Danish labour-market pension provider Sampension said it is now tightening climate requirements for its external fund managers, aiming to increase their overall level of commitment to the Paris Agreement.
Jacob Ehlerth Jørgensen, head of ESG at the DKK294.8bn (€40.1bn) pensions firm, said: “But even though there is a positive movement going on among the managers [in terms of their focus on ESG considerations], in our view it is going too slowly, especially in the climate area.”
“We find that the managers generally have too little focus on working with their climate footprint, and in this regard, we want to have them committing to a much greater extent in future to invest, for example, in line with the Paris Agreement,” he said.
This was why Sampension was now tightening up its requirements for managers, not least in the area of climate, he said.
“At the same time, it must contribute to the realisation of our own goal of reducing the climate footprint of the overall investment portfolio, so that it is CO2-neutral in 2050,” Ehlerth Jørgensen said in a statement released on Thursday.
The issues of sustainability and climate had generally risen higher up company agendas, he said, adding that the emphasis had particularly been on the responsibilities and contributions of listed companies.
But unlisted companies had to raise their game too, he said, and asset managers had an important role to play in bringing about that development.
Managers of unlisted assets typically ran significant sums amounting to many billions of kroner for investors, which in itself placed demands upon asset managers to focus on sustainability in investments for the benefit of both investors and society, said Ehlerth Jørgensen.
“And this is reinforced by the fact that [unlisted] fund investments for investors are long-term, illiquid investments, which as an investor you can’t just get out of, unlike investments in the listed market,” he said.
So it was crucial that these managers assumed their social responsibility and ensured their investments on behalf of investors contributed to the green transition, he said.
As examples of progress already made, however, Sampension said the proportion of its managers of private equity and infrastructure assets to have signed the UN Principles for Responsible Investment had risen to 81% in 2021, from 54% in 2019.
Sampension’s announcement that it is getting tougher with its external managers comes after saying it January that it was upping its engagement with companies this year, particularly on climate issues.