Pension fund ABP will stop investing in fossil companies. Professor of Banking and Finance Dirk Schoenmaker says this is a very important signal: "It puts the ball in the companies' court. The message is: this can't go on, the pace is too slow." ABP manages the pensions of all civil servants in the Netherlands and therefore also of all employees of Erasmus University Rotterdam.
"You have to get serious about the energy transition. Only when these companies have serious plans can you invest money in them again, is the signal," says Schoenmaker in newspaper Trouw. He explains that this does not immediately create a problem for the fossil companies like Shell or BP because other investors want to buy their interests. But he says: "The number of providers of capital is falling and so a company will have to offer a higher return to entice investors. That's what happened in the tobacco sector, the few that still invest in it demand a high profit."
Loss of 'licence to operate'
There is another important effect of the ABP's action, he says: "Fossil companies are losing their 'licence to operate'. That's the real issue. The discussion is tilting... The net is closing in around large companies that are not making a serious transition to clean energy. The pressure is increasing, that is very clear. You would hope that the heads of government would also increase that pressure at the upcoming climate summit." The professor at the Rotterdam School of Management hopes that companies will eventually be sensitive to this social call. "They have to get going and become investable again. After all, the idea is that we are all moving together towards the new, cleaner world."
Mathijs van Dijk, professor of Finance at the Rotterdam School of Management, says on NOS that fossil companies seem to be become a new category of 'sin stock', like the arms industry and tobacco industry became before. "The long-term effect of ABP's move may be that it becomes more difficult for them to raise money in the capital market... There are more and more investors saying they are getting out of the sector."