Billions of Danes' pension funds are now to be invested in the private sectors of developing countries to create momentum behind sustainable development in severely challenged areas - and make money for Danish pension customers.
Four Danish pension companies and the Investment Fund for Developing Countries have joined forces to allocate 2.7 billion DKK to a new Global Goals Fund II. The parties say this in a press release. For Foreign Minister Lars Løkke Rasmussen (M), the new fund's investments are strategic for Denmark.
- As a small open economy, we must focus on those parts of the world where there is growth - for example Asia, Latin America and Africa, he says in the release.
PKA, PFA, Pensam and P+ are behind the investments. This is not a gift financing from the Danish side, it is emphasized. A return for pension customers is crucial for investment in developing countries.
The parties emphasize that the money must be used to support the green transition, contribute to better living conditions and "at the same time create good returns for investors".
- With IFU's Global Goals Fund, we have an investment model that reduces risks and ensures returns and results. It is good for both Danes' pension savings and for the climate when we create more investments in, for example, sustainable energy sources, says the Minister of Foreign Affairs.
Need for private funds
The fund is announced in the crucial days of the COP29 climate summit. Here, the central theme is to agree on a new target for climate financing for developing countries. The West is adamant that this requires private capital - because public funds cannot adequately handle the task. The new fund shows how such an approach can work, it says.
- Private investors are often reluctant to invest in developing countries due to high risk, and this is a huge challenge if the SDGs are to be realized, says Lars Bo Bertram, CEO of the Investment Fund for Developing Countries, in the announcement.
The Danish billions can therefore help to make larger investments in developing countries more secure.
- This task cannot be undertaken solely with public funds, and therefore we need to remove some of the risk of attracting risk-averse private capital, says Lars Bo Bertram.
However, Danish pension funds do not invest exclusively with green purposes in mind. Billions are still flowing towards the development of fossil fuel companies. For example, the International Cooperation has uncovered that 16 Danish pension companies have invested a total of over 20 billion kroner in fossil fuel companies.
/ritzau/
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