With socially responsible investing continuing to develop as an established part of the asset management industry, it is easy for pension funds to make token gestures towards the concept, without necessarily putting in place processes that can effect change. But PenSam Liv of Denmark stands out in the field of SRI investing as an institution that is making a difference, not only by thorough vetting of its portfolio, but also by active engagement with companies.

In particular, the fund is not afraid to communicate with companies it does not invest in, as well as those which are included in its portfolios. It is for these achievements that PenSam has won the IPE Award for SRI.

The pension fund - whose portfolios, worth over €4.8bn, give it an enormous amount of clout - believes its approach in this area is unique. Combining screening of shares with engagement and active ownership, the fund's SRI policy has been shaped by its members.

The fund is also a signatory to the UN Principles for Responsible Investment, and this underpins its entire policy. PenSam says that the UNPRI principles constitute a good framework for collaboration with other interested parties, and a good basis for communicating its SRI goals.

As a starting-point, PenSam screens the universes of shares from which it selects investments according to conventional standards, with the exclusion of nuclear weapons and cluster munitions producers.

The screening process is based on research from the Ethical Investment Research Service (EIRIS), GES Investment Services and recommendations from the Norwegian Council on Ethics for the Government Pension Fund - Global.


PenSam discusses its SRI guidelines with its members, who then decide on the specific criteria. This ensures there is alignment between the values of the members and those of the fund. However, decisions on excluding specific companies are made by the pension fund's supervisory board. This is done again in accordance with the members' wishes, ensuring that decisions are made at a strategic level, above the fund's day-to-day management.

Investments in individual companies are then compared with the principles contained in over a dozen conventions and international agreements. These include the UN Global Compact, OECD Guidelines for Multinational Enterprises, Universal Declaration on Human Rights, Kyoto Protocol, UN Convention against Corruption and the
Chemical Weapons Convention.

The investment process as a whole also encompasses a policy of engagement with all companies found by EIRIS to be in possible breach of PenSam's SRI policy.
Companies in this situation, but which are considered to be within reach of attaining the required standard, are placed on the fund's internal observation list.

However, companies that do not sufficiently comply with PenSam's SRI policy or which are unwilling to make improvements can be excluded altogether from the investment universe by the fund's supervisory board. PenSam says that this exclusion list reflects the fact that some companies do not share its values, and will not make the necessary changes. It also says it believes its SRI policy would not be credible without the ability to exclude these companies.


When a company is identified by EIRIS as having unaddressed issues in relation to PenSam's policy, the pension fund contacts it directly. The companies include those that are included in the pension fund's portfolio, as well as those that are not. This policy of engagement is intended to promote change, and thereby ensure that as few companies as possible are excluded from the fund's investment universe.

PenSam then shares the responses it has received from these companies with EIRIS, so that the relevant information can be factored into EIRIS's own assessments. This way of working is unique to PenSam, but in line with the UNPRI requirements for collaboration with other interested parties.

The pension fund screens its whole portfolio of equities and corporate bonds at defined intervals. This contrasts with the approach of other pension funds, which typically screen on a regular basis only those companies that are part of their screening agency's standard universe, or do not screen corporate bonds at all.
SRI of course should include active ownership. PenSam has a voting policy which supports the principles of its SRI policy, as well as supporting generally accepted principles of good corporate governance.

The fund aims to vote at the AGMs of all listed companies whose shares it owns. To achieve this, it cooperates with Institutional Shareholder Services, the provider of proxy voting and corporate governance advisory services.

PenSam is the only pension fund in Denmark that does so. In contrast, other funds vote only where the companies are on a focus list, or at any rate, vote only at a limited number of AGMs.

One of the reasons why PenSam makes a reasonable effort to vote at all company AGMs is that the fund considers that failing to do so means giving away influence to other parties who also make the effort to vote, but whose interests may not be aligned with the interests of PenSam's members.

This entire framework of SRI principles and screening processes has led, PenSam believes, to the promotion of visible change in individual companies, in line with the fund's SRI policy. PenSam firmly believes that engagement and active ownership are more effective at promoting change than exclusion alone.

PenSam's comprehensive approach to SRI includes several unique features. The pension fund combines active ownership with engagement and screening. SRI investment policy is determined by the fund's members, with exclusions decided upon at supervisory board level. The fund's entire portfolio of listed equities and corporate bonds is regularly screened. PenSam engages with all companies that do not comply with its SRI policy, whether or not it invests in them. Those companies that are thought capable of achieving compliance are put on an observation list, while the rest may be excluded from the investment universe. Pensam's active ownership policy includes the aim of voting at all AGMs of companies whose shares it owns.