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Danish pension pool worth €40bn sets net zero by 2050 target

Sampension’s head of ESG, Jacob Ehlerth Jørgensen, says ‘managers [of unlisted funds] must ensure their investments contribute to the green transition’.

Sampension, a DKr295 billion ($45 billion; €40 billion) Danish pension pool, has set a target to reach net-zero carbon emissions across its portfolio by 2050. It is also stepping up its climate and ESG criteria for private fund managers.

“It is crucial that [unlisted fund] managers ensure that their investments on behalf of investors contribute to the green transition,” Jacob Ehlerth Jørgensen, head of ESG at Sampension, wrote in a blog post.

The pension pool is “tightening the requirements for existing and potential managers when it comes to the environment, social and governance conditions, especially in the climate area,” according to the blog. It is considering, for example, requiring fund managers to commit to investing in line with the Paris Agreement. The blog, which was reported by Investments & Pensions Europe,  does not provide further details on the tightened requirements for fund managers.

Sampension had investment allocations of 4.7 percent to private equity and 11.4 percent to real estate, land and infrastructure at the end of the 2020 fiscal year. The pension pool’s private fund commitments over the last five years include EQT’s third infrastructure fund, Danish buyout firm GRO’s second fund, Arsenal Capital’s fourth flagship fund and Danish venture capital fund Seed Capital’s third fund, according to affiliate title Private Equity International.

Ehlerth Jørgensen wrote: “Managers [in unlisted markets] typically manage significant billions of dollars for investors, which in itself requires managers to focus on sustainability in investments for the benefit of both investors and society. And this is reinforced by the fact that [unlisted] fund investments for investors are long-term, illiquid investments, which you as an investor cannot just get out of, unlike investments in the listed market. Therefore, it is crucial that managers take on their social responsibility and ensure that their investments on behalf of investors contribute to the green transition.

“Sustainability and climate have in recent years generally come higher up on the agenda of companies, where the focus has especially been on the listed companies’ responsibilities and contributions in this connection. But companies in the unlisted part of the market must of course also do their share, and here the fund managers play an important role.

“Even though there is a positive movement going on among managers, in our view it is going too slowly, especially in the climate area. We experience that managers generally have too little focus on working with their climate footprint, and here we will in future have them to a much greater extent to commit to, e.g. to invest in line with the Paris Agreement. That is why we are now tightening up the requirements for managers, and not least in the climate area. At the same time, it must contribute to realizing our own goal of reducing the climate footprint of the overall investment portfolio, so that it is CO2-neutral in 2050.”