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Danish mandatory pension scheme ATP is betting that the next phase of investment returns will come from financing the global transition — not just backing green assets but improving companies across sectors, including those still reliant on fossil fuels.
The strategy reflects a core principle laid out in its December 2025 sustainability report: “sustainability measures must always go hand in hand with good returns.” This balance is top of mind for the fund as it focuses on its mandate to deliver lifelong pensions with contributing to a more sustainable economy.
“They need to go hand in hand,” Ole Buhl, head of environmental, social and corporate governance and senior vice-president at ATP, said in an interview with Markets Group. “We are fully focused on returns; while setting clear minimum standards for all our investments to ensure they reduce their emissions.”
Rather than excluding large parts of the investment universe, ATP is leaning on stewardship, which it calls “the most significant lever” for aligning value creation with sustainability impact. The focus is on using ownership to push companies to improve over time.
“From an ESG perspective, there are no ‘right’ companies,” said Buhl. “What matters is how we, as owner or investor, can help the companies we invest in move in the right direction.”
That approach is shaping how the fund defines opportunity. While it continues to invest in green assets — with green bonds expected to remain a major allocation — it also sees returns in transition finance, including companies shifting from coal to less carbon-intensive fuels.
“A transition from coal to gas is preferable,” he said, reflecting a view that fossil fuels will remain part of the energy mix for decades, particularly in developing markets. ATP recognizes that companies operate under different conditions and starting points and focuses on ensuring that all portfolio companies improve over time.
ATP’s strategy frames sustainability as both a source of risk and opportunity, noting the potential to “protect and enhance the value of the investment portfolio” while influencing companies. It does not set fixed allocation targets for green investments, as this is not considered an effective management tool and could create conflicting incentives. Instead, the fund has narrowed its focus to three themes — green transition, working conditions and governance — which it says are financially material “for all companies.” Progress is tracked through specific metrics, including absolute carbon emissions, workplace safety and diversity in management.
Central to that system is company-reported data. Without ESG data, institutional investors are blind, Buhl noted, adding that the fund emphasizes “robust data points with wide data coverage,” measurements that can actually drive change inside companies.
“What gets measured typically also gets managed,” he said, pointing to the role of disclosures — including in complex areas like Scope 3 emissions — in shaping corporate behavior.
ATP embeds that into an ongoing stewardship process: collecting data, identifying action points and engaging directly with companies. While exclusion is part of its toolkit, it is used sparingly. Indeed, within the strategy, divestment is considered only after other approaches. When companies are in breach of ATP’s sustainable investments policy, stewardship is the preferred route.
In its recent stewardship report, ATP made it clear that its patience with companies is not endless when it comes to sustainable practices. Firms that fail to show progress on ATP’s three new sustainability metrics are expected to show “willingness to engage in dialogue and make improvements over time.”
“We need to convince ourselves there is a road forward. Otherwise, we will need to consider starting naming companies in public,” Buhl said.
The approach also reflects a shifting geopolitical backdrop. ATP acknowledged that sustainability priorities increasingly intersect with defense and energy security — tensions highlighted by the Russia-Ukraine War. Its strategy noted that “sustainable solutions can come into conflict with other legitimate considerations.”
Even so, the fund maintains that its role is not to make sector bets but to drive improvement across its portfolio. “It is not a question of whether we are invested in one sector or another,” the report stated, “but that all companies in our portfolio improve.”
For ATP, that philosophy ties ESG directly to long-term financial outcomes. Sustainability risks — particularly climate-related — are increasingly seen as material to valuations, while companies that adapt may gain competitive advantages.
The result is a pragmatic model: set minimum standards, rely on data and use ownership to capture value from the transition already underway.