A December 2020 report found that the fund exceeded its carbon budget to keep the increase in the Earth’s warming below 2°C by around 13%. In response, the FDC in July pledged to regularly measure its carbon intensity and its alignment with the Paris Agreement targets. The FDC board also committed to reviewing sustainability criteria and increase the number of sustainable investment fund mandates.
But Greenpeace sees these measures--revealed by Schneider in answer to a parliamentary question--as insufficient. “Schneider fails to provide clear answers on how the fund intends to align its investments with the objectives of the Paris Agreement,” the NGO said in a press release on 23 August.
The NGO demanded a clear decision from the Luxembourg government to require the fund to adopt the necessary measures to align itself with the Paris Agreement. It also called on the government to adopt a coherent sustainability policy for all its investments including a phase-out of climate-damaging fossil fuels.
The fund is due to review its strategy next year for a five-year period starting in 2023.
“Although we are continuously witnessing the devastating consequences of climate change around the world, the Luxembourg pension fund is still investing in climate-damaging companies and does not follow an ambitious strategy in its pursuit of sustainability,” said Myrna Koster, climate justice campaigner at Greenpeace Luxembourg.
The FDC has said that its current legal framework does not allow it to exclude entire branches of industry, such as fossil fuel companies, from its portfolio. Members of parliament in a motion adopted last year said this should be investigated and called on the government to clean up sovereign investment.
A blacklist is regularly updated to exclude companies not meeting international standards on human rights, the environment, labour law, the fight against corruption and weapons activities from investment.
Environmental activists have long demanded that the FDC should divest from carbon majors and cease other problematic investments. Some of those include palm oil company Wilmar (Amnesty International in 2016 reported child and forced labour at the company’s plantations, subsidiaries and suppliers) and mining company Newmont (criticised for excessive use of force during protests in Peru).
By the end of 2023, the FDC plans for all of its sub-funds to be managed under environmental, social and governance (ESG) criteria.
Since its creation, the fund has generated around €9bn in revenue swelling the portfolio to €22.9bn and securing Luxembourg’s pensions for a period of four years even if there were no more contributions paid during that time.