Denmark’s financial watchdog has found fault with three Danish pension providers after scrutinising the processes the firms use in their flagship sustainable and climate pension products.

Commercial pension companies PFA Pension, AP Pension and Danica Pension have each received official orders to correct procedures after a series of inspections by the Danish FSA (Finanstilsynet) on the theme of compliance with the requirements for sustainable investments and international standards.

In the last six years, all of Denmark’s main commercial pension providers have launched ‘sustainable’ pension products alongside their existing ones.

In the reports published yesterday following the inspections at each of the three firms – all carried out in November 2023 – the FSA detailed certain specific failings, while also saying that each of the providers had indeed had methods or processes that did contribute to ensuring compliance with legislation.

Regarding PFA Pension, for example, which received two official orders, the FSA said the firm had methods to assess whether potential investments were sustainable, including ensuring that the investments contributed to an environmental or social goal – with those methods typically measuring the contribution based on one or more of the United Nations’ 17 Global Goals.

“However, it is not documented how the contribution to the individual environmental or social goals is calculated or continuously monitored,” the FSA said.

“There is therefore a risk that the company does not continuously take a position on the method or size and distribution of the investments’ positive contribution to the UN’s Global Goals,” the authority said.

Rasmus Bessing, head of ESG investments at PFA Pension, commented on the FSA inspection, saying the pension provider had “a good and constructive dialogue” with the authority.

“At PFA, we have a good and solid setup for sustainable investments with strong processes and competences, but of course we take note of the orders to strengthen our methods and processes, and we are already in the process of implementing this,” he said in a statement.

AP Pension responded to its inspection, which resulted in three official orders to correct procedures, saying it had already been in the process of changing the set up around its product AP Sustainable, with the product having been designed back in 2019 – long before the disclosure regulation came into force.

Danica Pension, meanwhile – which received one official order from the FSA – commented on its website simply that it was taking note of the order.

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