Danish pension fund AkademikerPension announced yesterday it has excluded the Hungarian airline Wizz Air from the companies it is willing to invest in, divesting shares worth DKK22m (€2.95m), saying it had lost patience with the engagement process.
AkademikerPension’s chief executive officer, Jens Munch Holst, said: “After dialogue with the company’s management, we have in no way been reassured that it will initiate the changes we have requested. On the contrary.”
Therefore the pension fund saw no option other than excluding the firm, he said.
The pension fund said studies had shown Wizz Air’s management had repeatedly refused to recognise the freedom of association of employees and the right to enter into collective bargaining in Romania, Ukraine, Norway and Italy, among others countries.
Several courts had also ruled that the company has exhibited discriminatory behaviour and fired employees because of their union affiliation, it went on to say.
In October, AkademikerPension sent a letter to the airline, signed and supported by various other investors, expressing concern that it may actively be discouraging the formation of unions among employees.
“If we are not ready to use [exclusion], we have nothing with which to threaten when we, as an investor, try to influence companies to change course”
Jens Munch Holst, AkademikerPension’s CEO
According to the pension fund’s statement yesterday, the airline’s management only agreed to attend a meeting when investors aired criticism in the press.
At the meeting, AkademikerPension said, Wizz Air’s management gave information about its approach and told attendees that it did not want to change its behaviour.
Munch Holst said: “Exclusion is the last tool in our toolbox. And if we are not ready to use it, we have nothing with which to threaten when we, as an investor, try to influence companies to change course in this kind of case.
“So now Wizz Air is out of our investment universe,” he said.
Asked for a response to AkademikerPension’s announcement yesterday, Wizz Air issued a statement, in which it said:
“Wizz Air takes the engagement with its employees very seriously and we are confident that our structures and processes that have been in place to support open and transparent engagement are working extremely well, including our People Council, which provides a forum for employees to discuss important issues, frequent employee engagement surveys and a regular ‘Floor Talks’ programme which allows for a regular two-way dialogue with our CEO.”
Additionally, the company said, it had recently formed “a Sustainability and Culture committee for the board all with a view to dedicating even more focus on environment and people issues.”
Assessing climate change from an employer covenant perspective
The implications of climate change-related issues for employer covenants supporting UK defined benefit (DB) schemes should in the first instance be considered in sectoral terms, according to the Employer Covenant Practitioners Association (ECPA).
In a new paper, the professionals group said sponsor-specific issues can be reflected once the sectoral background, such as regulation and technological evolution, is understood. Sector-specific issues could be reflected either through identified cash flows in forecasts, or as sensititivies and scenarios, the ECPA said.
Karina Brookes, chair of the ECPA, said its members were seeing the impacts of climate change feed into the performance of sponsors, for example via transitional risks, but that many sponsors were successfully addressing the impacts of climate change.
“The paper sets out clearly and systematically how our member firms can consider climate change in their work – and advise trustees and sponsors on how it might be reflected in scheme funding and integrated risk management plans,” she said.
“Certain of the longer-term time horizons relevant to climate change – such as √net zero by 2050’ – are distinctly relevant for the run-off of pension liabilities over decades to come. It is vital, therefore, that appropriate and proportionate consideration is given to climate change in employer covenant work.”
SFDR Article 8, 9 funds hit €4.05trn
Assets in funds classified by asset managers in accordance with Article 8 and Article 9 funds of the EU’s ESG disclosure regulation reached €4.05trn at the end of December, according to Morningstar.
This represented 42.4% of all funds sold in the EU, it said.
In a new report, Morningstar said Amundi, Nordea and Swedbank remained the three largest providers of Article 8 and 9 funds.
It also that SFDR spurred product development and innovation last year, with close to 200 new Article 8 and 9 funds hitting the shelves in the fourth quarter alone, accounting for 54% of new fund launches.
Asset managers continued to reclassify strategies from Article 6 into Article 8 or Article 9 by enhancing ESG integration processes, adding ESG exclusions, or switching to brand-new strategies, Morningstar said, adding that “changes to justify a reclassification vary in depth and breadth”.