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GOVERNANCE

4 Danish pension funds rejoin PRI, citing governance, transparency improvements

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Four Danish pension funds will rejoin the Principles for Responsible Investment, following three years of critical dialogue with the PRI’s board.

The 805.7 billion Danish kroner ($114.6 billion) ATP, Hilleroed,; 576.8 billion Danish kroner PFA, Copenhagen; 265 billion Danish kroner Sampension, Hellerup; and 250 Danish kroner PKA, Hellerup, announced the move in a joint news release Thursday.

The pension funds withdrew their membership from the organization — for which signatories agree to implement a voluntary set of six environmental, social and governance principles into investment decision-making — in 2013 due to dissatisfaction with the PRI’s own governance.

From 2011 onward, executives at the funds “became increasingly worried that the PRI did not meet the basic requirements for management structures required by the investors in the companies in which these companies invest. Despite multiple attempts to improve the PRI’s management from within, the group of Danish pension companies unfortunately had to recognize that the efforts were unsuccessful,” said the release.

Since withdrawing from the PRI, the group maintained a dialogue with Chairman Martin Skancke. The PRI’s board has made changes to policies and management structure, said the release. It has also increased visibility regarding its plans and decisions, and has been “receptive of arguments in the ongoing dialogue with the Danish pension companies,” said the release.

“We are rejoining the PRI now … the organization has listened to our concerns and criticism regarding primarily governance structure and transparency,” said a spokesman for Sampension in an e-mail. “We don’t necessarily think that PRI is perfect yet, but the dialogue has been constructive and we believe that important issues like democracy and transparency are moving in the right direction now.”

Two other pension funds, the 194 billion Danish kroner PensionDanmark, Copenhagen, and the 150 billion Danish kroner Industriens Pension, Copenhagen, also withdrew from the PRI in 2013. They have not rejoined as of this time.

“We have not had any direct discussions with the PRI since a meeting in November 2015. Hence, nothing has changed for us,” said Jens-Christian Stougaard, a director with PensionDanmark, in an e-mail. “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 organization re-establishes the original principles of governance — e.g. membership rights, having an (annual general meeting) etc. — we will give serious consideration to rejoining. Until then, we’ll continue our efforts as an active and responsible investor across asset classes and geographies."

The PRI welcomed the returns. “We have had constructive informal discussions with them over the last several months and sought to explain how their governance concerns were addressed following our governance review, which was approved by over 95% of signatories voting,” said Mr. Skancke in a statement provided by a PRI spokeswoman.