PensionDanmark awards responsible investment overlay to Hermes EOS, meaning loss for F&C

‘Full spectrum of stewardship services’ for €23bn asset owner

PensionDanmark, the DKK175bn (€23.5bn) pension scheme for blue-collar workers in the construction and transportation sectors in Denmark, has tapped Hermes Equity Ownership Services (EOS) to assist it with its responsible investment policies and active ownership of companies – resulting in a loss for incumbent F&C.

Hermes EOS will provide its “full spectrum” of stewardship services on PensionDanmark’s foreign-listed equity portfolio of €6.5bn and assist the company in managing its risks and adding long-term value to its investments.

F&C, acquired by the Bank of Montreal earlier this year, had been supplying its ‘reo’ (responsible equity overlay) service to the fund since 2009.

“From time to time PensionDanmark screens the markets to evaluate if current providers of services are the most suitable for our needs. This current screening resulted in the conclusion that Hermes was a better partner for us going forward,” PensionDanmark’s Head of SRI Susanne Røge Lund told RI.

Jens-Christian Stougaard, Director at PensionDanmark, said in a statement: “We chose Hermes EOS because of the team’s expertise and their understanding of the commercial challenges and opportunities to engagement and good stewardship.”

Colin Melvin, CEO at Hermes EOS, said: “We are convinced that the data from our services are going to help [PensionDanmark] make investment decisions andchallenge their fund managers to create long term value to their beneficiaries, facilitating positive change for the benefit of the wider communities.”

PensionDanmark is a committed investor in renewable technology with just short of 10% its assets dedicated to this area.

Hermes EOS, which is ultimately owned by the BT Pension Scheme, says it is seeing increasing demand for its services in the Nordics, and PensionDanmark is the fourth client the company has taken on alongside Unipension, PKA and Industriens Pension.

An F&C spokesman said: “F&C’s reo service has won a number of new institutional investor mandates over the past 18 months as investors seek advice on effective environmental, social and governance issues. In the last year, F&C engaged with over 700 companies, across nearly 50 countries, on a breadth of environmental, social and governance (ESG) issues, achieving almost 300 instances of change.”

In October, F&C won a tender to manage ESG priorities on a €12bn portfolio for Germany’s Bankhaus Metzler. Its other big reo mandate in Germany is with the Bayerische Versorgungskammer, the country’s biggest pension fund. It also named Howard Pearce, the former chief of the £2.4bn (€3bn) Environment Agency Pension Fund, as Chair of its new Responsible Investment Advisory Council.