Luxembourg, the 2nd December 2020 – Tomorrow the long-awaited parliamentary debate on the investment strategies of Luxembourg’s sovereign funds will take place in the Cercle Cité. The session will notably focus on the climate-damaging investments of the sovereign pension fund, the Fonds de Compensation (FDC). Greenpeace Luxembourg calls on the Members of Parliament to send a strong signal to the government and the management of the FDC and demand an investment strategy which ends the financing of fossil fuels and other unsustainable investments through public money.
“Our elected representatives must commit themselves to a truly sustainable pension fund. There is no good reason to continue investing in fossil fuels,” said Martina Holbach, climate finance campaigner at Greenpeace Luxembourg. “Investments in coal, oil and gas not only damage the climate, the planet and its inhabitants, but also pose a serious financial risk. Recent studies confirm that sustainable investments outperform traditional ones, such as investments in fossil fuels.”
Over the past two years, Greenpeace has brought the problematic investment policy of the pension fund to the attention of those responsible through analyses, expert reports, protests and a court case. In October, Greenpeace presented an expertise of an economist to the members of Parliament, which lays out how the FDC should bring its investment strategy in line with the objectives of the Paris Agreement for both environmental and economic reasons [1].
More and more pension and investment funds are ending their financial support for oil, gas and coal [2], and not only for reasons of climate protection. As recent as early November, the Australian pension fund REST recognised investments in carbon-intensive companies as a financial risk and committed itself to climate neutrality [3].
The Luxembourg government has ratified the Paris Agreement and committed itself in the coalition agreement regarding the Fonds de Compensation to the elaboration and application of clear guidelines on the orientation of investments towards the green and sustainable financial sector. [4] However, it ignores the climate-damaging investment strategy of the pension fund which continues to invest in fossil fuel companies contrary to its alleged “sustainable and socially responsible investment policy” [5]. In its most recent report on Luxembourg’s environmental performance, the OECD has pointed out that central and local governments should set a good example when it comes to the Paris Agreement commitment to “making finance flows consistent with a pathway towards low greenhouse gas emissions and climate-resilient development.” They should pledge to measure, report and reduce the environmental and social impacts of public investment, sovereign wealth funds and public pensions [6].
“The upcoming parliamentary debate must finally mark a turning point in the fight against the FDC’s climate-damaging investments,” said Myrna Koster, Climate Justice campaigner at Greenpeace Luxembourg. “The need for a clean pension fund concerns us all: it is not just about the pensions of present and future generations, but about the protection of our livelihoods, human rights and the future of our planet. The fund could be a flagship model for a truly sustainable and climate-friendly financial industry in Luxembourg”.
Note to editors:
[2] A total of 1,258 institutions worldwide have already de-invested, which together represent assets of more than 14 trillion US dollars. 13% of these institutions are pension funds. Examples include Norway’s government pension fund GPFG (Government Pension Fund-Global), Allianz, Axa, Generali, MunichRe, Amundi, AP1, AP4, Storebrand and KLP (https://gofossilfree.org/divestment/commitments/)
[4] Coalition agreement 2018-2023 (French version), page 108