PFA's initiatives and dialogues with companies

PFA wants to be an active owner who continuously monitors and is in contact with a large number of the companies in which we invest. We work through ownership dialogues and initiatives to influence the companies to promote responsible value creation, where climate and environmental, social and management conditions (also called ESG factors) are taken into account, as this helps to ensure the highest possible long-term return on investment for our customers.

The process for dialogue with companies

PFA wants to influence the company's behaviour through dialogue driven by ourselves or in collaboration with others. PFA continuously reassesses whether there is sufficient basis for continuing the dialogue on the grounds of an evaluation of whether sustainability risks associated with investment in a specific company are handled adequately and at an acceptable pace. The dialogue process is generally concluded by the company being notified of the conclusion resulting from the dialogue. If the desired effect of the ownership dialogue is not achieved, it may lead to the divestment and/or exclusion of the company in question.
       

Overview of PFA's dialogues and initiatives

 
Data on the number of dialogues by company in 2023:
 
Number of proactive active ownership dialogues (109)
11 driven by PFA directly
2 via the CA100+ investor initiative
93 via external advisor (Sustainalytics)
3 via Nordic Engagement Cooperation
 
Number of reactive active ownership dialogues (61)
9 driven by PFA directly
50 via external advisor (Sustainalytics)
1 via Nordic Engagement Cooperation
1 via Danish investor cooperation
Current dialogues

Dialogues with the world's largest greenhouse gas emitters

TotalEnergies & Shell in the oil and gas sector

PFA conducts in-depth climate dialogues with TotalEnergies and Shell in the oil and gas sector. PFA has divested itself of corporate bonds from oil and gas companies and chosen to concentrate its share exposure to two companies: Shell and TotalEnergies. We have opted to do so in order to pool our resources and increase the opportunities to exercise influence as an investor.

PFA's active ownership in these companies is based on the recognition that we will not eliminate the world's energy needs by boycotting the energy producers. The focus of PFA is therefore to get the companies to invest even more in green energy and energy efficiency, so that we can accelerate the transition to a low-emission economy. Because we do not believe that the companies' climate focus is currently sufficient. However, we do not believe in a solution in the form of exclusion and divestment, as it will simply result in fewer green votes at the negotiating table. So although divestment will probably make PFA's portfolio greener, it will not benefit the green transition if other non-critical investors take our place. This is also confirmed by researchers in the field, read for example, Professor Jules H. van Binsbergen of Wharton: Why Investor Engagement with 'Dirty' Companies Is Better Than Divestment (upenn.edu) and Professor Jesper Rangvid and Peter Løchte Jørgensen from the Pension Research Centre (PeRCent): What makes Denmark's pension system one of the best in the world? The key is financial sustainability (cbs.dk).

According to independent experts, TotalEnergies and Shell are among those in the sector best positioned in relation to the green transition. However, we still believe there is room for improvement and voted against Shell's own climate plan in 2023, as we found a lack of further concretisation of the company's green transition towards 2030. At the same time, we attended both companies' annual general meetings in person in May 2023 to provide our improvement points for the companies' disclosure of their investment plans through to 2030, including quantifying the alignment between investment plans and carbon reduction targets.

Here a few words about the development and the climate-related topics that PFA that has raised from the companies' general meetings and through our frequent dialogue meetings with them.

TotalEnergies: 
Together with other like-minded investors, PFA has contributed to the fact that the company now plans to become one of the world's five largest producers of renewable energy. This must be seen in the light of the fact that in 2015, when the Paris Agreement was concluded, the company was a classic black company with 99 per cent of their revenue generated within oil and gas.

In the dialogue with TotalEnergies, PFA has, among other things, emphasized the importance of getting the company to specify their expectations for investments in renewable energy, so that they can achieve their objective of a renewable energy capacity of 100GW by 2030. By comparison, Ørsted aims for 35-38 GW by 2030. Likewise, at the general meeting in 2022, we raised questions about the validation of the company's CO2reduction target. We have seen an effect in both of these areas. TotalEnergies has now stated that by 2030 they will allocate approx. 33 per cent of new investments in renewable energy and biofuels (compared to 15 per cent in 2020), and the company is on course to be ranked among the top 5 worldwide in terms of renewable energy production. TotalEnergies has also presented targets for reducing the company's CO2 intensity (Scope 1, 2 and 3), which according to the company itself is in line with the "Announced Pledges" scenario from the International Energy Agency (IEA) of a maximum temperature increase of 1.7 degrees towards 2100. PFA is not necessarily satisfied with the pledged goals and ambitions, but they provide a starting point for continued pressure through dialogue, and also represent progress compared to previous ambitions.

Shell:
Since the Paris Agreement in 2015, the company has evolved from a classic oil and gas company to one that focuses on a broad mix of energy sources, in particular climate-friendly forms of energy such as wind energy and biofuels. This means that Shell is now, in absolute figures, among the largest investors in renewable energy sources. Likewise, they are also, for example, market leaders when you look at revenue from charging stations for electric cars. Since 2021, PFA has been in critical dialogue with Shell about publishing the size of the company's future investments in green solutions. In 2023, Shell announced that they will invest a total of DKK 75-100 billion in renewable energy, charging stations for electric cars, and low-emission fuels such as biofuels and hydrogen until 2025. In comparison, Shell spent just under DKK 7 billion on green solutions in 2020.

In our dialogue with Shell, PFA has ensured a particular focus on the company's absolute emissions across their value chain (Scope 1, 2 and 3), where Shell has delivered approx. 10% lower absolute emissions in 2022 compared to 2021, as well as having made public that their discharge of absolute emissions is expected to have peaked. However, we do not believe that development is moving fast enough. We are currently in dialogue with them about this, and in 2024 will have a special focus on updating their climate strategy, where we are prepared to pressure the company in relation to both climate targets and further investments in green energy towards 2030. We voted no to their latest 'say-on-climate' in 2023, and as the only Danish investor with recommendations for improvements we participated from the podium at the general meeting. We are prepared to do both again if we do not see sufficient progress.

General focal point in both dialogues
Since we will not abolish the need for oil and gas in the foreseeable future, it is important that the extraction of fossil fuels takes place with the least possible damage to the climate and the environment. New investments in oil and gas should therefore go towards energy efficiency and reducing the footprint of existing projects, while investments in new oil and gas fields must be phased out in line with the International Energy Agency’s (IEA) scenarios for the energy transition. The clarity of that link is something that PFA is pushing for in our dialogues with both TotalEnergies and Shell – and both companies have presented their respective analyses in 2023 regarding how their reduction measures align with the Paris Agreement based on scientific scenarios from the IEA and the United Nations’ Intergovernmental Panel on Climate Change (IPCC). TotalEnergies has also set a target that a maximum of 13 kg of CO2 per person may be emitted per barrel (Scope 1 and 2, both oil and gas) in 2028. For comparison, the IEA estimates that the oil and gas sector emits an average of 60 kg of CO2 per barrel of oil and 43 kg of CO2 per barrel of gas (Scope 1 and 2). 

BHP and Freeport McMoRan in the mining sector

PFA is also in dialogue with BHP and Freeport McMoRan in the mining sector. Mining activities are crucial for the green transition, for example through the extraction of cobalt, which is a central component in batteries for electric cars, but at the same time, is also associated with high emissions of greenhouse gases and the impact and dependence on natural resources. In our dialogue with BHP and Freeport McMoRan, PFA thus focuses on reducing the companies' greenhouse gas emissions as well as the better management of risks of negative impact on biodiversity and ecosystems.

The mining company, Rio Tinto, steps up commitments to CO2 reduction

In 2024, the world's second largest mining company has now committed to stepping up its commitments to reducing its carbon footprint. This is happening as a result of pressure from the organisation Australasian Centre for Corporate Responsibility (ACCR), in collaboration with PFA, who together have put forward a shareholder proposal aimed at the upcoming general meeting, that the company be obliged to make its CO2 emissions from steel production (Scope 3) completely CO2-neutral by 2050. This is a concrete advance of 10 years compared to previously.

Rio Tinto must also ensure that they publish how much they will invest in a generally greener steel production as well as the CO2 emissions from the company's value chains. Rio Tinto has already complied with the shareholder proposal before the general meeting. This also means that the company must set a more progressive direction in its lobbying activities and support relevant policies and legislation that can contribute to a faster reduction of CO2 emissions from steel production.

Rio Tinto har allerede inden generalforsamlingen efterkommet aktionærforslaget. Det betyder også, at selskabet skal sætte en mere progressiv retning i sine lobbyaktiviteter og støtte relevante politikker og lovgivning, der kan bidrage til en hurtigere nedbringelse af CO2- udledninger fra stålproduktion.

Climate Action 100+

PFA also supports Climate Action 100+ (CA 100+) business dialogues with the initiative's 167 focus companies with a view to accelerating the green transition of the world's most high-emitting sectors. PFA is 'co-lead investor' in the CA 100+dialogue with TotalEnergies and a recognized 'individual engager' with BHP. We are a 'collaborating investor' in the CA 100+dialogue with General Electric and Iberdrola.

 

The in-depth climate dialogues must be seen as part of PFA's journey towards net-zero emission of greenhouse gases from total investments by 2050, including by virtue of our membership of the Net Zero Asset Owner Alliance. The goal is to influence the companies that represent the greatest proportion of PFA’s total CO2 emissions to improve their business models and behaviour and thereby reduce PFA’s exposure to sustainability risks and to thus contribute to the green transition of the real economy.

Read more about PFA's position in relation to the transition from fossil to climate-friendly energy

Dialogue with the companies in the world associated with the greatest impact and dependence on nature in the Nature Action 100

PFA has chosen to join the Nature Action 100 in September 2023. Nature Action 100 is an investor-driven dialogue initiative that aims to bring together global investors to engage in dialogue with the companies in the world that are most dependent on and associated with the greatest impact on nature. In line with Climate Action 100+, the corresponding investor initiative in the climate area, common expectations are set for 100 focus companies regarding the integration of nature-related risks and opportunities. Their progress, or lack thereof, is evaluated on the basis of a company-specific benchmark with a number of indicators that we, as investors, can hold the companies to. PFA is a co-signatory of the investor letters to all focus companies in the initiative and is also selected to contribute to in-depth dialogues with Nestlé, AstraZeneca and McDonald's when these dialogues begin in 2024.

Dialogue on biodiversity with companies in the agricultural value chain

Just before the end of 2022, PFA joined the thematic engagement programme Biodiversity & Natural Capital, which involves ownership dialogue with over 50 companies across the agricultural value chain in collaboration with PFA's external advisor and like-minded investors. As with the climate crisis, the biodiversity crisis is associated with significant risks that can negatively affect the value of the companies PFA invests in. In particular, the agricultural sector is among those sectors in the world that are the most dependent on and have the greatest impact on natural resources. PFA will use the programme for internal competence building and follow the dialogue with four of the programme's companies particularly closely. In addition, in connection with the UN Biodiversity Conference COP15 in December 2022, PFA has chosen to sign the declaration "Moving Together on Nature" along with over 150 other investors.

Dialogue on consideration of biodiversity in connection with renewable energy projects

Within the unlisted investment area, PFA has initiated discussions with managers of our infrastructure investments regarding the integration of biodiversity considerations in connection with the setting up and operation of wind turbine and solar cell parks. Renewable energy is essential for the green transition, but must be established with regard to nature.

Dialogue on improved ESG data for unlisted investments

PFA has an ongoing focus on improving the availability and quality of ESG data for unlisted investments in collaboration with our data suppliers. The goal is that here, too, we are able to get a solid foundation for working with CO2 reduction targets and prioritizing action areas for climate and sustainability, as well as reporting on this in accordance with the new EU framework for work with sustainability and ESG. In 2023, we contacted the vast majority of our unlisted investments, as well as fund investments, to collect and improve the ESG database. In addition, PFA has held dialogues with selected trustees with the same aim.

Dialogue with property managers and contractors on energy optimization and CO2 reduction

As a construction client and property investor, PFA has, throughout 2023, maintained an ongoing focus on making energy optimisation improvements and CO2-reducing initiatives by way of entering into dialogues with contractors and property administrators and managers. Among other things, initiatives such as transformation from natural gas to district heating and installation of charging stations for electric cars and solar cells on the roofs have also commenced. In 2023, there has been further focus on reducing waste and increasing recycling during renovation and conversion.

Dialogue on global plastic pollution

PFA has also prioritised entering into a dialogue with Nestlé, Unilever and Colgate-Palmolive on their impact and management of global plastic pollution in the value chain – an area that illustrates the link between the lack of circularity and the loss of biodiversity and ecosystems. All three companies are committed to minimising the use of virgin plastic and to ensuring that the packaging of the products they sell can be recycled. However, further action is still needed from the companies, the public sector, and consumers to ensure that plastic does not end up in nature.

Thematic dialogue on human rights

PFA takes a strong stand against violations of human rights and seeks to improve practices for this in the mining, electronics, and cocoa sectors through the thematic engagement programme Human Rights Accelerator. This is done in cooperation with the investors in the Nordic Engagement Cooperation, which in addition to PFA consists of investors from Sweden and Finland, as well as with PFA's external advisor and other like-minded investors. The programme involves dialogue with around 20 companies and aims to improve the companies' due diligence systems related to human rights across the value chain in accordance with the UN Guiding Principles for Business and Human Rights.

Dialogue on politics within human rights

PFA has entered into dialogue with four companies regarding the establishment of an explicit policy for human rights on the basis of a screening of the investments' potential negative sustainability impacts.

Dialogue on tax practices with pharmaceutical and technology companies

PFA rejects aggressive tax planning and has sought to improve tax practices among pharmaceutical and technology companies through the thematic engagement programme called “Taxation 2.0” in collaboration with PFA’s external advisors and like-minded investors. The purpose of the programme is to improve the transparency of selected pharmaceutical and technology companies, such as on practice in relation to tax evasion, effective tax rates, and internal governance. By the end of 2022, the companies SAP, Biogen and eBay had moved the most in line with the programme's purpose of increased public information. The tax area has recently received increased focus internationally, both with the OECD's agreement on 15% minimum taxation for multinational companies and the EU's directive on the implementation of country-by-country tax reporting. In 2023, the programme maintained a particular focus on the companies' lobbying activity on legislative proposals in Australia (country-by-country reporting).

Dialogue with companies about violations of norms or suspicions thereof

In collaboration with our external advisor, PFA conducts a reactive dialogue where breaches of PFA's Policy for Responsible Investments and Active Ownership have been detected (or are suspected) through a norm-based screening of PFA's listed investments (shares and corporate bonds). During 2023, this resulted in dialogue with 50 companies about issues such as corporate governance, environmental management, and tax practices, as well as social matters.

The table below shows the number of dialogues conducted on the basis of breaches of norms in previous years, broken down by number of companies.

Reactive dialogue on the basis of the breach of norms 2023 2022 2021  2020
Engagement dialogues with companies where there are confirmed violations of PFA’s Policy for Responsible Investments and Active Ownership 7 11 12 16
Engagement dialogues with companies where there are indications of PFA’s Policy for Responsible Investments and Active Ownership being violated 43 55 55 50
Total 50 66 67 66

The table below provides an overview of dialogues on the basis of the breach of norms in 2023, divided by topic:

Reactive dialogue on the basis of the breach of norms divided by topic
Area Quantity Ratio
Environment 6 12 %
Human rights 26 51 %
Labour rights 6 12 %
Corruption and business practices 13 25 %
Total  51  100 %
In 2023, we engaged with several companies concerning multiple topics.

Dialogues with mining companies about work culture

In 2022, PFA engaged in dialogue with and wrote investor letters to prioritised mining and metals companies based on a report about work culture in the company Rio Tinto. On Rio Tinto’s own initiative, the report was prepared by Elizabeth Broderick & Co as an external assessment of the company’s work culture. The report pointed out a number of objectionable issues such as, for example, discrimination, bullying and offenses. After the publication of the report on the company's objectionable work culture, PFA made direct contact with Rio Tinto and held a meeting with the company, where the report, including cultural change proposals, was reviewed and discussed. We also contacted our external partner, Sustainalytics, to get their assessment of the matter. As the problem cannot be isolated to Rio Tinto, we also chose to reach out to other mining and metal companies in which we have invested, with a view to improving monitoring and handling of work culture in the sector. Overall, PFA contacted ten mining companies, among which we sent letters to five companies and engaged in dialogue with five companies. As for Rio Tinto, we acknowledge that the company has initiated the work and prioritized the area, just as the report was commissioned and published by the company itself. The report's conclusions require action, and the implementation of the concrete initiatives proposed in the report will take several years. PFA follows up through the dialogue and status reports from the company.

Dialogue with Amazon on violation of the workers' right to join a union

The background for the dialogue with Amazon is a long series of cases where Amazon is accused of violating basic labour rights, including working against employees' right to organise in a trade union. The problem is particularly pronounced at its warehouses in the USA, and it is not compatible with the company's own principles in the field, including the company's explicit reference to the UN guidelines (UNGPs) and ILO conventions in their Global Human Rights Principles.

In collaboration with other investors in various constellations, PFA has engaged in dialogue with Amazon on labour rights since 2021. First, under the auspices of the Nordic Engagement Cooperation, where we called for Amazon to take a number of concrete steps to implement its obligations to comply with labour rights. This applies, among other things, to the Bessemer facility in Alabama (US), where there have been a number of problems related to the employees' right to organise without interference from the employer. In November 2021 the authority, US National labour Relations Board, assessed that the election in Bessemer Alabama should be rescheduled due to interference from Amazon. As part of this dialogue, at the company's general meeting in May 2021 and again in 2022, PFA supported, among other things, a shareholder proposal which recommended employee representation on the board and better company reporting on the right to organise. The proposal also recommended against the re-election of the representative for the responsible board committee as well as the ordering of an impartial report on working conditions in the company.

In May 2023, PFA chose to enter into a collective dialogue with Amazon together with a number of Danish financial institutions. This happened in part as a result of a new case in January 2023, where the US National Labor Relations Board found that the company had negatively influenced elections for professional representation in two rounds in April 2022. The problems with labour rights are particularly pronounced at the company's warehouses in the United States. It is important to distinguish between Amazon in the US and Europe. This is partly because the standards are different and because Amazon has concluded collective agreements in European countries, including Italy, France and Sweden. In addition, the large American labour market pensions – for example CalPERS and New York Commons – also do not recommend excluding companies with challenges to labour rights such as Amazon. On the other hand, similar to key players in the American trade union movement – including the Committee on Workers Capital, the AFL-CIO and the SEIU – they emphasise the importance of being active and critical owners.

The dialogue initiative is thus based on a common understanding that active ownership is a more effective tool to influence the company than divestment and exclusion. By excluding the company, we as investors renounce the opportunity to influence Amazon's handling of labour rights, and we will thus not be able to influence the company in the right direction for the benefit of the company's employees. The dialogue is professionally based around the norms that must ensure that Amazon complies with the basic labour rights of the company's employees. With reference to Amazon's policies in this area, the ambition of the dialogue is to get Amazon to document how the right to organise in a trade union and negotiate wages and working conditions collectively is incorporated into Amazon's processes.

Dialogue with Johnson & Johnson on product safety

In collaboration with our external advisor, PFA is engaged in dialogue with the company Johnson & Johnson (J&J) on matters related to product safety. In July 2018, PFA participated in a webinar held by J&J where the company’s compliance and quality assurance processes were elaborated on. In addition, a new common safety standard across the Group was presented. In November 2019, PFA had a conference call with J&J where PFA obtained insight into the company’s views regarding current lawsuits concerning talcum powder, opioids, and Risperdal. In April-May 2020, there was a dialogue about COVID-19, where PFA questioned how J&J enforced its stringent R&D protocols despite the speed at which a COVID-19 vaccine was being developed. We want the company to incorporate its experience to a greater extent in safety protocols and control procedures, so that in the future they can reduce the risk of product safety cases arising. In this way, the company can reduce the risk that consumers will be injured or become ill, just as they can minimise the risk of new lawsuits. At the same time, it is recommended that the company develops guidelines for increased transparency about product-related data, so that they can ensure that any points of observation about their products are communicated to their consumers as early as possible.

Ongoing initiatives

Proceedings against Meta (formerly Facebook)

In 2022, PFA launched a lawsuit against Facebook/Meta Inc. for misguiding investors on a number of matters during the period from April 2021 to October 2021. The lawsuit concerns an algorithm change that was made to increase user engagement, but at the same time has led to the disproportionate redistribution of misinformation and harmful content of various kinds. The lawsuit was made because, according to PFA and co-plaintiffs, Meta withheld this information from investors who consequently invested in Meta based on faulty information and without knowledge of this matter, which may then have a negative impact on the company’s valuation.

Support for CDP's Science-Based Targets Campaign

In continuation of the efforts towards external verification of targets for the reduction of greenhouse gases among the joint stock companies in Climate Plus in 2022 and again in 2023, PFA has chosen to support CDP's Science-Based Targets Campaign. The campaign promotes support for the Science-Based Targets initiative (SBTi) through investor letters sent to more than 1000 companies worldwide.

Support for the PRI’s Advance initiative

In continuation of our focus on work culture in the mining sector, PFA has chosen to support the Advance initiative, which is driven by the UN-backed PRI (Principles for Responsible Investments). The initiative's first phase and dialogue with 30+ companies began in autumn 2022 with the aim of improving company practices in relation to securing human rights in the mining and metals sector.

Select completed dialogues:

Dialogue on water supply management

The water crisis is a global challenge that requires local solutions. The increasing scarcity of fresh water resources is an economic, social, and environmental societal risk worldwide and a significant problem for companies. PFA therefore seeks to improve the handling and protection of water supply among 18 companies through the thematic engagement programme Localized Water Management in collaboration with PFA's external advisor and like-minded investors. The programme began in 2020 with a focus on companies with operations on the Tietê River in Brazil as well as the Vaal River in South Africa. The programme was completed in the first quarter of 2023 and has resulted in improvements to the companies' water management, including: water consumption and reduction targets for this as well as the implementation of climate scenario analyses.  

Dialogue with Bunge on deforestation

In the spring of 2022, PFA entered into a dialogue with Bunge about the risk of deforestation associated with the company's sourcing of palm oil and soy in Brazil. Following in-depth responses from the company about their practices to mitigate deforestation risks associated with their business – including tracking and monitoring suppliers and committing to deforestation-free supply chains by 2025 – the PFA-driven dialogue has, for now, ended without further action. However, PFA will follow Bunge's development on an ongoing basis in collaboration with our external advisor, who will continue the dialogue with the company.

Dialogue on TCFD reporting with Carrefour and Ahold Delhaize

Since 2021, in collaboration with an external advisor and the rest of the investors in Nordic Engagement Cooperation (NEC), PFA has been engaged in dialogue about TCFD integration with Carrefour and Ahold Delhaize, which are among the world's largest retail companies. TCFD, which stands for "Taskforce on Climate-related Financial Disclosures", is an internationally recognised framework tool for the integration and reporting of climate-related risks. PFA wants the companies we invest in to follow these recommendations, as failure to manage climate-related risks can have a negative impact on the companies themselves and thus the securities they issue. The dialogue with the two companies has now ended as a result of improvements in both companies' integration of the recommendations from TCFD. In addition, both companies have set science-based reduction targets verified by the Science-Based Targets initiative (SBTi).

Dialogue and investor letters about joining the Science-Based Targets initiative and handling GHG reductions across the value chain among joint-stock companies that are part of PFA Climate Plus

During 2022, PFA has sent letters to and/or entered into dialogue with companies in PFA Climate Plus' share portfolio that have not yet joined the Science-Based Targets initiative (SBTi). SBTi is among the most recognised initiatives for scientific verification of companies' reduction targets, which is why joining this is important for PFA's work towards reducing the carbon footprint of our investment portfolio. In addition, PFA has contacted the companies in PFA Climate Plus' share portfolio that have already had their reduction targets verified by SBTi, with a view to addressing the reduction of GHG emissions (greenhouse gases) across the value chain. Just as a company's business activities are closely linked to their suppliers and customers, the companies' GHG reductions also depend on the value chain. It is therefore important for PFA that the companies approach their reduction plans holistically. Overall, PFA contacted 40 companies, including via investor letters to 21 companies and dialogues held with 19 companies.

Thematic dialogue with leading cocoa and chocolate companies to address child labour

The thematic engagement programme Child Labour in Cocoa, which has included dialogue with seven leading cocoa and chocolate companies in collaboration with PFA's external advisor and like-minded investors, was completed in the summer of 2022. The aim of the programme is to address child labour in the cocoa industry – a systemic problem that is particularly prevalent in Ivory Coast and Ghana. As part of the programme, PFA and like-minded investors have pushed for better controls in the value chain via Child Labour Monitoring and Remediation Systems (CLMRS). Despite the fact that child labour is increasing globally after the COVID-19 crisis, six out of the seven companies have now implemented CLMRS systems, which cover over 50 per cent of their supply chains.

Dialogue with Danske Bank about illegal transfers in the bank's Eastern European branches

In the period 2007 to 2015, Danske Bank carried out illegal transfers for customers in the bank's Eastern European branches. As the case has developed, PFA has continually asked for more information about Danske Bank’s work with reviewing earlier high-risk transactions and how resources are allocated to its anti-money laundering processes. PFA has a clear expectation that the bank will continue its efforts to create transparency about these matters. PFA recognises that the bank has gone through a transformative process, and we would like to continue to influence Danske Bank to move in the right direction. PFA has therefore supported the establishment of a new board of directors at Danske Bank, which can focus on the business and on their vital relationships with investors, customers, and society. In December 2022, Danske Bank agreed to pay a billion kroner fine to the American and Danish authorities for the money laundering scandal. We continue to follow the case, but consider the dialogue closed.

Dialogue with TotalEnergies on activities in Russia

PFA strongly distances itself from the completely unacceptable Russian aggression and warfare in Ukraine and expects the companies we have invested in to comply with EU sanctions against Russia and Belarus. PFA has been engaged in a critical dialogue with TotalEnergies since it became known in March 2022 that they conduct activities in Russia via a number of minority stakes in non-government owned oil and gas companies and that they purchase Russian oil and gas mainly for the European market.

History of the dialogue and PFA’s assessments:
- March 2022: The company has now released a plan for how they plan to, as quickly as possible and no later than 2022, stop buying oil from Russia and gradually suspend its Russian activities. The company notified of their intention to stop buying oil from the end of 2022 in week 12 of 2022. ;
- December 2022: The company has stopped buying Russian oil and gradually suspended its Russian activities. TotalEnergies has removed the company's two representatives from the board of Novatek, which is Russia's largest private gas exporter. TotalEnergies has reduced the value of the company's 19.4 % minority stake in Novatek, but does not have the option to sell its share because one of Novatek's largest shareholders appears on Western sanctions lists.

Dialogue with Freeport McMoran about environmental problems in the company's mining operations

PFA has entered into a dialogue with Freeport to gain an insight into the company’s practices regarding the environmental problems related to its mining operations. Among other things, this involves the use of River Tailings Disposal in Indonesia and problems with water consumption in Chile. Through this dialogue, PFA wants to ensure that the company makes a satisfactory effort to protect its surroundings and the environment.

Dialogue with TotalEnergies on activities in Myanmar

PFA has entered into a critical dialogue with Total Energies due to its activities in Myanmar following the deposition of the country’s leader, Aung San Suu Kyi and the democratically elected government by the military junta in a military coup in February 2021. PFA distances itself from the military junta and considers the situation in Myanmar to be serious, which is why we wanted to uncover the rationale and extent of TotalEnergie's continued presence. In particular, we wanted to understand the relationship with Myanmar Oil & Gas Enterprise (MOGE) and TotalEnergies' handling of the risk that the company could support the military junta via business activities in the country. The dialogue proceeded as follows:
- In the period from May to December 2021, PFA had several meetings and other correspondence with TotalEnergies, where we enquired about their assessment and handling of the current situation in Myanmar. PFA let the company know of its concerns and requested answers to a number of questions. TotalEnergies recognised that they were in a challenging situation, which they would try to resolve by putting pressure on the board.

- At the same time, PFA consulted an NGO with expert knowledge of the conflict and the precautions that TotalEnergies had taken to assess the company's actions. On the basis of information submitted by Sustainalytics, PFA agreed that TotalEnergies’ precautionary measures were reasonable in the short term, but the prospect of a long-term military rule will make it challenging for the company to remain in the country.

- In February 2022, one year after the military regime took power, TotalEnergies' top management sent a letter to PFA, from which it appeared that the company is withdrawing from its activities in Myanmar due to the unsustainable conflict and the expectations of the outside world (including PFA). TotalEnergies sold its share of the activities to other joint-venture companies, and over the following six months TotalEnergies handed over their operational activities in a structured process with consideration for the local employees.

- On that basis, PFA considers the dialogue with the company about the activities in Myanmar to have reached a conclusion. PFA continues to maintain dialogue with TotalEnergies regarding the company's green transition, which we follow closely.

Dialogue with Rio Tinto on violations of indigenous peoples' rights

Over the years, Rio Tinto has been involved in several cases concerning violations of indigenous people’s rights. In 2020, the company was involved in yet another case, as the company destroyed two holy sites for aboriginals in Australia in connection with the expansion of an iron ore mine. The result of the case is that three members of Rio Tinto’s management team, including the company’s CEO, have been dismissed. The purpose of the dialogue is to get the company to compensate the impacted aboriginal community. In addition, Rio Tinto must ensure that their team for community relations is fully integrated in their operations so as to ensure that all operational decisions do not violate the rights of local communities and thus ensure that similar incidents are not repeated in the future.

Dialogue with Macquarie on dividend tax fraud

Since 2018, PFA has been in dialogue with Macquarie after their participation in dividend tax fraud was made public. PFA continues its critical dialogue with Macquarie on the dividend tax issue and has decided not to enter into new partnerships with Macquarie before we have gotten to the bottom of the precise facts of the case. How this investigation turns out will be a critical factor in deciding whether we want to do business with them. Among other things, PFA is waiting for the outcome of an ongoing court case in Germany against Macquarie before reviewing its decision. PFA shares this standpoint with both ATP and PKA.

Dialogue with Samsung Electronics on corruption allegations

PFA’s external asset manager which has invested in this company has been in dialogue with Samsung Electronics’ management team to address the lack of transparency and accusations of corruption. Samsung Electronics has launched initiatives to improve their governance, and PFA will monitor the case together with its external asset manager.

Volkswagen PFA entered into a dialogue in September 2015
Status: Completed

         
Reason for initiating dialogue
In September 2015, it was made public that Volkswagen had cheated on emission tests for their diesel engines for a long period of time. The case was later dubbed “diesel gate”. 

Substance of the dialogue
Since 23 September 2015, PFA has been in dialogue with Volkswagen. 

In May 2018, the company committed itself to addressing concerns about compliance, risk management and cultural issues. 

In January 2020  the company announced that they were in the process of implementing a number of targets to get past the diesel gate scandal. In addition, the company also hired an independent compliance monitor who will ensure that the targets are sufficient and that they are effectively implemented. 

Based on the company’s readiness to cooperate with the authorities, the strong responsiveness to engage in dialogue and the significant progress in improving the in-house compliance culture and general changes of corporate culture, we have finalised the dialogue with Volkswagen. The dialogue will be resumed in the event of any new serious misconduct.

Volvo PFA entered into a dialogue in December 2020
Status: Completed

         
Reason for initiating dialogue
In December 2020, an NGO published a report about companies that supply military equipment to Saudi Arabia and the United Arab Emirates which were allegedly used in the war in Yemen.

According to the report, Volvo has delivered engines to armed vehicles via the subsidiary ACMAT/Arquus.

Substance of the dialogue
In December 2020, PFA contacted Volvo to initiate a dialogue about the company’s policies and processes for this area.

In January 2021, PFA participated in a meeting with Volvo where the company elaborated on their policies and practices.

Subsequently, in February 2021, PFA had its external adviser assess the policies and the assessment was that Volvo’s governance structures were satisfactory.
  

Hangzhou Hikvision Digital Technology PFA entered into a dialogue in February 2020
Status: Completed

         
Reason for initiating dialogue
PFA, together with our external advisor, Sustainalytics, has entered into a dialogue with Hangzhou Hikvision Digital Technology on the basis of accusations of violating human rights when selling surveillance equipment.

Substance of the dialogue
The dialogue is aimed at ensuring that Hikvision can guarantee that their surveillance tools are not used for purposes that violate human rights. We want the company to implement a robust due diligence programme that brings the company’s policies and procedures in line with international human rights standards. The company must also focus on being able to deliver insightful and transparent reporting on how the management deals with human rights issues related to the company’s products and services.

History of the dialogue and PFA’s assessments
- February 2020: Our external advisor contacts the company to initiate a dialogue on how Hikvision manages human rights and the associated risks. The company recognises the challenges that have been brought up and provides more detail on the issues.
- May 2020: PFA joins the dialogue. 
- August 2020:PFA has a status meeting with Sustainalytics concerning Hikvision and how the dialogue is progressing and how it is assessed. Hikvision has hired an external law firm to prepare a report about Hikvision’s role in projects in the Xinjiang region, and Hikvision must assess the possible implementation of the report’s recommendations. Hikvision reports that they have gained greater understanding of the risk of their products and services being used in a manner that violates human rights. Hikvision accepts that they must have better due diligence practices and more transparency. Hikvision has not submitted bids for projects in Xinjiang since 2018.
- November 2020: PFA has a status meeting with Sustainalytics about Hikvision.
-PFA has completed the dialogue with the company as PFA has sold off its investment in this company.

Rio Tinto PFA entered into a dialogue in 2017
Status: Completed

         
Reason for initiating dialogue
Rio Tinto has used “riverine tailings disposal”, which is harmful to the environment.

Substance of the dialogue
Since 2017, PFA has been in dialogue with the company in order to determine how its mining activities in Indonesia impact the environment. The company has confirmed that they are actively working on monitoring their impact on the local environment and that it has established areas to stimulate a regeneration of nature. PFA confirms that data from Indonesia show that the company’s practices are ‘best practice’ and that alternative methods for the disposal of wastewater would not be better.

For that reason, PFA has concluded its dialogue with the company about its environmental impact in Indonesia.

History of the dialogue and PFA’s assessments
- PFA has been in dialogue with Rio Tinto since 2017
- In that connection, PFA has concluded that the company’s restoration activities are ‘best practice’.
- The dialogue has been concluded.

Chevron PFA entered into a dialogue in September 2017
Status: Completed

         
Reason for initiating dialogue
A desire for more transparency about Chevron’s lobbying.

Substance of the dialogue
PFA has chosen to support a proposal that the company should publish a report on their lobbying activities, that the chairman of the board of directors should be independent and that it should be possible for shareholders holding more than a 10 per cent of the shares to convene an extraordinary general meeting. PFA has chosen to not support a proposal that the company should prepare a report on their transition towards a “low-CO2 economy” - the reason for this is that the company has already taken steps in that direction by publishing their ‘Managing Climate Change Risk’ report which already deals with this topic and which indicates that there has been a change in attitude since the annual general meeting in 2016.
  

Enbridge Inc. PFA entered into a dialogue in December 2016
Status: Completed

         
Reason for initiating dialogue
Together with other investors, PFA has been in dialogue with Enbridge on how the company can use its influence in connection with its investment in the Dakota Access Pipeline Project (DAPL). 

Substance of the dialogue
The dialogue with Enbridge has been focused on how the company will improve its policies and guidelines and particularly how it will focus on the UN Special Rapporteur’s assessment of DAPL’s negative impact on the rights of indigenous people. Enbridge has stated that the company is working on using its influence and updating its policies so that they are in line with international standards for this area. 

In September 2019, the company presented strategies that addressed most of the issues.

In November 2020, it was assessed that the company had made sufficient progress in the form of a new policy and robust procedures to deal with the rights of indigenous peoples, safety issues and human rights. 
   

Energi Transfer Equity og datterselskabet Energy Transfer Partners PFA entered into a dialogue in December 2016
Status: Completed

         
Reason for initiating dialogue
Negative impact on the rights of aboriginal people

Substance of the dialogue
PFA has attempted to establish a dialogue with Energy Transfer Equity, the parent company of Energy Transfer Partners, which is building and operating the Dakota Access Pipeline. This was for the purpose of putting the spotlight on the Dakota Access Pipeline’s negative impacts on the rights of aboriginal people in the area where the oil pipeline is being constructed. Neither PFA nor PFA’s screening and engagement company have succeeded in establishing a dialogue with Energy Transfer Equity.

PFA supports the UN special rapporteur’s assessment of the case involving the Dakota Access Pipeline, and the activities are in violation of PFA’s policy for responsible investments. As the company does not want to enter into a dialogue, PFA has divested its equity holdings and excluded Energy Transfer Equity and its subsidiary, Energy Transfer Partners.

Phillips 66 PFA entered into a dialogue in November 2016
Status: Completed

         
Reason for initiating dialogue
Together with other investors, PFA has contacted Philips 66 in connection with the company’s investment in the Dakota Access Pipeline Project (DAPL).

Substance of the dialogue
Philips 66 has agreed to enter into a dialogue, and PFA’s focus is on determining how the company will improve its policies and its behaviour, with a particular focus on the UN Special Rapporteur’s assessment of negative impacts on the rights of indigenous people.

As at July 2020, the company has published a human rights statement and accounted for how they are engaged in dialogue with the impacted communities.

Mærsk PFA entered into a dialogue in October 2016
Status: Completed

         
Reason for initiating dialogue
The scrapping of ships and working with the Shree Ram shipyard

Substance of the dialogue
PFA has been in dialogue with Mærsk about their policy for scrapping ships and their work with the Shree Ram shipyard in India. The dialogue has been focused on the work with upgrading the facilities in India in order to ensure that the ships are scrapped in an environmentally friendly manner and, among other things, how it is ensured that the components from the ships do not come into contact with the intertidal zone. The dialogue has also been about the standard used when Mærsk scraps its ships outside of the EU. We will continue our dialogue with Mærsk focused on ensuring that they comply with existing environmental legislation, use external verification and comply with the Hong Kong convention and the EU’s list of approved shipyards for scrapping ships.

Freeport-McMoRan PFA entered into a dialogue in 2016
Status: Completed

         
Substance of the dialogue
Since 2016, PFA has been in dialogue with the company in order to determine how its mining activities in Indonesia impact the environment. The reason for initiating the dialogue was the company’s use of “riverine tailings disposal”. The company has confirmed that they are actively working on monitoring their impact on the local environment and that it has established areas to stimulate a regeneration of nature. PFA’s advisor has confirmed that data from Indonesia indicate that the company’s practices are ‘best practice’ and that alternative methods for the disposal of wastewater would not be better. For that reason, PFA has concluded its dialogue with the company about its environmental impact in Indonesia.
  

JBS SA PFA entered into a dialogue in November 2015
Status: Completed

         
Reason for initiating dialogue
Issues with bribery, labour rights, policies that need improvement and transparency in several areas.

Substance of the dialogue
Together with 30 international investors, PFA has been in dialogue with the Brazilian company JBS SA. The group of investors encourages the company to address issues with bribery in Brazil, ensure that labour rights are respected in the supply chain and ensure that moving forward the remuneration structure includes ESG assessments of executive salaries. 

PFA has participated in a meeting with the company where its new compliance process was presented. The new compliance process includes the implementation of a whistleblower scheme, and external consultants are used to ensure it is implemented. 

The dialogue is still ongoing and focusing on corruption issues, cartel formation and labour rights. The dialogue on cutting down forests has been concluded (though still to be evaluated) and the dialogue about water pollution and human rights has also been concluded.

PFA has completed the dialogue with the company as PFA has sold off its investment in this company.  
   

Walmart de Mexico PFA entered into a dialogue in October 2015
Status: Completed

         
Substance of the dialogue
PFA has excluded Wal-Mart Stores Inc, but not Wal-mart de Mexico (Walmex) which, among other things, operate Walmart stores in Mexico and Central America. PFA has been in dialogue with its advisor in this area, and the dialogue confirmed that Walmex does permit its employees to be members of a labour union. Thus, Walmex is not in violation of PFA’s guidelines - unlike Wal-Mart Stores Inc, which has been excluded.
  

Sun Hung Kai Properties PFA entered into a dialogue in May 2015
Status: Completed

         
Substance of the dialogue
PFA’s external asset manager, who has invested in this company, has contacted the company to address potential human rights violations associated with their security contracts in Nauru and Papua New Guinea. The company has stated that they do not plan to extend their contracts. Together with the external asset manager, PFA will continue to monitor the case and how it develops.
  

GlencoreXstrata PFA entered into a dialogue in October 2014
Status: Completed

         
Reason for initiating dialogue
- Environmental impacts from their mine in Mount Isa, Australia
- Activities in Western Sahara

Substance of the dialogue
PFA has been in dialogue with the company about the environmental impact of its mine in Mount Isa, Australia. PFA and the company have discussed the progress made in reducing air pollution and how the company works towards minimising the impact on water quality near the mine. PFA has also been in dialogue with the company about its human rights due diligence in Western Sahara. At the end of 2017, the company confirmed that they were no longer active in West Sahara and that the company’s human rights policy now also covers activities in conflict zones. In 2018, PFA sold off the majority of its investment in Glencore.

After the sale, PFA will no longer prioritise the direct dialogue with the company but will instead have the active ownership dialogue managed by the screening and engagement company GES and monitor the company’s progress via GES. 
    

Sygenta PFA entered into a dialogue in December 2014
Status: Completed

         
Reason for initiating dialogue
In December 2014, PFA was presented with a report and a video about very objectionable issues in Syngenta’s supply chain.

Substance of the dialogue
PFA asked GES to prepare an analysis of the company’s practices, and PFA initiated its own dialogue with the company. PFA was waiting for an investigation by the Fair Labour Association (FLA) concerning Syngenta’s supply chain (“Procurement price and credit practices in Syngenta hybrid seeds supply chain, India”), which was published in July 2015. In 2016, PFA followed up with the company on their work in this area. PFA has found that Syngenta, following recommendations from a multi stakeholder consultation process, has launched two pilot projects in India aimed at ensuring that minimum wages are paid to workers in the company’s supply chain. The projects lasted until autumn of 2017, and PFA will await the results of the pilot projects.

Syngenta has since been acquired by ChemChina, and PFA no longer owns any equity in the company. The dialogue has therefore been closed.

History of the dialogue and PFA’s assessments
- In December 2014, PFA was presented with a report and a video about very objectionable issues in Syngenta’s supply chain.
- In 2016, PFA followed up with the company on their work in this area.
- The dialogue has been completed.
   

Cement Roadstone Holding PFA entered into a dialogue in 2014
Status: Completed

         
Reason for initiating dialogue
Possible association with an Israeli company that was possibly involved in activities that violate international conventions on the West Bank.

Substance of the dialogue
Since 2014, PFA has been in dialogue with the company to investigate a number of issues surrounding the company’s association with an Israeli company and its potential involvement in activities that violate international conventions on the occupied West Bank.

In January 2016, the company made it public and confirmed that it has divested itself of its ownership stake in the Israeli company. Therefore, as the association is no longer relevant, PFA’s RI Board has decided to close the dialogue.
   

Nordea Bank PFA entered into a dialogue in April 2013
Status: Completed

         
Reason for initiating dialogue
Money laundering case

Substance of the dialogue
PFA has been in dialogue with the company about a money laundering case. Nordea Bank has launched an internal investigation of the transactions, some of which are up to five years old. In the mean time, new measures have been introduced to ensure that similar incidents cannot take place again. PFA assesses that the company has implemented sufficient measures to comply with anti-money laundering laws in the future. As part of its investment approach, PFA has been engaged in an ongoing dialogue with the company.

Adani PFA entered into a dialogue in April 2013
Status: Completed

         
Reason for initiating dialogue
Potential damage to the environment in Australia

Substance of the dialogue
PFA’s external asset manager has been in dialogue with Adani Ports and Special Economic Zone’s (Adani) management team to address potential environmental damage in Australia and the company’s general approach towards sustainability. Adani has informed PFA that they have not made use of their permit from the Australian government to dump soil near the Great Barrier Reef - instead, Adani has chosen to discard the soil on land. Historically, Adani has generated a lot of turnover from selling coal, but the company now has an objective of reducing the turnover from coal from 50 per cent to 20 per cent. PFA’s asset manager will maintain the dialogue with the company.
   

Chevron PFA entered into a dialogue in June 2010
Status: Completed

         
Substance of the dialogue
PFA has followed up on the company’s latest annual general meeting where PFA supported a resolution on the importance of the company reporting on its work on a strategic adaptation of activities to address climate change up until 2035.
   

Ryanair PFA entered into a dialogue in May 2010
Status: Completed

         
Reason for initiating dialogue
Labour rights

Substance of the dialogue
PFA’s screening and engagement company, GES (now Sustainalytics) has, on behalf of PFA and other investors, been in dialogue with Ryanair to investigate questions on the company’s practices when it comes to worker rights in the context of the ILO conventions. They have not found clear violations of international conventions when it comes to labour market issues.

PFA has observed, with concern, Ryanair’s approach to running their business, including concerns about labour market issues for their employees and, most recently, the case brought before the Danish Labour Court. The case shows that the company is not sufficiently interested in adapting to local conditions and managing the associated risks. PFA’s RI Board has thus on this basis assessed that PFA should not invest in the company.
    

Walmart PFA entered into a dialogue in February 2006
Status: Completed

         
Reason for initiating dialogue
Labour rights and sustainability

Substance of the dialogue
Together with 11 other investors, PFA has contacted the company to initiate a dialogue on labour rights and sustainability. Walmart has been excluded from PFA’s investment universe and the dialogue is therefore closed.

Nestlé PFA entered into a dialogue in July 2006
Status: Completed

         
Substance of the dialogue
PFA has been in dialogue with the company to discuss their sustainability programme, including how to prevent the use of child labour in their supply chain. PFA has visited Nestlé in the Ivory Coast, where, among other things, Nestlé has implemented a ‘Child Labour Monitoring and Remediation System’ (CLMRS) aimed at identifying child labour and finding solutions to the problem. PFA will maintain the dialogue with Nestlé to follow up on their progress and to discuss the scope of their sustainability programmes.
      

Chevron PFA entered into a dialogue in May 2003
Status: Completed

         
Reason for initiating dialogue
The acquisition of Texaco in 2001

Substance of the dialogue
PFA is aware of the environmental risks that Chevron has assumed in Ecuador in connection with their acquisition of Texaco in 2001. In 1995, Texaco was ordered by a court to pay for the costs of fixing the environmental damage they caused in Ecuador. After paying the costs, Texaco’s activities and obligations in Ecuador were taken over by their joint venture partner, Petroecuador. In 2013, a court ordered Chevron to pay compensation for Texaco’s activities, but this lawsuit was subsequently rejected in the United States in 2014 and 2016 due to charges of corruption and bribery during the trial in Ecuador. On the basis of the court ruling from the United States, PFA has decided not to enter into a dialogue with Chevron about Texaco’s former activities in Ecuador unless new information emerges that would make it relevant.
   

  
Selected completed initiatives:

 

Investor letters to US banks on fossil fuel financing

As a follow-up action after voting at the general meetings of six US banks in the spring of 2022, PFA has sent letters with our main messages to the banks in question (JP Morgan, Morgan Stanley, Goldman Sachs Group, Wells Fargo & CO, Bank of America and CitiGroup) about their policies for financing of fossil fuels. PFA did not vote in favour of the shareholder proposals on the banks' policies for fossil financing, because these dictated the end of all financing of the oil/gas sector within the current year. A sudden stop would be inappropriate for security of supply, dependence on Russian oil and gas and for the bank in which the pension funds are invested. While we do not wish to impose particularly restrictive frameworks on company management through shareholder proposals, we see investor letters as a good opportunity to express our opinion on the direction of companies.

Divestment of Anta Sports due to human rights violations/p>

Anta Sports withdrew from the Better Cotton Initiative (BCI) to continue buying cotton from Xinjiang in China despite widespread concern about human rights abuses. On that basis, PFA contacted the company and enquired directly about these violations. As a consequence of the lack of response and the high sustainability risks associated with the company, PFA sold the investment in the company in 2022.