Engaging with companies and voting at general meetings are key elements in our ambition to generate attractive pension savings, influence companies and contribute positively to society. We believe that sustainability and return go hand in hand, and through active ownership we can promote sustainable development in the companies we invest in, so that they can generate good, long-term returns for our customers.
Sustainability is key
Through active ownership, we can protect our customers’ investments and make their savings grow. Engaging with companies provides us with greater knowledge of their business, and whether they will be good long-term investments. We can also help companies improve their operations by enhancing their ESG efforts. This may include ensuring that they have effective water supplies, focus on climate and environment, have safety procedures for products and employees or that they have a responsible and competent management that protects the long-term value of the company.
“We believe that focusing on sustainability in environment and climate, social matters and governance is key to companies generating good long-term risk-adjusted returns. Sustainability is therefore an important aspect of our active ownership”.Danica Pension’s Chief Investment Officer, Poul Kobberup
Engaging in direct dialogue
We engage in direct dialogue with companies. Our aim is for companies to take a structured and effective approach to their risks and opportunities within ESG (environment, social and governance) and financial issues, so that they are better positioned to generate good returns in the long term. Our dialogues with companies are often part of a confidential process, and in our experience this is the best way to get the most effective results.
Better mitigate and handle risks related to ESG and financial aspects related to the investments
Select investments that perform well in terms of ESG and generate good long-term returns
Influence companies most effectively and help building sustainable and well-managed companies
Taking responsibility and contributing to solutions
As active owners, we take responsibility and contribute to a positive development within the companies we invest in. Generally, we thus maintain our investments in companies and do not turn our back on problems, challenges or dilemmas. Instead, we engage with companies to pressure and push them towards taking positive steps and solving challenges or objectionable conditions. This is the most effective way for us to contribute to creating good and responsible companies.
Exclusion as last resort
It may take time for companies to improve their performance, and we support them in the long term by engaging in active dialogue. However, if we assess that a company does not sufficiently improve over time and we see no others options to pressure the company, we may sell off the investment or impose investment restrictions on specific companies.
”We use our influence as a responsible investor to push the companies towards solving and addressing issues or challenges. By maintaining our investments in companies, we can contribute to making lasting positive changes. However, if we do not see sufficient progress or improvement over time, we will sell off our ownership interests.”Danica Pension’s Chief Investment Officer, Poul Kobberup
By engaging in dialogue we can
- get a better understanding and knowledge of the companies’ business models and strategies
- get insights into and discuss the significant ESG and financial aspects that can affect the companies’ long-term development
- influence and push the companies towards integrating sustainability in their business as well as to support their positive and long-term growth and development
- pressure the companies to correct objectionable conditions and contribute to possible solutions
Dilemmas and issues
We invest in many different regions and sectors to diversify risk and generate a robust and long-term return. In this connection, dilemmas and challenges may occur. We solve these in the best possible manner by drawing on expertise, ESG data and input from other relevant stakeholders. In addition, we emphasise the importance of the investments complying with international conventions and principles for corporate responsibility, including the UN Global Compact. As part of the Danske Bank Group, we have a number of Position Statements defining our expectations of the companies’ approach to sustainability.
Dialogue on energy and climate issues
Climate change entails significant financial risks, so we focus on reducing and stopping climate change as a means to generating good returns on our customers’ savings. We therefore discuss climate issues with companies.
The climate agenda and the energy transformation are causing changes within the energy sector, and we engage with a number of energy companies in relation to how this affects their business and how they approach these changes. From an investment point of view, we believe that companies which are transforming their business to focus on energy sources with less climate impact are the best investments in the long term. Based on developments in society, energy legislation and consumer trends, these companies will be in a position to generate long-term value. If companies continue to focus on traditional energy sources without reducing their level of carbon emissions and do not consider the transition towards green energy, we believe that they will be poor investments in the long term.
An example of this is Royal Dutch Shell, one of the world’s largest energy companies, with which we discuss their efforts to reduce their climate-related business risks and their transition towards more efficient energy production. In recent years, Shell has revised its long-term strategy and presented a goal to cut its carbon intensity by 50%. We engage with the company both to ensure that it delivers on its strategy but also to discuss potential strategic challenges along the way. We also engage with Shell through our membership of the Institutional Investors Group on Climate Change (IIGCC), which is in an ongoing dialogue with Shell. Most recently, Shell decided to cancel its membership of the American Fuel and Petrochemical Manufactures to ensure consistency between its own climate focus and the climate policy of the organisations it is a member of. Another example is our engagement with the Italian energy company Enel, which has increased its share of green energy and reduced its activities within fossil fuels over a numbers of years. In addition to this, it also has a clear future strategy aiming at reducing its climate impact.
Voting at general meetings
We exercise our voting rights at general meetings to ensure that the companies have sustainability on their agendas. We voice our opinion at general meetings and vote in favour or against proposed resolutions to influence companies to create long-term value and develop and strengthen their ESG efforts.
Our votes are coordinated based on our dialogues with the companies to influence and contribute most effectively to the companies’ development and growth. We exercise our voting right at the general meetings of Danish companies in which we represent relevant holdings. See how we voted at general meetings here.
Collaborating with other investors
As part of our active ownership, we work together with other investors and relevant stakeholders to influence companies and contribute to sustainable development, for example in cases where a joint investor position on specific subjects can create the best positive changes, or if we believe that we can exert greater influence on a company by joining forces with other investors. Moreover, we are also a member of various investor initiatives aimed at promoting greater transparency and sustainability standards at companies and in the financial markets in general.
The organisation Dansif works to promote knowledge, debate and sharing of experience in the field of sustainable investments and to contribute relevant data in the area. Through the Danske Bank Group, Danica Pension is a member of Dansif, which has sister organisations all over the world.www.dansif.dk
PRI – which is short for Principles for Responsible Investment – is a UN-supported member organisation working to understand the investment implications of environmental, social and governance (ESG) aspects and to support its members in incorporating these factors into their investment and ownership decisions. Danica Pension is a signatory to PRI as part of the Danske Bank Group and has signed the six Principles for Responsible Investments, which form the basis of our approach to sustainable investments. Through the Danske Bank Group, we report annually to PRI on our processes and sustainable investment activities.
Institutional Investors Group on Climate Change
As part of the Danske Bank Group, Danica is a member of the Institutional Investors Group on Climate Change (IIGCC), a network of more than 170 pension providers and investors with over EUR 23 trillion under management. IIGCC’s mission is to promote collaboration between policy makers, investors and companies to reduce climate change and incorporate climate-related risks and opportunities in their business models and strategies.
Paris Pledge for Action
It is our ambition to contribute to solving the challenges of climate change. Therefore, as part of the Danske Bank Group, Danica signed the Paris Pledge for Action in 2015, thus supporting the Paris Agreement and the goal of combatting climate change by pursuing efforts to limit a temperature rise to 1.5oC towards 2100.
Carbon Disclosure Project
Carbon Disclosure Project is an organisation collecting and disclosing information on carbon emissions and climate strategies, so that investors have the data and tools to reduce climate-related risks and include climate opportunities in their investment decisions. Danica Pension is a member through the Danske Bank Group.
Task Force on Climate-related Financial Disclosures
Danske Bank supports the Task Force on Climate-related Financial Disclosures (TCFD), which is developing a reporting tool for climate-related financial risk disclosures to be used by companies in providing information to investors, lenders and other stakeholders. Danske Bank believes that TCFD’s tool will provide a framework for companies to meet investor demands for reporting that will allow the investors to quantify and address climate-related risks.
Climate Action 100+
As part of our climate focus, in 2019 we signed on to the global investor initiative Climate Action 100+. With the more than 370 other investors who have signed on, we can collectively strengthen our dialogue with companies to curb their carbon emissions and step up their reporting and transparency concerning their carbon emissions and the financial risks related to their climate impact.