DENMARK - Pensionskassernes Administration (PKA), the Danish occupational pension funds administrator, has hired fund manager Hermes to carry out share-ownership responsibilities for its €3.7bn of non-domestic equity investments.
PKA said the agreement meant the eight pension funds it represents would have more opportunity to act as responsible investors, strengthening their dialogue with more than 2,200 businesses globally.
"The agreement with Hermes gives us two things," said Peter Damgaard Jensen, CEO of PKA, "on the one hand, expertise and focus on the work of responsible global investment, and on the other, more power than we can have on our own."
Hermes said the deal with PKA means Hermes Equity Ownership Service (Hermes EOS) will now have more than €65bn in assets under advice.
Apart from the BT Pension Scheme - which owns Hermes - other Hermes EOS clients include the British Coal Staff Superannuation Scheme and the BBC Pensions Trust.
Colin Melvin, chief executive officer of Hermes EOS, said the service was a way off enabling long-term shareholders to work together.
That said, one attraction of this move was it allowed shareholders to have more influence than they would otherwise, he said.
The service involves engaging with companies to improve their long-term value in terms of governance, social and environmental risk, he said.
"Our clients recognize they have responsibilities, but it is also an opportunity to raise long-term value," he added.
The Hermes EOS comprises a voting service, which includes communicating with all companies where the investor is voting against management recommendations, and a full engagement service. The engagement service aims to encourage companies to address social and environmental matters and boost long-term shareholder value, Hermes said.
As well as this, Hermes will advise PKA on its responses to company, governmental consultations and other regulatory consultations, it said.
Separately, PKA said the eight funds are making a private equity investment of nearly DKK900m (€121m) in environmental firm Genan. Genan breaks down old car tyres into rubber, steel and textile which can then be used to make new materials.
PKA originally invested in Genan through Invest Miljø - a venture capital investment vehicle it owns along with other Danish pension funds. After the new injection of capital from PKA, Genan founder Bent A. Nielsen has a 52% stake in the company, while PKA, Invest Miljø and insurer Købstædernes Forsikring collectively hold the other 48% of the unlisted company.
"We think the business fits in well with our desire to invest in the growing environmental industry sector," said Michael Nellemann Pedersen, investment director at PKA.