Tesla Accounts for Notable Portion of Luxembourg Pension Fund’s €26 Billion Portfolio

Luxembourg’s pension fund, Fonds de Compensation (FDC), remains committed to its investment in electric carmaker Tesla despite growing concerns over its corporate governance and labour practices, according to a response in Parliament on Monday by Martine Deprez, the minister for health and social security.

Recently, one of Europe’s largest pension funds, Stichting Pensioenfonds ABP, divested its entire €571 million stake in the American carmaker over CEO Elon Musk’s €53 billion pay package and working conditions at the company. The question in Parliament, asked by LSAP’s Mars Di Bartolomeo, was prompted by the Dutch pension fund’s decision.

Tesla Investment Breakdown

As of 31 December 2024, the FDC held €164.3 million in Tesla shares, accounting for a notable portion of its €26 billion portfolio.

Approximately 70% of this investment (€115 million) is tied to index-tracking funds replicating the MSCI World Index, where Tesla ranks as the sixth-largest constituent with a 1.66% weighting. The remaining 30% (€49.3 million) is managed through actively managed equity portfolios, Deprez explained in the answer.

She also explained that the FDC aims to exclude companies from its investments universe that do comply with international standards of human rights, environmental standards, international labour standards and corruption as enshrined in the United Nations Global Compact.

The FDC uses the service provider Sustainalytics to screen its investments and detect companies that violate the principles.

So far, Tesla has not been excluded from the FDC’s investment plan because Sustainalytics has given it “observation status with a neutral improvement outlook.”

Last year, the NGO Greenpeace Luxembourg had alleged that the FDC invested in 1,200 companies which have “negative impact” on society and environment. “Their adverse impact on people and the planet, including contribution to climate change, environmental damage, human rights violations and/or their involvement in the arms industry, including controversial weapons,” Greenpeace had said.

That list mainly included fossil fuel and tobacco companies. It did not include Tesla.

FDC’s recent performance  

According to a recent FDC press release, its 2024 unaudited results show that it earned a return on investment of almost 12% in 2024, totalling €2.9 billion.

The results were an outcome of outperformance by US stocks, in particular “the exceptional momentum of the magnificent seven,” the FDC said.

The magnificent seven is a group of seven technology companies in the US – Apple, Nvidia, Microsoft, Google, Meta, Tesla and Amazon – whose market capitalisations have grown considerably in the past two years.