The latest to do so is PFA, Denmark’s largest commercial pension fund with roughly US$110 billion of assets under management. The investor has just offloaded its $170 million stake in Shell Plc based on an assessment that the company’s capital expenditure on renewables is worryingly low. 

“There was a cry to them to engage more in the transition,” says Rasmus Bessing, head of ESG investing and co-chief investment officer at PFA. “But especially over the last year or so, a bit more perhaps,” Shell has been signaling it wants to “go in a different direction,” he said.

A spokesperson for Shell referred to a comment made by Chief Executive Officer Wael Sawan at the company’s annual general meeting on May 21, when he said shareholders “have strongly backed” its strategy. “Our focus on performance, discipline and simplification enables us to invest in providing the energy the world needs today, and in helping to build the low-carbon energy system of the future.” 


Other institutional investors also are losing patience with oil and gas holdings. Stichting Pensioenfonds ABP, Europe’s biggest pension fund with about $550 billion of assets under management, said in May that it exited all its liquid assets in oil, gas and coal — a portfolio that was worth about $11 billion. It has said it plans to divest a further $5 billion of less liquid fossil-fuel assets. 

In France, new sustainable investing requirements mean asset managers using the label will need to purge their portfolios of an estimated $7.5 billion in combined fossil-fuel assets, a development that will hit companies including TotalEnergies SE and Shell.

In the U.K., both the Church of England Pensions Board and the Church Commissioners for England, which together oversee about $17 billion in assets, said last year that they’ll start blacklisting oil and gas majors. 

Sweden’s AP7 fund, which manages more than $100 billion, has exclusion policies targeting a range of oil producers, including Saudi Aramco and India’s Oil and Natural Gas Corp. It blacklisted Exxon Mobil Corp.

AkademikerPension, a Danish pensions investor, axed the last remaining oil and gas holdings in its $20 billion portfolio at the end of 2023 and is now in the process of offloading companies that provide equipment and services to fossil-fuel producers. 

For now, the impact on returns of such divestments has been “neutral to slightly positive,” says Troels Børrild, head of responsible investments at AkademikerPension. 

But looking down the road, there’s a transition risk “and that will materialize for a number of companies,” Børrild said. “It’s not priced in at the moment,” but as regulations take their toll, low-carbon portfolios are poised for “even more positive” risk-adjusted returns, he said.

Shell’s goal is to invest around $10 billion to $15 billion between 2023 and 2025 “to support the development of low-carbon energy solutions,” a spokesperson for the company said. That includes e-mobility, low-carbon fuels, renewable power generation, hydrogen, and carbon capture and storage. Shell says it invested a total of $5.6 billion in low-carbon solutions in 2023, which was 23 per cent of its capital spending.

A number of big banks are also cutting their exposure to oil and gas. The European Union’s largest lender, BNP Paribas SA, has stopped underwriting conventional bonds for the fossil-fuel industry as part of a broader crackdown across the group on financing oil and gas. Credit Agricole SA, another major French bank, said in early June that it’s taking similar steps.

The development coincides with a particularly tense moment in the finance industry’s relationship with fossil fuels. On Wall Street, banks are increasingly being targeted by angry protesters demanding an immediate retreat from oil, gas and coal financing. Wall Street has responded by warning such a move would be economically irresponsible.

CEOs including Barclays Plc’s CS Venkatakrishnan, Citigroup Inc.’s Jane Fraser, JPMorgan Chase & Co.’s Jamie Dimon and Goldman Sachs Group Inc.’s David Solomon have insisted that the finance industry can’t turn its back on oil and gas clients.

Just this week, Venkatakrishnan characterized as unrealistic any calls to go “cold turkey” on fossil fuels. KKR & Co. founder Henry Kravis recently accused climate protesters of not understanding the economics of the energy transition.

Even within the realm of climate nonprofits, there are now notable proponents of embracing some of the highest-polluting assets. These include Climate Arc, which is backed by hedge fund billionaire Chris Hohn. Other backers include Nicolai Tangen, a former hedge fund manager who now runs Norway’s $1.7 trillion sovereign wealth fund, as well as Generation Foundation, which was set up alongside Al Gore’s Generation Investment Management.  

Critics of exclusion policies argue that fossil-fuel companies can just turn to less scrupulous financiers, with less likelihood of any green engagement. They also note it’s important to distinguish between gas — which even made its way into the EU’s green taxonomy — and coal and oil, which have much higher CO2 emissions.

Meryam Omi, Climate Arc’s CEO, says too many investors are shying away from the “murky part” of climate finance. In other words, the finance industry needs to move into the highest-emitting sectors to effectively bring about a low-carbon energy transition, she says.

Bessing notes that PFA still holds oil companies whose transition plans it views as credible. That includes TotalEnergies.

Not everything that TotalEnergies does is perfect, but unlike Shell, the company has set “a 2030 target of raising their capex in clean energy to 33 per cent, which is something that we have requested,” he said. 

“If I had the resources, I would engage with more oil and gas companies in order to push them further into green transition,” Bessing said. 

As things stand, though, it’s clear that even if PFA exited all its fossil-fuel exposures, “the world will not become any greener,” he said.