Danish education sector pension fund Pædagogernes Pension (PBU) has introduced a code of behaviour for pension funds on tax ethics.
The code is aimed at improving the behaviour of companies in which it invests, and PBU has called for other pension funds in Denmark to adopt it.
Sune Schackenfeldt, chief executive of PBU, said: “As a pensions company and an institutional investor, we have an interest in getting dubious tax planning practices into the open.
“We would like it to be possible to discuss this and get things changed over time, even if this is easier said than done.”
The six points of the new doctrine are:
- To identify best practice and go on the offensive with companies that avoid tax;
- To support criticism of companies by action-orientated dialogue;
- To actively support relevant shareholder resolutions on tax at annual general meetings;
- To ensure that stock lending never leads to dividend tax speculation;
- To ensure direct investments in developing countries take place without tax incentives or tax exemptions;
- To work towards tax being a guiding principle in the UN Guidelines for Corporate Responsibility.
PBU said that when tax was “twisted”, this harmed Denmark’s welfare society and weakened the opportunities developing countries had of growing out of poverty.
According to the OECD, the equivalent of around DKK2trn (€269bn) was lost every year globally in corporation tax revenues as a result of global profits being shifted around and tax havens being used.
A conservative estimate was that Denmark alone was losing DKK5bn a year in this way, PBU said, which could be used to finance 5,000 education practitioners and 1,000 extra school teachers as well as giving a long-term boost to school and day-care centre buildings.
In developing countries, multinational companies often relied on the extraction of natural resources, but their contribution to local populations was limited because of their tax planning across national borders, and tax exemptions in countries where corruption was a widespread problem, PBU said.
Loss of tax revenue and the potential consequent erosion of welfare provision has had a high profile in Denmark over the last two years, with some large-scale tax fraud scandals hitting the headlines in the high-tax country.