When you invest with Danica Pension, you do not invest in all types of businesses. We do not invest in companies that, for example, have a detrimental effect on sustainability. Pension products that we manage ourselves - Danica Balance, Danica Tidspension, Danica Traditionel* and the funds in Danica Link – include restrictions that cover the coal, tar sand, controversial weapons and tobacco sectors and which also apply to investments that violate international norms. Investment funds in Danica Link and Danica Select that are managed by other investment management companies, such as Fidelity or Schroders, may have other restrictions than ours. Danica Balance Responsible Choice includes additional restrictions.
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Coal, tar sands & peat
Thermal coal, tar sands and peat are three of the energy sources with the highest levels of CO2 emissions. Because of this, we do not invest your pension savings in companies that derive more than 5 percent of their revenue from thermal coal mining, thermal coal energy or a combination of these. Nor do we invest in companies that derive more than 5 percent of their revenue from the extraction of oil from tar sands or peat-fired power generation.
Our ambition is to phasing out investments in companies involved in the three fossil fuel types by 2030 in the EU and OECD and by 2040 in the rest of the world, in line with the requirements of the Paris Agreement. We may exempt companies if they are able to demonstrate a credible plan to phasing out thermal coal, tar sands and peat activities in alignment with the Paris Agreement. We use the Transition Pathway Initiative framework to assess a company’s transition plan. Only companies that are assessed as meeting level 3 criteria of the framework are granted exemptions. Meeting level 3 includes, for example, setting quantitative targets for reducing GHG emissions, disclosing scope 3 GHG emissions and being transparent about lobbying activities related to the climate agenda.
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Controversial weapons
We do not invest your pension savings in companies that are directly or indirectly involved with controversial weapons. Controversial weapons are weapons that are prohibited by international law or considered controversial because of the indiscriminate damage they cause. Cluster bombs, anti-personnel mines, biological weapons, chemical weapons and nuclear weapons are all classified as controversial weapons.
Similarly, restrictions apply to ammunition made with depleted uranium, weapons primarily intended to set fire to objects or to cause burns to persons, and ammunition that uses white phosphorus.
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Tobacco
We do not invest your pension savings in companies that derive 5 % or more of their revenue from growing, processing or producing tobacco products. This includes products that are wholly or partly based on leaf tobacco as well as so-called next-generation tobacco products such as electronic cigarettes and snus/nicotine pouches.
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Norm-based exclusions
We do not invest your pension savings in a wide range of companies that exhibit harmful behaviour or are involved in problematic activities. These companies violate norms and standards such as the principles of the UN Global Compact or do not adhere to human rights or environmental- and climate-related conventions. For example, your pension savings are not invested in companies that contribute to water pollution and climate change, damage biodiversity, violate human rights or are involved in corruption or arms trading.
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Government bonds
When we invest in government bonds, countries use this money to finance infrastructure such as schools, hospitals, energy production or roads. In this way, government bonds act as an important tool that enables countries to invest in societal development and to create better conditions for citizens. However, investing in government bonds from developing countries poses a dilemma because these countries often face challenges related to human rights and other issues.
To ensure that we invest responsibly in government bonds and are helping to support a positive societal development with respect for human rights, we follow the principles of the UN Global Compact, the UN guidelines on human rights and similar frameworks.
We do this by:
- not investing in government bonds from countries on UN, EU, UK, US and Danish sanctions lists
- analysing how countries work with 23 different sustainability aspects, including environmental issues and the green transition, freedom of expression and rights for girls and women, human rights, child labour, slavery, health, rights for minorities, corruption, taxation, and the rule of law
- considering EU, OECD, UN or World Bank recommendations about investing in government bonds from certain countries so that they have the money to develop the country for the benefit of the citizens
On the basis of these aspects, we choose not to invest in government bonds from certain countries that are on our list of investment restrictions.
Additional restrictions with Danica Balance Responsible Choice
Pension savings invested in Danica Balance Responsible Choice include additional restrictions. This product does not invest companies involved with alcohol, gambling, pornography, fossil fuels or military equipment, for example.
Analysing a company’s sustainability practises
When we invest your pension savings, we screen your investments on an ongoing basis to gain increased knowledge of how companies address ESG-related issues. Among other things, we analyse whether companies meet international norms and standards for corporate social responsibility in relation to human rights or environmental and climate considerations, for example. Screening helps us to identify companies that contribute to climate change, exhibit harmful environmental behaviour or have inadequate labour and human rights practices.
If companies face challenges in meeting their corporate social responsibility, we can put additional pressure on them to correct the problems. If we do not believe that this type of company can improve sufficiently, we can also choose to divest the company and place it on our investment restrictions list.
*Exclusions apply to direct investments in equities and bonds. In order to ensure optimal management of risk and of the investment portfolio, derivatives based on equity index are occasionally used, which can lead to an indirect exposure to companies on the restriction list. Equity derivatives are not used in Danica Balance Responsible Choice.
