Portfolio level – Portfolio decarbonisation reference target
Baseline date: 31 December 2019
- 1,638,043 tC02e (absolute emissions)
- 13.4 tC02e/DKKmn invested (financed CO2e emissions), equivalent to
- 89.32 tC02e/$mn invested
Target year(s): 2025; 2050
- -29% CO2e/DKKmn invested by 2025
- Net-zero GHG emissions by 2050
GHG scopes included: Scope 1 & 2 for all equities, scope 3 to be included in due course.
Asset classes in scope: Listed equity, corporate fixed income and real estate
Methodology: Methodology and calculations are based on IIGCC’s Net Zero Investment Framework combined with NZAOA and Finance Denmark’s CO2e-model.
To set PKA’s CO2e reduction target for 2025, we simulated scenarios based on future expectations to AUM, returns and asset allocations.
Emissions metrics: All calculations are based on EVIC.
PKA discloses emissions on absolute and intensity basis (total carbon emissions, financed carbon emissions (carbon footprint), carbon intensity and weighted average carbon intensity (WACI)) in accordance with the TCFD recommendations. PKA’s CO2e-reduction target for 2025 is based on financed emissions (carbon footprint).
Portfolio level – Investment in climate solutions target
Baseline date: 2015
Baseline performance: 10% of AUM in 2020, equivalent to USD 4.9 bn (DKK 33 bn) at the time
Target date: 2025
Target: Total USD 7.4 bn (DKK 50 bn) to be invested in green assets
Methodology: PKA is a part of the Danish pledge of investing USD 52 bn (DKK 350 bn) by 2030. As part of the initiative, the Danish trade association for insurance companies and pension funds, Insurance and Pension Denmark has developed a methodology for
investors to identify and calculate green investments. The methodology is currently based investments supporting SDG 7 about ‘affordable and clean energy’ and covers all asset classes. Insurance and Pension Denmark will phase in the EU taxonomy in 2023.
Asset level – Portfolio coverage target
Approach: PKA is considering how to develop a more detailed implementation plan for the asset level alignment and what targets we may set.
Asset level – Engagement threshold target
PKA has set an engagement target of evaluating and divesting from those companies involved in the global initiative Climate Action 100+ that have not established a robust plan for its business to become Paris-aligned by the end of phase 1 of the initiative in 2023.
PKA is currently considering how to develop a more detailed implementation plan for engagement threshold.
Approach: PKA is an active asset owner and aims to influence companies to commit to becoming Net Zero through resolutions, voting and engagements. PKA’s support of the Paris agreement and the 1.5°C goal is incorporated in our policy of active ownership and exercised by PKA and PKA’s partner EOS at Federated Hermes. With EOS Federated Hermes, we are engaging with additional companies throughout the year concerning their Net Zero transition. PKA is also engaging with external asset managers on their climate
PKA is an active asset owner and has since 2018 been an active member of the global investor initiative Climate Action 100+ engaging with 167 companies on their Net Zero transition.
Methodology: Combining our green target (USD 7.4 bn or DKK 50 bn) and CO2e-reduction target (-29% CO2e/$mn invested) for 2025, we are consistent with delivering a fair share of the 50% global reduction in CO2e-emissions by 2030. In 2022, we expect to set
CO2e-reduction target for 2030 for listed equity, corporate fixed income, real estate and infrastructure (scope 1+2).
Fossil fuel investment: PKA’s fossil fuel policy includes zero tolerance for coal mining and oil sand unless the companies are committed to a Paris-aligned transition. PKA also has a restriction on utility companies, excluding those with more 20% revenue from coal unless the companies are committed to a Paris-aligned transition. Based on engagements with oil and gas companies, PKA has previously excluded 50 oil and gas companies that did not show sufficient commitment to a Paris-aligned transition.
PKA has also set an engagement target of evaluating and divesting from those companies involved in the global initiative Climate Action 100+, which have not established a robust plan for its business to become Paris-aligned by the end of phase 1 of the initiative in 2023.
Operational emissions: PKA measures its operational emissions, which is published in PKA’s annual report. In 2022, PKA is planning to set its first sub target for operational emissions for 2030.
PKA is also reporting on its net zero strategy in its annual report. The annual report is available on our website.
PKA Ltd. case studies
PKA: Integrating carbon emissions into listed equity and corporate bond portfolios
27 March 2023