Denmark to promote responsible investment in government bonds
GLOBAL - The Danish government has set out a range of initiatives to promote responsible investment in government bonds, following a wave of controversy about pension funds holding the bonds of some African countries.
Pension funds are agreeing to publish their policies on the issue, and the government has said it will develop ethical investment guidance.
The steps were agreed between the ministry of business and growth, pensions industry association Forsikring & Pension (F&P), the Danish Bankers' Association, the Federation of Danish Investment Associations, LD and ATP.
Peter Damgaard Jensen, chairman at F&P, said: "We agreed that investments in government bonds should live up to the general and internationally recognised standards of, among other things, the UN's six principles for responsible investment."
The parties also agreed to promote openness about the investments, he said.
"This allows the individual company to have objectives for its investment choices - and to position itself in a dialogue with customers, shareholders and the public," he said.
Last month, several major pension funds in Denmark had to defend themselves against an accusation of unethical behaviour over holdings of African government bonds.
Ole Sohn, minister for business and growth, said: "I want to emphasise that it's positive that the pensions industry gets involved in investments in developing countries, and so contributes to creating economic development."
But of course this had to happen in a responsible way, he added.
Damgaard Jensen said the problem could not be solved simply by making a list of those countries to be avoided when it came to investments in sovereign debt.
"Government bonds are a different and more difficult thing to declare than shares," he said.
"So this is a good and balanced solution with overall guidance and increased openness."
Among the initiatives agreed, Danish institutional investors are to follow the UN PRI's six principles for responsible investment regarding investment in sovereign debt as well as investments in companies.
They are also to take an active part in the work of the PRI Sovereign Fixed Income Working Group, which is expected to present its report at the end of this year, the ministry said.
Investors are to publish their policy and practice for government bond investments in their annual report, it said.
Sohn will meet the Danish Council for Corporate Social Responsibility to develop guidance on the criteria, the parties agreed.
In addition to this, the ministry will ensure there is easily available and timely information on which countries are covered by UN or EU sanctions, particularly sanctions prohibiting financial transactions including investments in government bonds, it said.