Only few Danish pension funds align their climate voting to Paris-targets, yet overall the Danish pensions are well ahead of most international shareholders.

Danish pension funds are generally more supportive of climate votes than the average global investor. However, large disparities remain between Danish pension funds, as some pension funds clearly fail to align shareholder voting practices with climate commitments. This article contains the main conclusions from AnsvarligFremtids report “THEIR VOTES, OUR FUTURE. HOW DANISH PENSION FUNDS VOTED ON CLIMATE IN 2023

Danish pension funds oversee investments totaling approximately 600 billion USD, underlining their robust financial presence. Notably committed to climate responsibility, Danish pension funds have voiced resolute stances on sustainability and actively participate in prominent climate-focused international investor initiatives, exemplified by their engagement with 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.

For the third year in a row, AnsvarligFremtid has evaluated the voting practices of Danish pension funds by investigating current 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 2023 AGMs of 19 companies in the banking sector, at 14 large companies in the oil & gas sector, at 14 large utility companies and at 5 sets of shareholder climate votes flagged as important by members of the Climate Action 100+ initiative.

The results indicate that Danish pension funds are generally more supportive of climate votes than the average global investor. However, large disparities remain between Danish pension funds, as some pension funds clearly fail to align shareholder voting practices with climate commitments.


Main findings and conclusions:

1. Two pension funds follow through on escalation through climate voting
AkademikerPension (85%) and Sampension (88%) stand out as the pension funds most advanced in strategically escalating engagement through climate voting. This includes voting for shareholder filed resolutions and through director voting (see Table 2.1). Also, Sampension has significantly improved its climate voting since the 2022 AGM, from 31% to 91% this year. In contrast, the pension funds PBU (19%) and PKA (30%) have dropped significantly since last year, and have become those with the lowest climate voting score, except for Lærernes Pension that remains the only pension fund not voting its shares.

2. Several pension funds have significant gaps between announced climate engagement strategies & actual climate voting
A significant number of Danish pension funds have now divested from oil/gas. Still a number of Danish pension funds remain invested in what they believe are oil & gas companies that will transition to become part of the green energy companies of the future. However there is a huge mismatch between the ambition of some of those pension funds to engage with the fossil fuel companies and their actual climate voting at the AGMs across all of the sectors covered by the report (See Figure 13.1). The lack of ambitious climate voting concerns both their lack of support for shareholder resolutions and lack of engaging through director votes. The pension funds Sampension (3.5%), PFA (3.2%), Danica Pension (3.0%), ATP (2.9%), PKA (2.5%) and PensionDanmark (2.5%) stand out as those most heavily invested in the fossil fuel sector. Some of the pension funds, despite retaining large holdings in the fossil fuel sector, do not have a concomitant escalation of their climate voting activity, scoring as low as 30% (PKA), 38% (Danica Pension) and 47% (PFA) (See Figure 13.1). These pension funds need to escalate significantly towards these industries for their engagement strategy to maintain any credibility. Even pension funds that achieved moderate or high climate voting activity, such as Sampension (88%), PensionDanmark (55%) and ATP (55%), need to increase ambitions.

Table 2.1: Overview on key indicators for Danish pension funds´ commitments to investor coalitions, transparency on voting and engagement through Climate Voting

3. Many pension funds still fail to hold banks accountable to their climate commitments
As the banking sector is a key player to ensure that the global financial flows support the green transition, it is a very significant problem that many Danish pension funds do not hold these banks accountable to their climate commitments through voting on shareholder resolutions and against re-election of directors in these banks. This is particularly concerning for pension funds that are rarely supporting climate shareholder resolutions, e.g. PKA (17%), PFA (25%), PensionDanmark (22%) and Lægernes Pension (23%), but also for those that do not hold the company chair of the board accountable for these banks´continued support of fossil expansion, going way beyond the commitment in the Paris Agreement. The pension funds that falling into this category include Danica Pension (11%) and PKA (12%) (See Table 2.1)

4. Utilities are an overlooked, yet critically important agency of climate leverage
With only 5 climate resolutions filed across the 4 the very large utility companies in the survey, the sector does not seem to have received the same level of attention as the oil/gas and banking industries. And as almost a majority of the climate votes filed this year were filed by shareholders with anti-climate intentions, it is very clear that climate concerned shareholders have so far given too little attention to the use of shareholder engagement on utility companies at AGMs. Although the Danish pension funds almost consistently voted FOR (>75%) climate action/resolutions, they generally failed to use director votes as a tool to hold the company directors accountable for their failure to live up to their climate responsibility.

Figure 13.1: Fossil Fuel Investments vs. 2023 Climate Voting Score among Danish Pension funds 

5. Danish pension funds do serve as a global role model for climate voting engagement
All Danish pension funds are members of Climate Action 100+ and the number of signatories to either or both of the NZAOA and IIGCC-PA II initiatives have risen from 12 out of 15 in 2022 to 14 out of 16 in 2023. Likewise, climate resolutions that were filed and flagged by CA100+ investors, were more consistently supported by Danish pension funds (74.5%) than the global shareholder (16.8%), albeit somewhat in the same range as last year (the 2022 comparisons were 66% versus 20%). Looking across the climate resolutions filed across the different sectors, the Danish pension funds were much more likely to vote in favor of climate resolutions raised at banks/financial institutions (77.7% vs. 19%), at oil/gas companies (69% vs. 19%) and at utilities (97% vs. 60%). Likewise, for director votes, the Danish pension funds were more likely to vote against re-election of directors than the average global shareholder at banks/financial institutions (18,5% vs. 6%), at oil/gas companies (45% vs. 9%) and at utilities (42% vs. 5%).

6. Voting on climate is often inconsistent & disputed
This year witnessed a significant upswing in “anti-climate” votes, particularly at The Southern Energy, Duke, and FirstEnergy. Remarkably, among Danish pension funds these resolutions were not always rejected. It is imperative for climate-conscious investors to oppose such counterproductive resolutions. Additionally, despite a general inclination towards supporting climate resolutions, certain pension funds exhibit notable inconsistency in their voting practices, warranting improvement. Moreover, debates persist regarding the targeted focus of director voting, with some advocating for a limited scope that excludes the chair of the board from accountability for sustainability and climate transitions—an interpretation we consider flawed.

Recommendations to Danish pension funds for more effective climate voting

1. Operationalize Paris-aligned policies and practices for climate voting
Pension funds should establish clear policies on climate that are aligned with the goals of the Paris Agreement and its target to limit global warming to 1.5 degrees Celsius. Furthermore, the pension funds should be capable of operationalizing those policies into their practical climate voting. Such policies should specify the overall and specific expectations that are requested from the investee companies in various sectors. These policies should enable a voting practice on climate resolutions which are requesting investee companies to align with the Paris Agreement. For investors in energy companies (including coal, oil and gas extractive industries and utilities) as well as for investors in banks, such a Paris-aligned climate voting policy should reject any company business plan and company board not pursuing an immediate stop of new fossil fuel projects. In addition, banks should commit to put an end to providing financial services to new fossil fuel projects and to the companies developing them, in line with the IEA Net Zero 2050 scenario.
2. Develop strategy for escalation of engagement
Pension funds need clear climate policies clarifying their willingness to escalate engagement on companies lacking Paris-aligned strategies. Such policies should clarify the conditions under which pension funds will escalate engagement through voting on climate resolutions and director votes. Furhtermore, these policies should go beyond the voting, and engage in escalation through filing/co-filing shareholder resolutions, announcement of voting intentions ahead of AGM, filing a lawsuit, denial of new debt or IPO financing, providing pressure through media etc. Additionally, the use of different escalation tactics should not be mutually exclusive but utilized in strategic combinations. The escalation strategies must be made publicly available to enable investee companies, pension clients and others to verify the pension funds commitment to engage in active ownership. 
3. Articulate Clear Expectations for Corporate Engagement
The pension funds should set clear and time-bound expectations to the investee companies and make it clear that if these engagement targets are not met by a clearly specified date, then the pension fund will escalate further and eventually divest part or all of its assets in the company across its equity and credit portfolio. Such a policy should also indicate what will be required for the pension fund to re-enter as an active investor in the investee company.
4. Contribute to climate action through support of global climate investor alliances
The Danish pension funds should support collaborative investor initiatives, such as NZAOA/IIGCC PA-II and CA100+. Also, as committed members of these initiatives, Danish pension funds should take on leadership roles and continue to push for more progressive policies on company engagement, including through escalation via climate voting and other means. Despite modest progress on climate transition among CA100+ focus companies and international banks, there is a surprisingly low number of climate resolutions filed at these companies AGMs, and therefore Danish pension funds should take the initiative to push for further escalation on companies, including through collaborative filing of shareholder resolutions.
5. Set higher ambition for policy engagement, public relations and asset manager accountabilityAs part of their commitment to investor initiatives such as NZAOA & IIGCC PA-II, the Danish pension funds must proactively engage in the public discourse on climate diplomacy, emphasizing their support for effective policy measures, such as carbon tax, implementation of green mandates & other types of legislation needed to support the green transition, also within the financial sector. The engagement should aim to hold other investors accountable on climate action promises, and request asset managers to develop transparent climate engagement strategies aligned with the pension funds own engagement outcomes, if the asset managers are to win future investment mandates.
If you want to know more about the report or AnsvarligFremtid, then feel free to contact us at