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Bond spotlight

Bond portfolio fossil exposure review: PFA Pension

Written by Ulf Erlandsson

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As much as we applaud PFA's engagement (together with Folksam and Ilmarinen) with Enbridge over the Dakota Access pipeline water management, we think their position as the second biggest international lender to the Province of Alberta - home of 75% of the world's tar sands - is a more urgent issue.

Some of PFA's other fixed income/lending decisions are also surprising for someone claiming climate alignment targets. We have been asked to conduct a review of PFA Pension’s fixed income portfolio.

This, in turn, follows an external flagging that PFA was the third-biggest bond holder in Japan Bank for International Co-operation (JBIC) bonds. JBIC has landed in controversy for its announcement to finance the construction on the Vung Ang II coal expansion in Vietnam.

Danish PFA is ranked #48 by assets under management (AUM) among all global pension funds. Despite its intermediate AUM size, PFA is a top global bond holder in three out of four SSA issuers that we believe should be completely excluded from any portfolio due to climate financial risks and negative impact. Coal power construction and tar sand lending are the main portfolio choices driving this.

About the author

Ulf Erlandsson

Ulf Erlandsson

Founder, Board member

Dr Ulf Erlandsson founded the Anthropocene Fixed Income Institute and was its first CEO. A pioneer of climate-focused fixed income portfolio management, he was named Environmental Finance’s Bond Personality of the Year 2022.

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