Interest in SRI surges among Danish pension funds, F&P study shows
DENMARK - More than half of Denmark's pensions industry now uses active share ownership methods to sway companies falling foul of ethical investment guidelines, with only 2% reacting by simply offloading problem stocks, a report reveals.
Research from the Danish Insurance Association (F&P) also showed that players accounting for practically the whole of the sector - 99.1% - have now established their own socially responsible investment (SRI) guidelines.
Back in 2009, 79% had such a strategy in place, while in 2008, that figure was just 66%.
On active share ownership, F&P said that, in 2011, 54% of the pensions sector used these methods to settle ethical investment conflicts, up from 39% in 2009, when the proportion was down from 2008's 45%.
It said: "If a business, for example, oversteps a pension fund's ethical guidelines, more and more funds are choosing to enter into a dialogue with that business, make suggestions and vote at general meetings instead of pressing the sell button, offloading their shares and thereby putting themselves outside the range of influence."
In 2011, just 2% of the industry had a policy of selling investments that breached SRI rules straightaway, down from 11% in 2009 and 7% in 2008.
Some 71.3% of the market's funds had corporate governance policies in place in 2011, the association found.
"Pension companies are increasingly demanding that those businesses they invest in, are, for example, open regarding management pay," it said.
The F&P report took in data from 41 active pensions institutes, looking at published figures from pension company websites and annual reports.
The figures are weighted according to gross customer contributions. No study was undertaken in 2010.
The remaining less than 1% of the sector that had not set up SRI guidelines consisted of a few small funds that are being wound up, F&P said.
Guidelines set out by the UN are behind most of the pension funds' published SRI strategies. In the Danish pensions sector, 97.8% of the market had signed either the UN PRI or the UN Global Compact, or both, according to the report.