Danish pension funds discuss re-joining Principles for Responsible Investment

Some of the Danish pension funds that left the Principles for Responsible Investment in 2013 over governance concerns are discussing rejoining the PRI, Responsible Investor understands.

Numerous sources close to the issue have told RI that there are currently ongoing discussions on whether Danish pension funds will rejoin or not, with a decision expected shortly – although it is not certain they will decide to rejoin.

In reaction, Fiona Reynolds, managing director of the PRI said: “We would be delighted to welcome the Danish signatories back to the PRI.”

It was almost exactly three years ago that Danish pension funds ATP, Industriens Pension, PensionDanmark, PFA, PKA and Sampension said they were quitting over poor governance over a “sustained period” at the London-based body. Following this, five more Danish pension funds exited the PRI – LD Pension, Tryg Pension, Laegernes Pensionskasse, DIP JØP and PenSam Liv.

The bombshell was arguably the worst episode in the PRI’s 10-year history and if the funds were to decide to return it will be a major boost for the organisation.

However, the schemes left the door open to re-entering the PRI, saying that if the organisation re-established its principles of governance that existed before 2010-11, they would return.

In the meantime the PRI – whose board meets on Thursday – has overhauled its governance structure. Following a review, the PRI revised its Articles of Association to create more accountability.But it is understood at least two Danish pension funds are considering rejoining, with a decision to be made this week and a formal statement before the end of the year. There are currently just two Danish asset owners signed up to the PRI – Unipension and Vaekstfonden.

It is understood that the PRI has periodically been in touch with the Danish pension funds that have left.

However, one leading Danish investor has confirmed it has no plans to rejoin the PRI. Jens-Christian Stougaard, director at PensionDanmark, said: “We have not had any direct discussions with the PRI since a meeting in November 2015. Hence, nothing has changed for us.

“When we left the PRI in 2013 it was because we observed that the governance of PRI did not live up to the standards we expect. If the organisation re-establishes the original principles of governance we will give serious consideration to re-joining. Until then we’ll continue our efforts as an active and responsible investor across asset classes and geographies.”

The Danes weren’t the only ones unhappy with the direction of the PRI. In September 2015 a group of leading asset managers wrote to PRI Chairman Martin Skancke criticising aspects of the PRI’s strategy and saying they wanted more involvement in its direction.

The upshot was that the asset managers’ candidate, Newton Investment Management’s Head of Responsible Investment Sandra Carlisle, was elected to the PRI’s board having accused it of “losing its way”. Carlisle herself has since acknowledged the positive changes in governance at the body.