Denmark’s largest commercial pension provider, PFA, said the political and economic risks of continuing to invest in China have increased because of geopolitical polarisation, listing the issue as a development it would monitor closely this year in its responsible investment work.
Rasmus Bessing, responsible investment director at the DKK778bn (€65.9bn) pensions firm, said the work was fraught with dilemmas and characterised by the geopolitical fractures arising after the pandemic, Russia’s invasion of Ukraine and US president Donald Trump’s redefinition of the US’ role.
In a commentary on the firm’s responsible investment work in 2024 and the outlook for this year, he said: “The election of Trump has already meant that a large number of American banks and asset managers have withdrawn from international cooperation on how the financial sector can contribute to the green transition.”
This was a clear signal the world was changing rapidly, he said.
“At the same time, I believe there are existing trends that are becoming clearer. This applies, for example, to investments in weapons,” Bessing said.
Whereas investment in arms had previously attracted criticism, he said PFA was now criticised if it did not invest in weapons.
“Similarly, there’s been a change in how investments in nuclear power are seen, because energy policy has now become security policy as well,” he said.
“In addition, there’s also an increasing focus on China, which we are still invested in, but where the political and economic risks have increased as a result of geopolitical polarisation,” he said.
Bessing said PFA was following these developments closely, to make sure it achieved the best possible match between return and responsibility.
PFA said it looked forward to “continuing the work on climate, working conditions and diversity, which, despite the geopolitical winds, will continue to be cornerstones of PFA’s active ownership.”
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