(Updates with details on investments; background)
By Toby Sterling
AMSTERDAM, Nov 17 (Reuters) - PFZW, a Dutch pension fund with 161 billion euros ($172 bln) of assets under management, said on Tuesday it will sell down investments in companies with relatively high carbon dioxide emissions.
PFZW is the latest high-profile investor to cut exposure to fossil fuel-linked investments this year.
Citing the need to invest in a way that protects the environment, the fund said it would divest completely from coal-related companies by 2020, while investments in fossil fuel companies will be reduced by 30 percent.
“This will take place in four annual steps and result in investments being withdrawn from approximately 250 companies” focused in the energy, utilities and materials sectors, the fund said in a statement.
Maurice Wilbrink, a spokesperson for PGGM, which manages assets for PFZW, said the divestments represent about 5 percent of PFZW’s equity portfolio, or 1.7 billion euros.
“That will be taken from companies in those sectors that score poorly” on measures of efficient resource use, and be reinvested in companies that score well, Wilbrink said.
He said PGGM and PFZW believe the investment change will be “neutral to slightly positive” for medium-term investment returns.
That comes despite the risk that the decision to divest may be poorly timed, given the fall in oil prices over the past year. The fund did not provide data but said in its third-quarter report that commodity-linked investments had “delivered the worst returns” in its investment portfolio, which had a loss of 3.2 percent from the same quarter a year earlier.
Explaining why companies that score well on sustainability measures might turn out to be better investments, Wilbrink gave the example of them suffering less if carbon becomes more expensive due to carbon taxes or as utilities’ carbon allotments under ‘cap and trade’ systems are reduced.
PFZW, which represents healthcare workers, said it would increase investments in healthcare, real estate and companies that guarantee the supply of food and water.
California passed a bill in September requiring the state’s two largest pension funds to divest from coal. Norway’s sovereign wealth fund, the world’s largest, said in February it would divest from thermal coal companies.
ABP, the largest Dutch pension fund, said in October it would exit all investments that don’t meet “sustainability” criteria by 2020. ($1 = 0.9379 euros) (Reporting by Toby Sterling; Editing by David Clarke and Susan Fenton)