Homeowners typically don’t have the capital to invest in energy renovation solutions, despite the proven returns. Danish pension fund PKA helps bridge that gap with a one-stop-shop solution which, it believes, could be replicated across Europe.
Pelle Pedersen is head of responsible investment at PKA, a Danish pension fund. He spoke to EURACTIV.com’s publisher and editor, Frédéric Simon.
Why is a pension fund like PKA interested in energy efficiency?
There’s a number of factors. First, we represent the healthcare sector, nurses and social workers and 90% of our members are women. And our members believe we should pursue investments where we are able to merge sustainability and profit. Because of that, we have in our investment strategy a specific reference to climate change and to what we call impact investing.
That’s not to say it’s easy to find a project where you can combine the two. We started in 2011 with our first wind park investment in Denmark, which was the biggest in the country at the time. Now we have invested roughly €1.7 billion into four wind parks.
We’ve also created our own energy renovation fund where we provide fully funded energy renovations to homeowners and companies in Denmark. We’re repaid through savings on energy bills, plus interest on the loans we provide.
This got a lot of attention in Denmark, from mayors and politicians all over. PKA provides the capital but we’re very honest about how knowledgeable we are about building renovation, which is a specific area of expertise. So we’ve teamed up with another organisation, Smith Innovation, and they are the experts in providing the needed solutions together with the essential financing, which makes our offer much more effective.
On our side, we bring capital to the table. We invested €40 million into this fund called Sustain Solutions, offering fully funded renovation in Denmark, and we hope to see further allocations being made to that fund as we go along.
When the fund was launched back in 2015, we had to explain what this was all about, why we believed this was very innovative. Now, we’re exploring how we could collaborate with other Danish companies to provide a one-stop package to homeowners so they don’t have to engage with ten different contractors and ten different companies for specific solutions.