in the energy transition, with “low-carbon energy solutions” accounting for 23 per cent cash capital expenditure last year.
BP said it was confident in its strategy to transition from an oil company to a lower carbon and high-margin integrated energy company.
TotalEnergies did not respond to a request for comment in time for publication.
