Bjarne Graven Larsen, the former CIO of Denmark’s largest pension fund, told a conference in Madrid yesterday that sustainability is a proxy for good company management, and that firms creating public value will benefit from doing so in many ways.
Speaking at the IPE Conference and Awards 2021 in Madrid, Graven Larsen – now founder and chief executive officer of the investment firm Qblue Balanced – said ESG issues had now been part of investment for a long time and would continue to be, but that the focus had tended to shift over the last 30 years.
“It’s multi-dimensional, it’s dynamic and I think we’ve had to take that into account,” he said, when describing how his firm looked at ESG.
People had been struggling to find the rationale for why it should be believed that the most responsible companies – if it was defined in the right way – should perform better than other companies.
“So that’s something that we spend a lot of time at our company trying to understand,” he said.
“If you measure it in the right way, strong sustainability scores in a multi-dimensional way is a proxy for good management, and good management is good for companies. But at the same time, it’s also a proxy for a public good, namely creating societal value above the private value a company produces,” he said.
“And today – maybe not perhaps 20 or 30 years ago – I do believe that companies that manage to create public value, positive externalities, they will benefit from that in the form of help from governments, help from regulators, more loyal employees, and more loyal partners,” said Graven Larsen.
IPE editorial director Liam Kennedy was interviewing Graven Larsen in Madrid on Thursday, a day after the 20th anniversary of a huge financial market exercise the industry veteran had carried out while CIO of ATP.
On 1 December 2001, Graven Larsen along with the then CEO of ATP Lars Rohde and other leaders at the pension fund decided to hedge the statutory pension giant’s entire liabilities, following a key change by the financial regulator to mark Danish pension fund liabilities to market.
Having made the decision, the investment team then bought most of the hedges for the risk in just five trading days between 10 and 14 December, he said.
“At the time we had discussed the interest-rate level, because they had just come down, and they were now at a very low point, 5.25%, and we thought they were going to increase,” he said in the on-stage interview.
Back in 2001, ATP had around DKK250bn of assets – about a quarter of the DKK927bn it managed at the end of September this year.
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