Pension funds in Iceland have indicated their collective commitment to promoting sustainable development through investments, joining major players in the country’s financial sector by signing a letter of intent – alongside Prime Minister Katrín Jakobsdóttir.

In the open letter signed last week, a range of pension funds and banks declared that capital was an important driving force in shaping the economy and society as a whole, and that using it properly to a large extent determined the competitiveness of nations and the future of generations to come.

“Investors, financial companies, institutions and governments therefore play an important role in shaping the economy and communities,” the signatories wrote.

Jakobsdóttir said socially-responsible thinking and sustainable development was a common thread in her government’s charter, and that governments, companies and institutions should take responsibility and have a constructive impact on society.

This required the introduction of sustainability and social responsibility in all operations, she said, adding: “That ideology will create new opportunities and be a driving force for many kinds of progress.”

In the letter, the parties said they believed sustainable development to be based on balancing the environment, society and the economy, and that it could be sustained by targeted measures within funding, investment and lending activities.

Thorey Thordardottir, chief executive officer of the Icelandic Pension Fund Association (Landssamtök lífeyrissjóða, LL) said responsible investment was characterised by good governance, thorough preparation and transparency, in the spirit of sustainability and working towards healthy communities.

“All of this is in accords well with the policies and operations of Icelandic pension funds,” she said.

The letter included a commitment to Iceland’s international obligations and the criteria set by the Icelandic government.

These included, according to the declaration, the target of national carbon-neutrality by 2040, the Paris Agreement goal of cutting greenhouse gas emissions to keep global warming below 1.5°C, and the United Nations’ global goals for sustainable development.

Pension fund signatories to the letter included Festa, Frjálsi, Gildi, the Pension Fund of Commerce (LV), alongside the government, the central bank, and banks Arion Bank, Íslandsbanki and Landsbankinn.

The letter will remain open for more signatures, LL said.

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