DENMARK - PKA, which administers DKK111bn (€14.9bn) of assets for eight occupational pension funds, has defended its ethical stance and its reasons for several shareholdings in the face of media criticism.

A Danish news report revealed the pension funds had invested, via PKA, in several companies blacklisted by watchdog DanWatch, and workers' representatives were reported as registering their dismay.

The investments slammed included L3 Communications, French firm Safran, Chinese auto producer Dong Feng, and Japan-based tyre producer Bridgestone.

Although L3 was defined by DanWatch's criteria as an arms manufacturer and produced cluster bombs, PKA said the company only produced detonators that could be used for this type of bomb. PKA's 2006 AGM had discussed the matter and decided not to sell, and there was no sign of any change since then, said PKA.

Safran, similarly, was not an arms manufacturer and also received the green light at the 2006 AGM. However, it was now on the observation list so that its role in relation to actual arms manufacturers could be judged.

Dong Feng, suspected by DanWatch of supplying military equipment to Burma, has also been put on the observation list. PKA said it would try to change the firm's behaviour through dialogue, but would sell the shares if unsuccessful.

Accusations levelled against Bridgestone of using child labour in Liberia would be investigated, PKA said, as well as the type of child labour possibly being employed. "If it is happening under reasonable conditions - the children are being educated - and the company has a policy in this area, for many children in poor countries it is better than being left to the alternative: a life on the streets," it said. 

That said, if the result of investigations and dialogue were unsatisfactory, PKA said it would sell the holding immediately.

PKA said that the DanWatch blacklist had derived from the exclusion lists of three other Nordic pension funds.

"The PKA pension funds have, in conjunction with the delegates, established their own guidelines on to behave regarding SRI, and how to conduct SRI," the provider said.

"In the PKA pension funds' ethical guidelines there is - over and above the principles of the UN global compact - a ban on investments in weapons manufacturers and tobacco producers. The ban concerns direct production and there is an exception for sub-suppliers."

But there would always be grey areas surrounding the issue of how far a particular company was contravening guidelines, PKA said.