The pension fund's aim is to generate the highest possible return as well as being a responsible investor.
The focus of CSR is to ensure that the pension fund, business partners and companies, in which the pension fund has invested, have management systems to identify, prevent and handle actual and potential negative impact on e.g. the environment and human rights.
We have decided on policies and guidelines to ensure integration of CSR in our investments. The policies and guidelines are based on both national and international guidelines for responsible investments and are structured across our investments.
Policy for responsible investments
The policy on responsible investments is part of the investment policy.
The policy is based on the UN's Global Compact, the UN-backed principles for responsible investments (PRI), the UN's 17 Global Goals on Sustainable Development, the Paris Agreement adopted during COP21 as well as the Danish recommendations regareding active ownership from the Committee on Corporate Governance.
The policy is applied across the pension fund's portfolio on investments in:
Credit and loans to companies
The desicive responsibility for ensuring that the pension fund's work complies with the policy for responsible investments falls to the pension fund's board of directors. The operational responsibility lies with the pension fund's head of responsible investments who refers to the pension fund's CIO. The CIO refers to the pension fund's CEO.
The investment committee
The pension fund's investment committee discusses issues relating to the pension fund's investments, before the pension fund's CIO decides on the further process. The investment committee must ensure:
that there is a distinct coherence between the return and risk profile in the pension fund
that the risk-based investment process is embedded in the entire organsition
that the CRO is able to contribute to the decisive investment decisions to ensure that the risk mapping and measurement are handled correctly
that the accomplished due diligence in concrete investments is completed according to the in-house procedures, including that the pension fund complies with national or international regulations and legislation
that investments are made according to the pension fund's policy for responsible investments. The investment committee discusses responsibility when investing, changes to the pension fund's exclusion list as well as relevant issues relating to CSR.
Members of the investment committee are the pension fund's CEO, CIO, CFO, head of responsible investments and CRO. The investment committee meets every other weeks.
Responsible investments in practice
International and national guidelines define the framework for the pension fund's work with CSR in practice, and consequently how we consider CSR when investing.
Before we invest
Before the pension fund invests, CSR is incorporated into the decision-making process, and when the pension fund selects investment managers to invest on behalf of the pension fund, their work with CSR is part of the consideration and the final investment decision. Investment managers must consider how companies identifiy, prevent and handle actual and potential negative impact on e.g. human rights, employees' rights, climate, environment, tax and anti-corruption before investing.
When the investment is made
The pension fund engages in active ownership. Active ownership includes supervision of companies, dialogue with selected companies, cooperation with other investors and as far as possible voting at companies' annual general meetings. Hermes EOS and the investment managers handle the dialogue with the companies on behalf of the pension fund.
The purpose of active ownership is to encourage the companies to comply with the pension fund's policy for responsible investments, minimize risks as well as advance companies' long-term value creation.
The UN's 17 global goals on sustainable development
The pension fund must focus on making investments that support the UN's 17 Global Goals on Sustainable Development, but not at the expense of return to the members.
The UN's 17 Global Goals on Sustainable Development must be supported through incorporation of CSR in the investment decisions.
The pension fund is part of below-mentioned networks and organisations through which we in different ways work for responsible investments.
The world’s largest network focusing on responsible investments. As a member of PRI, the pension fund commits itself to incorporate responsibility in its investments.
A networking forum for professional investors, consultancy firms and others who are committed to responsible investments in Denmark. In Dansif, the members exchange knowledge on responsible investments. Dansif organises events about subjects within responsible investments. DIP has an active role in Dansifs event committee.
CDP works to create transparency about companies and other players’ emission of carbon dioxide.
IIGCC is an European network organisation for institutional investors. The purpose of IIGCC’s work is to create investment-related framework conditions for handling risks and possibilities resulting from climate change.
Exclusion of companies and countries
The pension fund's exclusion list includes a number of companies and countries which the pension fund does not invest in. The pension fund does if possible not invest in companies and countries on the pension fund's exclusion list as well as companies with characteristics equaling companies on the pension fund's exclusion list.
The list is included in all investment structures possible. The companies and countries are on the list, because:
- They systematically violate DIP's policy for responsible investments, and active ownership is pointless.
- They violate the UN's treaties and conventions that Denmark has signed concerning nuclear weapons, anti-personnel mines, cluster munition, chemical weapons, biological weapons and other controversial weapons.
- As a consequence of an assessment of financial sanctions.
- The country is not considered being a good investment based on an assessment of state governments' governance as well as environmental og social conditions in the country.
When a company or a country is entered on the exclusion list, the pension fund must not invest further in the company or country's government bonds, and when the market conditions allow for it, the pension fund must sell of the investment. Divestment of unlisted companies as well as companies which own forest, infrastructure and real estate can only be done in agreement with other investors.
The exclusion list is updated as needed, and the current liste is available here