Danish pension funds are generally more supportive of climate votes than the average global investor, but there is still a large variation between the Danish pension funds, with some pension funds clearly failing to align their shareholder voting practices with their climate commitments. These are the conclusions from AnsvarligFremtid entitled:


Danish pension funds manage investments of approx. 600 billion USD, they have made strong statements on climate and are very well represented in climate-focused international investor initiatives, including the Climate Action 100+ initiative. Therefore, Danish pension funds are in a central position to serve as a role model for the global investment community on climate action. This can be measured by how they invest, but also on how they use their shareholder voting power.

To evaluate the voting, for the second year in a row, AnsvarligFremtid has investigated the current practice on shareholder climate voting of 16 pension funds covering more than 98% AUM of the Danish pension sector. Each fund received a survey with questions about how they voted at the 2022 AGMs of 15 companies in the banking sector, at 11 large companies in the oil & gas sector and at 24 sets of shareholder climate votes flagged as important by members of the Climate Action 100+ initiative.



The results indicate that although Danish pension funds are generally more supportive of climate votes than the average global investor, there is a large variation between the Danish pension funds, with some pension funds clearly failing to align their shareholder voting practices with their climate commitments. Furthermore, although Danish pension funds have signed up to the CA100+ initiative, the vast majority are largely failing to provide their support to climate votes flagged by the CA100+.

Between 25% and 89% of Danish pension funds voted in support of ambitious climate resolutions at banks, whereas the average global shareholder support was in the range of 6-13%. If the Danish pension funds were the only ones voting, many of the climate resolutions at both banks and oil&gas companies would have passed.”

Although Danish pension funds were generally supportive of climate resolutions, there was a large variation between the pension funds. It is particularly concerning that some of the largest Danish pension funds, such as Danica Pension and PFA, are clearly failing to align their shareholder voting practices with their climate commitments. This is despite their membership in investor initiatives like Climate Action 100+, which leads to a troubling conclusion: CA100+ is not effective in compelling investors to push heavy emitters towards a 1.5 degree pathway” says Thomas Meinert Larsen, spokesperson for AnsvarligFremtid.

Key findings of the report:

● Danish pension funds generally support climate resolutions requesting banks to align their business model with the International Energy Agency (IEA) Net Zero Emissions by 2050 scenario
Danish pension funds are much more likely to vote in favor of climate resolutions at banks´ AGMs than the average global shareholder. This is clear from evaluating resolutions requesting banks “to establish a policy aligned with IEA NZE 2050”, hence implying providing no additional finance to new fossil projects. Between 25% and 89% of Danish pension funds voted in support of such resolutions, whereas the average shareholder support was in the range of 6-13%.
Although Danish pension funds were generally supportive of climate resolutions, there was a large variation between the pension funds. The pension fund P+ consistently supported climate resolutions (voting in support for climate resolutions at 14 out of the 15 banks they hold shares in), whereas others such as Danica Pension and PFA generally did not support climate resolutions, voting in favor only at 5/14 and 3/15 of tabled climate resolutions at the banks they hold.

● Danish pension funds are increasingly supportive of climate resolutions filed at oil and gas companies, but some pension funds still fall short of aligning their voting with the Paris Agreement
Danish pension funds were significantly more likely to vote in favor of climate resolutions including wording such as “requesting companies to set GHG emissions targets aligned with the Paris Agreement” compared to the average global shareholder. Danish pension funds averaged 86% support for oil and gas company climate resolutions, compared to a global average of 26% investor support. However, some Danish pension funds, such as Danica Pension and Velliv, still fall short of Paris-aligned voting, voting in favor only at 2/8 and 3/7 of oil and gas company climate resolutions respectively. In addition, most Danish pension funds are becoming increasingly critical of supporting the fossil fuel companies´ own insufficient climate strategies, as evaluated from “Say on Climate” resolutions. As an example, the Shell 2021 “Say On Climate” resolution did not obtain support from 22% of Danish pension funds. However, this years´ resolution was not supported by 89% of the Danish pension funds. Only Danica Pension stands alone among Danish pension funds in consistently voting in favor of the climate transition plans of both Shell and TotalEnergies, even though these plans are not aligned with Paris-aligned Net Zero climate scenarios published by IPCC and IEA.

● Global investors including Danish pension funds fail to support resolutions flagged as important by CA100+
This survey covered 24 sets of climate votes flagged by CA100+ members. Neither Danish pension funds, nor the average global shareholder provided support to those votes. Yet Danish pension funds were somewhat more supportive of CA100+ flagged votes than the average shareholder (66% versus 20%). Still several of the Danish pension funds failed markedly in their support, notably Danica Pension (supporting 1 out of 11), Pensam (2/10), PFA (1/8) and Topdanmark (0/4). This very low level of support was provided despite the majority of the Danish pension funds (11 out of 16) having previously claimed that they would usually vote for resolutions flagged by other CA100+ members.

Figure below: Share of Danish pension funds voting for climate resolutions, compared to the global average shareholder

Table below: The survey shows that there is great variation in the extent to which Danish pension funds vote for the climate resolutions presented at general meetings among the world’s largest banks, the largest oil and gas companies and among the world’s most CO2-emitting companies (CA100+ focus companies). The survey also shows that not all Danish pension funds have yet joined a global climate investor network or publish their votes according to official recommendations. Green indicates ambitious climate action, yellow indicates intermediate climate action and red indicates poor climate action.


The report also finds that:

● Voting on climate is often inconsistent and not aligned with the NZAOA guidelines on voting
The survey finds several examples of voting that are clearly inconsistent. As an example, Danica Pension supported seemingly identical climate resolutions with the wording “to establish a policy aligned with IEA NZE 2050” at a number of banks (e.g. Bank of America, Wells Fargo and Citi Group) but voted against such resolutions at other banks. This practice seems at odds with principle 3 of the NZAOA guidance on voting, which clarifies that: “Climate Votes must be evaluated based on the merit of the proposal and not current status of engagement or other management considerations”.

● Some Danish pension funds still fail to use their voting power at AGMs and provide insufficient transparency on their voting practice
Although most Danish pension funds are exercising their active ownership through voting, there are still a few pension funds who fail to use their equity ownership of companies to influence them. The pension fund Lærernes Pension has so far excluded voting at AGMs, and it has only recently announced that it will formalize a new strategy which will include company engagement and membership of CA100+. Also Sampension has a formal policy of not automatically using their voting power to influence investee companies, unless they own more than 3% equity share of the company, essentially ruling out the vast majority of possible votes. In addition, many Danish pension funds do not provide the level of transparency on voting that is recommended by NZAOA, and although some improvement has occurred since the 2021 survey, still only 10 Danish pension funds provide optimal transparency on how they vote their shares. 

The report provides a number of recommendations to Danish pension funds:

1. Develop Paris-aligned policies and practices for climate voting
Pension funds should develop clear policies on climate that are aligned with the goals of the Paris Agreement. Such policies should specify the overall and specific expectations that are requested from the investee companies. These policies should also cover climate voting to enable a voting practice on climate resolutions which are requesting investee companies to align with the Paris Agreement. For investors in energy companies, a Paris-aligned climate voting policy should reject any company business plan not pursuing an immediate stop of new fossil fuel projects, in line with the recent International Energy Agency Net Zero 2050 scenario. Similar expectations should also be defined for banks and the most polluting sectors. To ensure that voting is executed according to these policies, pension funds should also have their voting system set up to ensure implementation of these policies, e.g. through implementation of adequate “voting alerts” to make the investor aware of key AGM agenda items.

2. Prioritize CA100+ voting, and request major reform of CA100+
As members of the CA100+ coalition, the pension funds should develop policies ensuring that they as a rule of thumb will look to vote in favor of climate resolutions flagged by CA100+ and be willing to explain their reasoning if they chose not to. Furthermore, as members of the CA100+ initiative, Danish pension funds need to push for a substantial reform of the CA100+ initiative itself, so that all signatory members are required to provide a much larger contribution to company engagement, including through voting at climate resolutions that have been flagged as “important” by other CA100+ investors.

3. Develop policies for escalation of engagement
To enforce an effective ownership on climate, pension funds need to develop a clear policy for escalation of their active engagement on climate. As an example, an investor should set out clear expectations to the company and make it clear that if these engagement targets are not met by a clearly specified date, then the pension fund will divest its assets across its equity and credit portfolio. Such a policy should also indicate when the pension fund would file a climate resolution at the investee company AGM, either by filing a resolution itself or in alliance with other shareholders.

4. Join forces and contribute through global climate investor alliances NZAOA or IIGCC PA-II
The pension funds should seek collaboration with like-minded investors who are signatories to NZAOA or IIGCC PA-II, to develop more progressive policies on company engagement, escalation of engagement and voting. This should also include engagement with banks, where Danish pension funds should apply more pressure on banks to discontinue providing financial support to new fossil fuel projects as well as other industries and projects that are incompatible with the Paris agreement. Hence, Danish pension funds should join and show leadership in the collaborative networks that are currently being established specifically to engage with the banking sector, such as the IIGCC/CERES investor-initiative on the banking sector.

5. Implement transparency on climate voting according to NZAOA standards
Most Danish pension funds are transparent on their investments, i.e. making their stock and bond holdings visible to their customers and the public in general. However, for the pension funds to clearly demonstrate the outcomes of their active engagement in investee companies, they should report their voting records in an accessible and timely manner. According to NZAOA, voting records should be published in full and made clearly and quickly available (preferably daily) on the pension funds´ website. Furthermore, to increase their leverage, pension funds should also take the initiative to publish their voting intention on exceptionally important climate resolutions before AGMs, particularly when they vote against the company management.


If you would like to know more about the report or the work of AnsvarligFremtid (“Responsible Future”), please contact us at info@ansvarligfremtid.dk