MP Pension, Gentofte, Denmark, is set to divest 400 million Danish kronor ($60 million) in sovereign bonds from countries that violate human rights because the fund was unable to actively engage with them, a spokesman said.
Among excluded securities are Saudi Arabian government bonds and bonds of companies controlled by the state.
Basing decisions on the United Nations' international human rights law, MP Pension will also be excluding securities from Burundi, Benin, Bahrain, Congo, Comoro Islands, Ethiopia, Iran, Libya, Mozambique, Papua New Guinea, Rwanda, Swaziland, Tajikistan and Thailand, beginning in March.
"With this approach, we get the financial industry's probably most consistent criteria for accountability when it comes to investment in government bonds," Anders Schelde, chief of investments at MP Pension, said in a news release. "It is an area we have been working on for a long time, but now time has come to strengthen efforts to promote respect for human rights."
The divested funds will be redeployed to other markets over the next couple of months, MP said. However, the 114 billion Danish kroner pension fund will continue to invest in securities of China and Russia despite the countries' lack of progress made toward human rights.
"We want to invest in less developed countries and support them, but to be effective from a financial return perspective, we must accept that large issuers like China and Russia also find space in the portfolio," Mr. Schelde added in the release.
MP Pension cannot invest solely in government bonds in line with its environmental, social and governance standards, because it needs to consider financial returns, Mr. Schelde said.