One of Europe’s largest pension funds, PFZW, ditched 24 companies – including Danske Bank and Swedbank – from its equity and bond investments in the second half of 2021.
The €278 billion pension fund for Dutch healthcare workers announced on Friday that the bulk of the divestments were because firms allegedly “do not comply with what it considers responsible business conduct, as assessed against the international OECD standards”.
A spokesperson for PGGM, which PFZW runs its money through, would not disclose the value of the exclusions.
Among the companies were the two financial institutions. PFZW sold its bond holdings in the pair over concerns related to UN Global Compact Principle 10, which covers corruption. A spokesperson for Swedbank told RI: “Swedbank is committed to always operate in accordance with universal human rights, and this approach applies to all markets where we operate and to all our business relations. The information about PFZW is new to us and we will look deeper into it.”
Fellow pension fund PKA currently has Danske Bank on its “observation list” over corporate governance issues. A spokesperson for the Danish fund told RI: “The dialogue is ongoing but positive. However we can’t disclose the content of it.”
In 2018, Danske Bank was subject to a money laundering scandal regarding suspicious transactions that flowed through an Estonia-based bank branch from 2007 to 2015. A spokesperson for Danske Bank declined to comment on the divestment and PKA’s dialogue.
Chinese investor, China Huarong Asset Management Co Ltd was also removed for alleged “bribery and corruption incidents”. At the time of publication, China Huarong Asset Management had not responded to RI’s request.
Another divestment was the result of a so-called failed engagement in Myanmar. Shareholdings in the Indian state-owned aerospace and defence electronics company Bharat Electronics were sold because, according to a statement, the pension fund “appealed in vain in connection with human rights” in the conflict zone. Previously, RI reported how PGGM – on behalf of PFZW – was engaging with the firm.
At the time of publication, Bharat Electronics had not responded to RI’s request for comment. The company has already been dropped by Nordea Asset Management, due to its activities in Myanmar.
Last year, PFZW – alongside fellow Dutch pension giant ABP – came under fire from NGO Justice for Myanmar for its holdings in companies with an alleged “direct or long-term relationship with the Myanmar military or military-controlled businesses”, including Bharat.
Two firms – China Coal Energy and The AES Corporation – were also excluded by the fund due to their coal operations. A spokesperson for The AES Corporation declined to comment. At the time of publication, China Coal Energy had not responded to RI’s request for comment.
The exits predated PFZW announcing in February that it was planning to tighten its coal and tar sands exclusion policy. The revenue thresholds for the two sectors were reduced to 5 percent from 30 percent and 1 percent from 10 percent, respectively. At the time, the fund also said it would immediately divest from fossil fuel companies that did not have a greenhouse gas reduction target, with firms given until the end of 2022 to make a clear commitment to align with the Paris Agreement.
PFZW also sold its shareholdings in Israeli aerospace and defence company Elbit Systems Ltd over alleged “human rights issues”. In November, the firm was amongst the 14 major weapons makers and their suppliers to be blacklisted by Norway’s KLP. At the time of publication, Elbit Systems Ltd had not responded to RI’s request for comment on PFZW’s divestment.