6 Danish pension funds dropping out of UNPRI over governance concerns

Six Danish pension funds are leaving the United Nations-backed Principles for Responsible Investment over governance concerns with the private organization, the pension funds announced in a joint news release Friday.

The funds are ATP, Industriens Pensionsforsikring, PensionDanmark, PFA Pension A/S, PKA (or Pensionskassernes Administration A/S) and Sampension.

The release said officials at the pension funds “over a sustained period of time observed with concern that the governance of the PRI organization does not live up to the basic standards we as investors would expect of the companies in which we invest.” The release acknowledged that the principles “have an important role to play in promoting responsible investment — including emphasizing the importance of good governance in companies around the world.”

The six funds will continue to follow the principles, but outside the organization until it “again lives up to basic requirements for good corporate governance — including restoring membership democracy in the organization,” the news release said.

Officials from the six pension funds say when the previous board decided to establish the PRI Association as a separate, non-profit organization to run the PRI initiative, it limited funds' ability to influence the purpose and programs of the organization. They also said it lacks democracy and transparency. The governance body is a 16-person advisory council. PRI financial and legal affairs were previously run as a division of the Foundation for the Global Compact, a U.S.-based charity responsible for administering the affairs of the United Nations Global Compact.

“The PRI is deeply disappointed that this has occurred,” Fiona Reynolds, PRI managing director, said in a separatenews release. “At our annual Signatory General Meeting in Cape Town in September, the PRI committed to undertake a review of its governance. The (advisory) council'sgovernance committee has already begun to define the scope of this review, which will be led by a new council chair expected to be appointed in early 2014.”

The PRI release also said, “Given the important work of the Danish pension funds in responsible investment, we hope that the funds concerned will reconsider their decision at some point in the near future.”