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  • June 2022
  • Case
  • HBS Case Collection

PFA Pensions: The Climate Plus Product

By: Daniel Green, Victoria Ivashina and Alys Ferragamo
  • Format:Print
  • | Language:English
  • | Pages:20
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Abstract

The case explores whether alternative investments play a unique role in achieving low carbon dioxide emissions at the portfolio level. This case is set in April of 2020 and follows Kasper Ahrndt Lorenzen, Chief Investment Officer, and Peter Tind Larsen, Head of Alternative Investments, at PFA, the largest commercial pension fund in Denmark. PFA had recently seen increased demand from its corporate clients to offer a product with lower carbon dioxide emissions. The case explores PFA’s decision to offer a “Climate Plus” product that would aim to produce strong returns and meet ambitious climate-related goals. In the case, the protagonists meet to discuss the role of alternative assets in the product. Importantly, PFA already has a significant presence in the alternative space and, in particular, in private equity and renewable energy. A large fraction of their alternative portfolio is managed in-house. Among other things, PFA is thinking about adding timberland investments as a new asset class to achieve net zero emissions. Lorenzen and Larsen need to determine if they could leverage their existing team and processes to invest in timberland and whether it is the right time to launch a climate-focused product. This case provides a good platform for discussion on direct investing in the alternative space and the role of alternatives for large institutional investors.

Keywords

Carbon Emissions; Carbon Footprint; Alternative Assets; Alternative Investment Vehicles; Pension Fund Investing; Private Equity; Renewable Energy; Investment Portfolio; Corporate Social Responsibility and Impact; Environmental Sustainability; Denmark

Citation

Green, Daniel, Victoria Ivashina, and Alys Ferragamo. "PFA Pensions: The Climate Plus Product." Harvard Business School Case 222-088, June 2022.
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About The Authors

Daniel W. Green

Finance
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Victoria Ivashina

Finance
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  • Can Finance Save the World? Measurement and Effects of Coal Divestment Policies by Banks By: Daniel Green and Boris Vallée
  • PE Secondaries: Blackstone Strategic Partners By: Victoria Ivashina and Luis M. Viceira
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