Labour market pension fund PenSam has added tax as a special area in its responsible investment policy following a number of high-profile scandals.
The DKK127bn (€17bn) pension fund said it would investigate any companies in which it invests if they pay very little tax or channel profits through tax havens.
Torsten Fels, PenSam’s chief executive, said: “Proper payment of tax is the starting point for providing a good public service to citizens, and therefore it is particularly important for us at PenSam that our members’ pensions grow responsibly.”
Fels pointed out that some of PenSam’s members worked its social and heath assistants in a tax-financed welfare sector.
Under the new policy, PenSam said that if, for example, companies were associated with suspicious tax practices or paid less than 10% tax on their total earnings, or if a firm had placed all its profits in a country with a low tax rate, it would investigate them further.
“We want to use the new tax payment information to enter into dialogue with companies that show particularly problematic behaviour and push for them to change their practice in this area,” said Fels.
The pension fund said had several tax measures in place for funds, but has extended this to include tax checks on companies issuing equities and corporate bonds.
As well as this, PenSam said it had a tax policy in place that partners and external investment managers must accept and abide by when making new investments.
Under this policy, aggressive tax planning or direct tax avoidance are not acceptable, and there are consequences for the relationship with PenSam if this happens.
In October 2018, the pension fund said it would increase its focus on accountability and the screening of its investments and partners following media coverage of the ‘Cum-Ex’ withholding tax fraud case.
Fels called the revelations “the expression of a sick culture and business ethic in a broad swathe of the international financial sector”.