Lærernes Pension
Lærernes Pension is a life insurance company that provides pension schemes for more than 158,000 teachers employed in Danish municipal and private primary and lower-secondary schools and in adult education.
Portfolio level
Portfolio level – Portfolio decarbonisation reference target
Baseline date: Holdings as of 31 December 2019
Baseline performance: 21.3 t/M DKK. Scope 1+2 covering following asset classes:
- Listed equity
- Listed corporate bonds
- Directly owned real estate
Target year: End 2024, 2029
Target(s):
- 2024: -58 % tCO2e/mDKK invested
- 2029: -66 % tCO2e/mDKK invested
Relative to end 2022, these targets correspond to a required footprint reduction of -3 % and -22 %, respectively.
GHG scopes included: Our targets cover scope 1 and scope 2 of our investment portfolio. Scope 3 is not included due to significant challenges with data quality which shall be viewed in light of our highly diversified portfolio across geographies and sectors.
We track and report on our investment portfolio’s scope 3 in our Report on social responsibility (in Danish):
Asset classes in scope: Portfolio reference target covers the following asset classes:
- Listed equity
- Listed corporate bonds
- Directly owned real estate
Asset classes not included are:
- Government bonds
- Mortgage bonds
- Other unlisted investments
- Derivatives
Lærernes Pension will be working to improve data coverage for additional asset classes and follow developments in methodologies with a view to considering the potential for expanding the scope of the target over time.
Methodology/net zero scenarios: The methodology used to set targets has been guided by the following factors:
- Our overall target for the investment portfolio to reach net-zero by 2050 at the latest, in line with IPCC scenarios following the recommendations in the Net Zero Investment Framework by IIGCC.
- The CO2e footprint of the investment portfolio of the asset classes in concern has already been reduced considerably since 2019 and we aim for steady progress towards reducing financed emissions further under the respect of our fiduciary duty.
- We expect structural growth in our investment portfolio as to why we have set relative targets.
Emissions metrics: The target for our investment portfolio’s CO2e footprint corresponds to a total emissions reduction of our portfolio by approximately 50% by 2030 (absolute emissions reductions relative to 2019) despite growth in the investment portfolio.
Portfolio level – Investment in climate solutions target
Quantitative target
Baseline date: 31 December 2019
Baseline performance: 8 mia. kr. representing 6.3 % of total AUM
Target years: End 2029
Target: 15% of investments to have environmental and/or climate focus
Methodology: The baseline and targets have been based on our own current methodology used to calculate the investment portfolio’s share of investments with climate- or environmental focus. The methodology follows to the extent possible guidelines by the association Insurance and Pension Denmark (https://www.fogp.dk/media/8803/vejledning-til-indberetning-til-det-betingede-tilsagn-og-groenne-investeringer.pdf (in Danish)).
We have aimed to set ambitious and realistic targets that take into account the expected structural growth in AUM as well as respect our fiduciary duty.
At the time of setting targets we did not have sufficient data to assess the taxonomy-alignment of our investments. However, we plan to evaluate the targets by 2025 at latest. By then we hope to have obtained a better basis of data to evaluate the taxonomy-alignment of our investment portfolio, as well as gained better insights on how to evaluate investments that are not in scope of the taxonomy, potentially referring to the forthcoming guidance from IIGCC on Climate Solutions.
The methodology applied when calculating the portfolio’s share of investments with climate- or environment focus is based on the below definitions:
- Unlisted investments in renewable energy
- Listed equity mandates with environmental -and climate focus
- Corporate bonds mandates with climate focus
- Unlisted investments in forestry and restoration of nature
- Energy efficient real estate
(For a more detailed description of the methodology: https://lppension.dk/vores-investeringer/ansvarlige-investeringer/baeredygtighedsrelaterede_oplysninger/ (in Danish))
Asset level
Asset level – Portfolio coverage target
Baseline date: 31 December 2019
Approach: Towards 2025, Lærernes Pension plans to consider the scope for undertaking a baseline assessment of asset level alignment according to the Net Zero Investment Framework.
Asset level – Engagement threshold target
Approach: In June 2022, Lærernes Pension joined the investor initiative Climate Action 100+ to start our journey of active ownership, supporting the work to influence investee companies’ transition towards net zero thus support our own long term target.
Additional information
Methodology: Our targets represent approximately halving the financed emissions of the asset classes in scope by 2030 relative to baseline performance. As our portfolio is geographically diversified and covers various sectors/industries we consider the targets to be consistent with delivering a fair share of the 50 % global reduction in CO2 emissions by 2030.
Operational emissions: We have not set a target for operational emissions but, since 2021, have calculated and reported on the performance in our report on social responsibility.
As a financial institution, our operational emissions are relatively small. We have therefore – for the time being – chosen to focus our efforts and resource-allocation on our financed emissions since this is where we have the largest imprint.
Fossil fuel investment: In Lærernes Pension’s policy on responsible investments we have set out sector specific thresholds of tolerance including fossil fuel investments:
- Revenue from the exploration and extraction of thermal coal, Arctic drilling and oil extraction from oil sands must not exceed 0% unless the company has committed itself to a transition considered compatible with the Paris Agreement goals.
- Revenue from the exploration and extraction of oil and gas as well as energy production based on fossil fuels must not exceed 5% unless the company has committed itself to a transition considered compatible with the Paris Agreement goals
The assessment of the transition plans of the above companies to the Paris Agreement must meet the criteria listed for classification of companies and their obligations and forming part of the framework used by Lærernes Pension in its efforts to provide specifics on the net-zero emission target. Data sources for the classification are currently Transition Pathway Initiative and Science-based Targets Initiative.
This means that the companies must have long-term reduction goals for 2050 which are consistent with the global net zero target. The assessments from the data sources are not perfect, but we get more and more knowledge of what needs to be done to achieve the targets. Therefore, we will evaluate the opportunities for improving our method in step with improvements in the relevant data.
For further information (in Danish): https://lppension.dk/om-os/selskabet/politik-for-ansvarlige-investeringer/
For further information: Lærernes Pension will present our first complete TCFD report in Spring 2024. We plan to integrate the TCFD report in our ‘Report on social responsibility 2023′.
We refer to the following links for currently available information on Lærernes Pension’s work on climate risks and opportunities:
Policy on integration of sustainability-related risks (in Danish):
https://lppension.dk/om-os/selskabet/politik-for-integration-af-baredygtighedsrisici/
Policy on responsible investments (in Danish):
https://lppension.dk/om-os/selskabet/politik-for-ansvarlige-investeringer/
Report on social responsibility 2022 (in Danish):