It's not just the green that matters when ATP invests. This is what Bo Foged, CEO of ATP, insists to Karnov Group. Sustainability is also about reasonable returns, good tax behavior and long-term sustainable business models when the Danes' basic financial security is to be ensured. But sustainability and good returns go hand in hand, if you ask Bo Foged.
- I would like to clarify something early in the interview, I am often asked about this conflict between returns and sustainability, says Bo Foged.
- I think it is quite important to start by understanding what sustainability actually means? Sustainability means 'sustainable' or 'long-term', and if you put it in front of 'return', it says 'sustainable returns' or 'long-term returns', he says.
Bo Foged cites examples such as green bonds, where ATP provides cheap financing in Denmark and the EU for the development of, for example, wind turbine and solar parks. Another point where there is potential and an important transition is in relation to transport.
- We know that we need to move away from fossil fuels in transport - how can we contribute to that part of the transition? We are, for example, one of the founding partners in a lithium battery factory in northern Sweden, which will supply batteries to several large electric car manufacturers. And we are looking at the possibility of contributing to Power to X, just as we own a company in Spain that supplies gas to trucks. Even though it is not fossil-free, it is a step in the right direction of transformation until we have developed even better solutions, Bo Foged states.
Green investments cannot stand alone
ATP also invests in global stocks and bonds to ensure its members a good risk-adjusted return. This also means that there are investments where there is a CO2 emission. According to Bo Foged, ATP is trying to reduce its CO2 footprint by selecting the companies that are best at reducing their emissions. Data for CO2 emissions is included in the stock selection on an equal footing with financial data.
- So make no mistake. We are rapidly moving towards the green transition. But we will not do it with our heads down. We are happy to support the green transition, but it must also be done with a view to returns, says Bo Foged.
He explains that ATP is continuously investigating where they can invest advantageously in the future, but that he does not intend to put this forward for competitors:
- But it is my experience that the return is either non-existent or very low in certain parts of the green transition,” he says and continues:
- We must therefore be aware that gold and green forests can also be purchased too expensively.
Government bonds exchanged for green bonds
The green transition and the climate agenda are an integrated part of all investment processes in ATP, says the CEO.
- The climate agenda is both an opportunity and a risk for us as a long-term investor. Therefore, we have to deal with the risks that are indisputably associated with it. But we also see that that the same agenda creates investment opportunities.
For example, in green bonds.
- One of the things we have done is that we have sold a number of our traditional government bonds and bought green bonds instead, where with 30 billion DKK we are by far Denmark's largest investor in this field.
At the same time, it is important for ATP to exercise active ownership. The larger the ownership stake, the greater the opportunity ATP has to influence things in the right direction, such as in Copenhagen Airports, where ATP has been part of the airport's ambitious climate plans, but also in the companies where ATP only has a small ownership stake, they try to push the companies in a greener direction.
- There we influence companies and other investors through our active ownership. We do this, for example, by putting climate on the agenda in the companies, and we see whether they have an ambitious plan or need for a transformation, says Bo and interrupts himself themselves.
- In Denmark, however, we are already doing very well, for example Ørsted and other companies are named some of the world's best in their field. There is therefore generally reason to hand out praise to Danish companies. But internationally there is significantly more to change, says Bo Foged.
Does not believe in the oil industry
If the companies do not want to listen, ATP is not afraid to let it have consequences. If ATP is not convinced that the management of one of the companies they have in hand understands the seriousness of the green transition, Bo Foged emphasizes that this can ultimately lead to exclusions.
But it is also about identifying risks early.
- The coal companies have long since been sold off, and today we have no oil companies in our share portfolio. Simply because we believe that it is a bad investment from a return perspective. The oil companies are going on a green transition journey, which is expected to be expensive.
- It is important to understand that this is not based on a climate exclusion argument, it is based on a return argument. The business model is not attractive. We do not believe that the oil industry has a long-term sustainable business model, says Bo Foged.
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