Luxembourg, 26 March 2020 – The president of the Fonds de Compensation (FDC) Fernand Lepage promised in a letter addressed to Greenpeace Luxembourg that the fund will deliver a sustainability report in the third quarter of 2020 [1]. Lepage explained in the document, dated 12 March 2020, that said report will include a detailed analysis of the carbon footprint and the climate-related financial risks of FDC’s investments. Greenpeace Luxembourg welcomes the decision and renews the call to the FDC’s decision-makers to stop all financial support for fossil fuel companies.
“The decision to assess the climate-related financial risks and carbon footprint of the investments that spring from our pension system is an important first step, but the Fonds de Compensation should ultimately end all financial support of the fossil fuel industry and other polluting companies soon. We demand the FDC to align its investments with the Paris Agreement. Like most crises, climate change requires the government to fulfill its duty to protect us all. We are all experiencing a parallel health crisis at the moment, bearing witness to how fundamental shifts require bold action and governmental accountability to the people. It is totally doable,” said Greenpeace Luxembourg Climate and Finance Campaigner Martina Holbach.
Compliance with the Paris Agreement implies that Luxembourg needs to immediately address the gap between its climate commitments and the pension fund’s investment decision. The FDC should follow the example of important financial investors like the Swedish Public Pension fund AP1 [2] and end its investments into fossil fuel companies.
The decision that the Fund will deliver this climate assessment is an important precedent for the country. Luxembourg’s financial regulator does not consider reporting and disclosure of this information as a core responsibility to act in the best interest of pension fund beneficiaries and financial investors yet (otherwise known as fiduciary duties). While the government is promoting Luxembourg as a green financial hub, the country’s 4.7 trillion Euro investment fund industry is simply not obligated to monitor and communicate about the carbon emissions it finances. Emissions from the overall equity portfolio of the Luxembourg funds are estimated to be between 300 and 400 million tons of carbon dioxide every year [3], which is equivalent to between 30 to 40 times Luxembourg’s direct emissions.
“We are calling on the Luxembourgish government to introduce mandatory climate-related financial reporting for the entire financial industry. The situation is dangerous for the planet and also untenable for our country’s economy, provided the role of the financial sector in it. We need regulatory measures to curb carbon-intensive investments, the time for voluntary commitments is over. Our government needs to protect us and hold the polluters accountable,” added Greenpeace Luxembourg Climate Justice Campaigner Myrna Koster.
Notes to Editors
[1] In September 2019, Greenpeace Luxembourg filed legal proceedings before the Administrative Court after the Minister of Social Security Romain Schneider refused to respond to a letter sent by the NGO to receive information about the fund’s fossil fuel investments and its climate-related financial risks. In December 2019, the Administrative Court declared Greenpeace’s legal action against the Minister of Social Security as admissible and underlined that the Minister did not respect his legal obligation. However, according to the Court, there was no legal basis for the Minister to either comply with the Paris Agreement or to possess the climate-relevant information requested by Greenpeace Luxembourg.
[2] On 16 March, the Swedish public pension fund AP1 announced that it will rid its portfolio of fossil fuel companies due to financial risks in coal, oil and gas. More information here.
[3] Greenpeace Luxembourg is not aware of official statistics about the annual amount of carbon dioxide emitted by Luxembourg-domiciled funds. Our estimates signal that the overall equity portfolio of these funds emits between 300 to 400 million tons of carbon dioxide annually. These numbers include direct emissions (scope 1) and emissions from purchased energy (scope 2), but do not include indirect emissions that originate from the value chain and from product use (scope 3). More information is available here.