PensionDanmark engages in dialogue with authorities and other stakeholders regarding societal issues, particularly how private investors can become involved in finding new and innovative ways to solve them. Not only does this expand PensionDanmark’s investment opportunities, but it also adds to solving societal tasks and challenges.
Screening and active ownership complement and underpin our aim towards securing the best possible returns for our members in the long term. Well-run companies that are able to manage financial- and non-financial risks reduce PensionDanmark’s risk as an investor, while increasing future investment value.
Investment Guidelines
PensionDanmark's Board of directors has established a set of guidelines for socially responsible investments. They take the generally accepted principles as a point of departure, e.g. for social, environmental and governance factors.
To reinforce compliance with the board’s guidelines, PensionDanmark conducts screenings and exerts active ownership, both directly with our investee companies, in collaboration with likeminded investors and through our ethical investment advisor, Federated Hermes EOS (Equity Ownership Services).
PensionDanmark does not invest in securities that are subject to sanctions imposed by the UN or EU.
PensionDanmark does not buy equities or bonds in companies whose activities are in conflict with international conventions acceded by the Danish state.
Once a year, PensionDanmark's reassesses the general guidelines for investments. The guidelines for responsible investments are taken into account when the strategic benchmark for our asset allocation is determined.
Screening
PensionDanmark regularly screens its equity portfolio for observance of the guidelines for socially responsible investments established by the board of directors in relation to:
- Labor - and human rights
- Environment- and climate factors
- Corruption
- Corporate Governance
The guidelines take the generally accepted norms based on international conventions and agreements:
- UN's Universal Declaration of Human Rights
- ILO-Conventions
- Rio Declaration on Enviromnet and Development
- UN’s Convention against Corruption
- UN’s Guiding Principles on Business and Human Rights
- OECD's Responsible Business Conduct for Institutional Investors
- The Paris Climate Agreement
- The UN Sustainable Development Goals.
These accepted norms also shape the ten principles of UN Global Compact, the United Nations corporate sustainability initiative.
Dialogue
PensionDanmark identifies companies requiring special attention either ourselves, or in collaboration with likeminded investors or with our external partner and ethical investment advisor, Federated Hermes EOS This identification is based on an evaluation based on risk and whether the company exhibits conduct, which deviates from the shareholders best interest in regard to environmental, social and governance issues.
Dialogue is a lengthy process, in which gradual progress must be employed to foster initiatives promoting improvements. Considerable challenges can arise in cases where the company’s business culture and approach to corporate governance differ from the Danish context.
To ensure the best grounds for achieving satisfying results, discussions are conducted in confidentiality, which allows the companies to engage in a constructive and open dialogue.
In some instances, companies may refuse to engage in a dialogue. Dialogues can also be unproductive, e.g. if the company refuses to acknowledge the issues we raise. This can lead PensionDanmark to sell the shares and place the company on our exclusion list. But it also goes the other way. If a previously excluded company suddenly meets our requirements, it can again become part of the investment universe.
Voting
PensionDanmark can, amongst other things, exert our influence by exercising our shareholder voting rights at our investee companies’ annual general meetings. Federated Hermes EOS can vote on our behalf based on PensionDanmark’s own voting policy. PensionDanmark votes directly at Danish companies' general meetings. PensionDanmark annually publishes the results of our dialogues and voting in our Annual report.
PensionDanmark’s commitment to Net-Zero before 2050
In September 2019, PensionDanmark and a group of leading international investors announced the formation of the Net-Zero Asset Owner Alliance, an alliance of investors working towards climate neutrality by 2050. The Alliance was convened by UNEP’s Finance Initiative and UN PRI.
Consisting of pension and insurance companies, the Alliance had assets under management of USD 10,6 trillion in 2022.
Focusing on real economic impact, the Alliance will work to strengthen mandatory reporting methods, exercise active ownership and inspire each other to invest in the green transition. In 2020, we sat interim targets on the way to fulfill our net-zero commitment.
Alliance members commit to establish scenarios for how their investment portfolios should develop in order to achieve Net Zero by 2050 or sooner.
As a founding member, PensionDanmark is represented in the Alliance Steering Group.
Approved Science Based Target
In September 2023, PensionDanmark became among the first pension funds to receive approval from Science Based Target initiative (SBTi) of our 1,5C targets. The Targets cover 56% of AUM, including real estate, electricity generation and listed equity.