Statistical news focuses on the latest figures and trends in Danmarks Nationalbank’s statistics. Statistical news is targeted at people who want quick insight into current financial data.
Few investments weigh heavily in climate footprint
The Danish insurance and pension companies own shares and corporate bonds worth of kr. 1,092 billion in listed companies, which emit greenhouse gases to varying degrees. Through these investments, the insurance and pension companies finance the emission of 7.5 million tons of greenhouse gases per year. The calculation of financed emissions is based on the ownership share of a company, that is, if a pension fund owns 20 per cent of a company, then the pension fund finances 20 per cent of the company’s emissions. The emissions consist of the companies’ direct emissions (scope 1) and indirect emissions from the purchase of energy (scope 2).
Investments in a few sectors account for the majority of greenhouse gas emissions
Note: Financed emissions (scope 1 and 2) through the insurance and pension companies’ listed shares and corporate bonds. Other covers the sectors finance, cyclical consumption, stable consumption, health care, properties, and communication services. Sector breakdown is based on GICS codes.
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Few sectors emit the majority
5.9 million tons of CO2e of the insurance and pension companies’ financed emissions are primarily due to investments in four sectors, which have many direct emissions and indirect emissions due to the purchase of electricity, water, and heat. The four sectors are materials (e.g., chemicals and packaging), utilities, industrials (e.g., companies within transport and cement) and energy (e.g., oil extraction). The financed emissions in these four sectors make up 79 per cent of the total financed emissions but makes up 22 per cent of the insurance and pension companies’ total investments in listed companies (measured in market value).
Financed emissions can be reduced by divesting in high-emitting sectors. However, divestment does not necessarily support the green transition the best. Investments in utilities and materials can, for example, contribute to a green transition by securing the materials and conditions that must be used to expand the electricity grid, build on renewable energy production, and contribute to security of supply.
Nationalbanken compiles financial climate data
Every quarter, Nationalbanken publishes data which helps shed light on the financial sector’s financing of CO2e emissions through their investments and their exposure to emission intensive companies. Initially, the insurance and pension companies’ and investments funds’ investments in listed companies are highlighted (link).