PFA’s engagement dialogues and efforts

PFA’s engagement dialogues and efforts

As an active owner, we continuously monitor the companies in our portfolio and stay in contact with the companies we invest in. Through our active ownership activities – including engagement dialogues, investor letters and shareholder proposals – we seek to influence companies to reduce risk and promote responsible value creation. This means taking climate and environmental, social and governance (ESG) factors into account and supporting strong, long-term returns on our customers’ pension savings.

The process for engagement dialogue with companies

PFA seeks to influence companies’ behavior through dialogue, both on our own and in collaboration with others. PFA continuously reassesses whether there is sufficient basis for continuing the dialogue based on an evaluation of whether sustainability risks associated with investment in a specific company are handled adequately and at an acceptable pace. If the desired outcome of the shareholder dialogue is not achieved, we are prepared to step up our efforts in relation to the companies in which we invest—for example through voting or shareholder proposals. As a general rule, we seek to exert influence rather than divest, which we consider a last resort.
       

Overview of PFA’s dialogues and efforts

PFA’s dialogues in 2025:

Broken down by unique companies (#))

Broken down by topic (%)

 

258

 
Cirkeldiagram

The same company may be included under E, S and G, and we also include dialogues with companies in which we are not necessarily invested at the time. In 2025, we engaged in a dialogue with 38 companies across a range of ESG topics.

Selected ongoing dialogues and efforts:

Green transition

Dialogues with the world’s largest greenhouse gas emitters:

TotalEnergies in the oil and gas sector:

PFA engages in-depth dialogue with TotalEnergies in the oil and gas sector. In 2020, PFA divested all corporate bonds issued by oil and gas companies, and we sold our holdings in listed equities of such companies, with the exception of two. Today, PFA only invests in TotalEnergies. By concentrating our investments and resources, we increase our ability to exercise influence as an investor.

PFA’s main focus in our dialogue with TotalEnergies is to accelerate the company’s green transition. Among other things, PFA has emphasised the importance of continued significant investment in renewable energy and energy efficiency. According to independent experts, TotalEnergies is among the companies in the sector that is best positioned to navigate the green transition, and – despite geopolitical unrest, the energy crisis and the anti-ESG backlash – the company is still on track to become one of the world’s five largest producers of renewable energy. This development should be seen in light of the company’s starting point: in 2015, when the Paris Agreement was adopted, the company was a traditional oil and gas company with 99 per cent of its revenue generated from oil and gas activities. 

For several years, PFA has exercised its influence by participating physically in TotalEnergies’ sustainability days where we have engaged with members of the Group Executive Committee. In addition, we have held meetings with the company’s Executive Officer responsible for strategy and sustainability, as well as with Investor Relations and other subject matter experts. We have also exercised our influence by voting against board members and attending the company’s general meetings in Paris, where we have called for action on both climate-related and social issues. In 2024, PFA was appointed co-lead investor in the Climate Action 100+ initiative and is now one of four investors leading the dialogue with TotalEnergies.

The mining sector:

Mining plays a crucial role in the green transition—for example through the extraction of cobalt, which is an essential component in batteries for electric vehicles. At the same time, mining activities are associated with high greenhouse gas emissions and significant impacts – and dependencies – on natural resources.

For several years, PFA has engaged in dialogue with BHP, the world’s largest mining company, and Freeport McMoRan, a leader in copper extraction, which is a key mineral for the green transition. In our engagement with these companies, we focus on reducing greenhouse gas emissions and improving the management of risks related to negative impacts on biodiversity and ecosystems. PFA has exercised its influence both through dialogue and voting. In 2024, for example, PFA – together with the Australasian Centre for Corporate Responsibility and the Australian pension fund Vision Super – submitted a shareholder proposal at BHP’s annual general meeting. This contributed to significant improvements in BHP’s updated transition plan. The company has since published its planned capital expenditure (CapEx) investments aimed at decarbonising the value chains associated with iron ore and steel production over the next five years. This is particularly important, as the majority of BHP’s total emissions arise from the extraction of iron ore used in steel production.

PFA also submitted a shareholder proposal at Rio Tinto’s 2024 annual general meeting, in collaboration with the Australasian Centre for Corporate Responsibility. The proposal called for the company to make its CO2e emissions from steel production (Scope 3) fully carbon neutral by 2050. This resulted in a concrete advancement of the company’s ambition by ten years. In addition, PFA called for Rio Tinto to disclose the level of investment in low-carbon steel production and emissions reductions across its value chains. Rio Tinto chose to address these requests even before the general meeting took place.

In 2024, PFA also engaged in dialogue with the Danish company FLSmidth regarding the challenges mining companies face in reducing CO₂ emissions while supporting the green transition, as well as potential solutions to these challenges.

Climate Action 100+

PFA supports the Climate Action 100+ initiative, which brings together many of the world’s largest institutional investors to carry out active ownership in relation to 169 focus companies. The aim is to accelerate the green transition of the most carbon-intensive companies and sectors in line with the Paris Agreement. PFA acts as co-lead investor in the dialogue with TotalEnergies and participates as a collaborating investor in dialogues with BHP, GE Vernova and Iberdrola. The progress of the focus companies is assessed using the Climate Action 100+ benchmark, which includes a range of company-specific indicators that investors can use to hold companies accountable. More than 70 per cent of the focus companies have reduced their absolute emissions (Scope 1 and 2) over the past three years. However, challenges remain in relation to emissions across value chains (Scope 3).

 

These in-depth climate dialogues form part of PFA’s broader efforts to achieve net zero greenhouse gas emissions across all investments by 2050, including through our membership of the Net Zero Asset Owner Alliance. The aim is to influence the companies that account for the largest share of PFA’s total carbon emissions to improve their business models and behaviour, thereby reducing sustainability risks and contributing to the transition of the real economy.  

You can read more about PFA’s position on the energy transition here. (Only available in Danish)

Dialogues on joining the Science-based Targets Initiative (SBTi):

In 2025, PFA has been in dialogue with—and sent investor letters to—a number of companies, encouraging them to set climate targets in line with the framework provided by the Science-Based Targets initiative (SBTi). PFA has prioritised engagement with companies in the portfolio that contribute most to the carbon footprint of our investments. In addition to encouraging SBTi alignment, the dialogues have also focused on value chain emissions (Scope 3), decarbonisation initiatives and investments, and companies’ lobbying activities.

In a context of geopolitical unrest and increasing anti-ESG sentiment – particularly in the United States – PFA considers it especially important to encourage companies to maintain their focus on the green transition. For this reason, in 2026 we will also engage with portfolio companies that have committed to setting SBTi targets but have not yet received final approval.

Shareholder proposals and dialogue on green versus fossil fuel financing:

Banks and their lending activities play a central role in the green transition. For this reason, in 2025 PFA, in collaboration with SHARE, submitted shareholder proposals at the general meetings of four of the largest Canadian banks to promote greater transparency on financing for fossil fuels compared with green energy.
Such reporting provides investors, including PFA, with insight into banks’ contributions to the green transition and their exposure to climate-related risks. Scotiabank committed to increased transparency after reaching an agreement to withdraw the shareholder proposal.

Shareholder proposals submitted by SHARE and PFA at the general meetings of Toronto-Dominion Bank (TD), Canadian Imperial Bank of Commerce (CIBC) and Bank of Montreal (BMO) received investor support of 38%, 37% and 32%, respectively – among the strongest voting outcomes globally in 2025 for climate- and environment-related shareholder proposals. This strong level of support has been used by SHARE and PFA in ongoing dialogue with the three banks, which have committed to acknowledging the voting results publicly and to considering disclosure of their fossil versus green financing in line with emerging standards.

Call to uphold the adopted EU regulation of methane emissions:

PFA, together with 41 like-minded investors, has called on the EU to uphold the adopted EU Methane Emissions Regulation. Methane is one of the most potent greenhouse gases—more than 80 times more harmful than CO₂ over its first 20 years in the atmosphere. Reducing methane emissions is therefore critical for addressing global warming in the short term.

Weakening the regulation would create uncertainty around the framework conditions for both companies and investors responsible for delivering the green transition. In addition to the letter sent to EU decision-makers, PFA has signed investor letters to a number of individual companies (Enel, Iberdrola, ENGIE, RWE and TotalEnergies), encouraging them to actively support the regulation, and has participated in follow-up dialogues. 

Dialogue with companies with the greatest impact and dependence on nature (Nature Action 100)

PFA joined the Nature Action 100 initiative in September 2023. Nature Action 100 is an investor-led engagement initiative that brings together global investors to engage with companies that have the greatest impact – and dependence – on nature.

As with Climate Action 100+, the initiative establishes common expectations for 100 focus companies regarding the integration of nature-related risks and opportunities. Progress is assessed using a company-specific benchmark with a set of indicators that investors can use to hold companies accountable.

PFA is a co-signatory of investor letters to all focus companies and has been selected to participate in in-depth dialogues with Nestlé, AstraZeneca and McDonald’s. These dialogues began in 2024 and, alongside acknowledging the companies’ ambitions to contribute positively to nature, have focused on improving companies’ assessment of nature-related impacts, dependencies, risks and opportunities—currently one of the key challenges for companies involved in the initiative.

In 2025, the dialogue with Nestlé focused on expanding regenerative agriculture in its value chain. AstraZeneca published its first report in line with the TNFD (Taskforce on Nature-related Financial Disclosures) recommendations in 2025. Following limited engagement from McDonald’s in 2024, PFA and other investors submitted a shareholder proposal to increase pressure on the company. This was later withdrawn after the company committed to engage, and two meetings were held in 2025 on deforestation and regenerative agriculture.

Since the launch of the initiative in 2024, 49 companies have developed plans to address nature-related issues, 33 companies have shown progress against investor expectations, and 20 companies have begun integrating TNFD recommendations (compared with 9 in 2024). 

Bank of America strengthens lending requirements to prevent deforestation following a shareholder proposal from PFA and Green Century:

In 2025, PFA engaged in dialogue with Bank of America, in collaboration with Green Century Capital Management, on the bank’s approach to deforestation.
Through a shareholder proposal, PFA and Green Century secured improvements in the bank’s requirements for sustainability certification and traceability in lending to producers and processors of key commodities (including cattle, soy, palm oil and timber) in countries with a high risk of deforestation.

Call to maintain the ambitions of the EU Deforestation Regulation (EUDR):

In 2025, PFA co-signed an investor letter addressed to the President of the European Commission and several Commissioners, calling for the ambitions of the EU Deforestation Regulation (EUDR) to be maintained.

The letter emphasised the importance of ensuring that the regulation continues to prevent imports linked to deforestation, while providing companies and investors with a clear framework to support deforestation-free value chains. Following the letter, the European Commission withdrew its proposal to delay implementation by one year. However, later in 2025, the European Parliament and the Council agreed to postpone its entry into force until the following year.

Dialogue with Danish mortgage banks on the green transition: 

In 2025, PFA initiated dialogue with several Danish mortgage banks to strengthen the integration of sustainability into their lending processes and improve related reporting.

The dialogue has included discussions on alignment with the EU taxonomy (including the energy efficiency of underlying housing assets), the carbon footprint of mortgage investments, and the issuance of green Danish mortgage bonds.

Dialogue on biodiversity with companies in the agricultural value chain:

Since the end of 2022, PFA has participated in the thematic engagement programme Biodiversity & Natural Capital, which involves ownership dialogue with more than 50 companies across the agricultural value chain, in collaboration with PFA’s external advisor and other investors.

Like the climate crisis, the biodiversity crisis presents significant risks that can negatively affect the value of the companies in which PFA invests. The agricultural sector is particularly relevant, as it is both highly dependent on and has a significant impact on natural resources.

The programme focuses on encouraging priority companies to integrate nature-related risks into their business models. In 2025, there has been a particular focus on nature-related reporting, reflecting increased regulatory requirements (including the CSRD) and the recommendations of the TNFD. While more companies are now reporting on these issues, data availability and quality remain key challenges.

Investor letters to major US banks urging them to uphold restrictions on oil and gas activities in a nature reserve in the Arctic:

In 2025, PFA co-signed an investor letter with Green Century Capital Management urging major US banks to maintain their existing policies that restrict oil and gas exploration in the Arctic National Wildlife Refuge.

This protected area in Alaska is recognised for its biodiversity and its importance to indigenous communities. 

Investor statements to reduce the chemical industry’s negative impact on biodiversity: 

In 2025, PFA supported two investor statements, in collaboration with ShareAction, addressing the chemical industry’s impact on biodiversity.
The statements aim to encourage companies to increase transparency, reduce the use of harmful chemicals and adopt more sustainable production methods.

They also call on policymakers to introduce stronger regulatory frameworks to protect ecosystems from chemical-related harm. 

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

As a construction client and real estate investor, PFA has, throughout 2025, continued its focus on energy optimisation and CO₂ reduction through dialogue with contractors, property administrators and asset managers.

Initiatives have included the installation of automated energy and resource management systems, expansion of EV charging infrastructure, installation of solar panels, and the continued transition from natural gas to district heating and heat pumps.

As in previous years, there has also been a focus on waste reduction and circular economy principles in renovation and conversion projects. For commercial properties, PFA has also worked with tenants in 2025 to help them understand and reduce their energy use—and thereby their CO₂ emissions—through carbon accounting. 

Security

Dialogue with defence companies on responsible business practices and integration of human rights:

In times of war, geopolitical unrest and increasing polarisation, security has become an overriding priority – also for PFA. In 2026, we will place particular focus on the defence sector and engage with aerospace and defence companies in our equity portfolio, with a focus on transparency, anti-corruption and human rights.

Health and social issues

Shareholder proposals at Meta and Alphabet’s annual general meetings to promote children’s health:

In 2025, PFA co-filed shareholder proposals on children’s health at the annual general meetings of Meta and Alphabet. The proposals called for reporting (and, in the case of Meta, also targets) on concrete improvements in the safety and mental wellbeing of children when using the companies’ platforms, such as Alphabet’s YouTube and Meta’s Facebook, Instagram, etc.

The shareholder proposal at Alphabet’s general meeting received 9% support, while the proposal at Meta’s general meeting received 13% support (equivalent to 45% among independent shareholders).

Dialogues on human rights and the green transition:

Renewable energy is essential to the green transition, but must be deployed in a way that respects local communities and human rights throughout the value chain. To support this, PFA has participated in the thematic engagement programme Human Rights and Transition, established in 2025.

The programme involves dialogue with companies operating in the solar and wind energy value chains, with the aim of promoting human rights due diligence, strengthening the position of local communities, and reducing risks in supply chains. The overall objective is to contribute to a more robust and inclusive green transition in line with international standards such as the UN Guiding Principles on Business and Human Rights (UNGPs).

Dialogue with companies about violations of norms or suspected violations:

In collaboration with our external advisor, PFA conducts reactive engagement where breaches – or suspected breaches – of PFA’s Policy for Responsible Investments and Active Ownership are identified through norm-based screening of our listed investments (shares and corporate bonds).

In 2024, this resulted in dialogue with 36 companies on topics including corporate governance, environmental management and social issues.

Dialogue with Amazon concerning labour rights:

The background for PFA’s engagement with Amazon is a long series of cases in which the company has been accused of violating fundamental labour rights, including attempts to undermine employees’ right to organise in trade unions. These concerns are particularly prominent in the company’s US warehouse operations and are not consistent with Amazon’s own stated principles, including its reference to the UN Guiding Principles on Business and Human Rights (UNGPs) and ILO conventions in its Global Human Rights Principles.

In collaboration with other investors in various constellations, PFA has been engaging with Amazon on labour rights since 2021. Initially, this took place under the Nordic Engagement Cooperation, where we called on Amazon to take a number of concrete steps to meet its obligations in relation to labour rights.

As part of this engagement, PFA supported shareholder proposals at the company’s annual general meetings in 2021 and 2022, including proposals recommending employee representation on the board and improved reporting on workers’ rights to organise. The proposals also included voting against the re-election of the responsible board committee member and calling for an independent review of working conditions.

In May 2023, PFA entered into a collective engagement with Amazon together with several Danish financial institutions. This initiative is based on the shared view that active ownership is a more effective tool for influencing company behaviour than divestment and exclusion. By divesting, investors give up their ability to influence the company’s approach to labour rights and thereby its impact on employees.

The engagement is grounded in internationally recognised norms to ensure that Amazon complies with fundamental labour rights. With reference to Amazon’s own policies, the objective is to ensure that the company can demonstrate how the right to organise in a trade union and to negotiate wages and working conditions collectively is integrated into its processes.

In 2024, through written correspondence and meetings with Amazon, PFA has continued to push for clearer documentation of how these rights are implemented in practice.

Proceedings against Meta (formerly Facebook):

In 2022, PFA initiated legal proceedings against Facebook/Meta Inc. for having misled investors on several matters during the period from April 2021 to October 2021.

The case concerns changes to the company’s algorithms aimed at increasing user engagement, which also led to a disproportionate amplification of misinformation and harmful content. According to PFA and co-plaintiffs, Meta failed to disclose this information to investors, who therefore invested in the company without full knowledge of the associated risks, potentially affecting the company’s valuation.

Support for the PRI’s Advance initiative:

Building on previous initiatives relating to work culture in the mining sector, PFA has chosen to support the Advance initiative, led by the UN-supported Principles for Responsible Investment (PRI).

The first phase of the initiative, including engagement with more than 30 companies, began in autumn 2022 and focuses on improving corporate practices related to human rights in the mining and metals sector. PFA’s external advisor, Sustainalytics, leads engagement with Freeport-McMoRan and BHP as part of the initiative.

Across E, S and G

Dialogues across E, S and G based on voting:

Voting is an important tool in PFA’s active ownership approach and is particularly effective when combined with engagement dialogue. Following PFA’s voting at the annual general meetings of listed companies in 2025, we have reached out to a number of companies to engage in dialogue on the improvements we expect.

These dialogues have, among other things, been based on PFA’s decisions to vote:

o against board members, for example due to the removal of SBTi commitments, low gender diversity on the board, or a lack of responsiveness in engagement dialogue
o against the chair of the board where there is no human rights policy
o against executive remuneration packages where there is no clear link between pay and the integration of climate risks

Due diligence for unlisted investments:

In 2024, PFA engaged in dialogue with a number of managers during the due diligence phase for new unlisted investments – including Verdensmålfond II (’SDG Fund II’), a public-private partnership between Impact Fund Denmark and private investors.

Through this process, we identified sustainability-related risks and opportunities associated with these investments.

Dialogue on improved ESG data for unlisted investments:

In 2024, PFA continued its focus on improving the availability and quality of ESG data for unlisted investments, in collaboration with our data provider. This is essential to ensure a robust foundation for setting CO₂ reduction targets, prioritizing climate and sustainability actions, and meeting reporting requirements under new EU frameworks.

While the ESG data coverage has improved since 2023, PFA continued in 2024 to expand and strengthen the data foundation by engaging with the vast majority of unlisted investments – both direct investments and fund investments. In addition, we have engaged with selected trustees to support these efforts.

Selected completed dialogues and efforts: 

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 the development and operation of wind power and solar parks. In 2023, PFA engaged in dialogue with European Energy and Copenhagen Infrastructure Partners, and in 2024 PFA initiated discussions with Ørsted in its role as infrastructure manager. Renewable energy is essential for the green transition, but must be developed with due consideration for nature.

Dialogue on global plastic pollution:

PFA has prioritized engaging in dialogue with Nestlé, Unilever and Colgate-Palmolive regarding their impact on, and management of, global plastic pollution in their value chains – an area that illustrates the link between limited circularity and the loss of biodiversity and ecosystems.

All three companies are actively working to reduce the use of virgin plastic and to ensure that the packaging of their products can be recycled, including by setting targets in line with the Ellen MacArthur Foundation framework. At the same time, further action is needed from companies, the public sector and consumers to ensure that plastic does not end up in nature. PFA expects that conditions for further progress will improve if the UN adopts a legally binding global treaty on plastic pollution in 2025.

Thematic dialogue on human rights:

PFA takes a strong stance against human rights violations and has sought to strengthen practices in this area within the mining, electronics and cocoa sectors through the thematic engagement programme Human Rights Accelerator.

This work has been carried out in collaboration with investors in the Nordic Engagement Cooperation (including investors from Sweden, Norway and Finland), as well as PFA’s external advisor and other like-minded investors. The programme was completed in the first half of 2025 and involved dialogue with just over 20 companies aimed at strengthening their implementation of the UN Guiding Principles on Business and Human Rights (UNGPs).

Since these dialogues began in 2022, progress has been made in several areas such as the integration of human rights into companies’ due diligence practices, grievance mechanisms and corporate governance (including board oversight and the integration of human rights into executive remuneration).

Dialogues with mining companies about work culture:

In 2022, PFA engaged in dialogue with, and sent investor letters to, selected mining and metals companies based on a report about work culture at Rio Tinto. At 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 identified a number of serious issues, including discrimination, bullying and harassment.

Following publication of the report, PFA contacted Rio Tinto directly and held a meeting with the company, where the report and its proposals for cultural change were reviewed and discussed. We also contacted our external advisor, Sustainalytics, to obtain their assessment of the matter.

As the issue is not limited to Rio Tinto, we also chose to reach out to other mining and metals companies in which we are invested, with a view to improving the monitoring and handling of work culture across the sector. In total, PFA contacted ten companies, including sending letters to five and engaging in dialogue with five.

With regard to Rio Tinto, we recognise that the company has prioritised the issue and initiated action, including commissioning and publishing the report itself. The implementation of the measures proposed in the report was evaluated in 2024. PFA has remained in direct contact with the company, and almost all measures have been implemented as planned. At the same time, the company acknowledges that changes in work culture require ongoing effort, which is why cases of discrimination, bullying and harassment still occur. PFA continues to follow developments through dialogue and company reporting.

Dialogue with Shell in the oil and gas sector:

Active ownership dialogue is a key element in the effort to reduce CO₂e emissions from PFA’s investment portfolio. While PFA does not consider divestment to be a sufficient long-term strategy on its own, it may be applied where, for example, the opportunities for dialogue are assessed to be exhausted and/or the risks associated with the investment are considered too high.

In 2024, PFA decided to divest its investment in the oil and gas company Royal Dutch Shell (Shell). PFA has had a constructive and direct dialogue with Shell since 2019–2020, when we chose to divest our listed investments in a number of oil and gas producers and concentrate our equity exposure in two companies: Shell and TotalEnergies. This was done to strengthen our ability to exert influence as an investor while focusing on companies considered to be most advanced in their transition efforts. PFA continued its dialogue with Shell in 2024, including attending the company’s sustainability strategy day. PFA communicated the need for greater clarity regarding Shell’s future CapEx in low-emission energy solutions, as well as the thresholds applied to limit the climate impact of new oil and gas production. We had expected both elements to be more clearly reflected in the company’s updated transition strategy in the first half of 2024. On this basis, PFA chose to divest from Shell in 2024.

Dialogue on tax practices with pharmaceutical and technology companies:

PFA does not support aggressive tax planning and has worked to improve tax practices among pharmaceutical and technology companies through the thematic engagement programme Taxation 2.0, carried out in collaboration with external advisors and like-minded investors.

The aim of the programme has been to improve transparency among selected companies, including in relation to tax practices, effective tax rates and internal governance. By the end of 2022, companies such as SAP, Biogen and eBay had made the most progress in increasing public disclosures.
Tax practices have received increased international attention, including through the OECD agreement on a 15% minimum tax for multinational companies and the EU directive on country-by-country reporting. In 2023, the programme focused in particular on companies’ lobbying activities in relation to regulatory proposals in Australia. The programme was completed in 2024 and resulted in improvements in transparency and tax governance, including the introduction of tax policies by some companies.

Dialogue on politics within human rights:

PFA has engaged in dialogue with, and/or sent investor letters to, Blackstone, Hiscox, Charles Schwab and Great-West Lifeco regarding the establishment of formal human rights policies following a screening of potential adverse sustainability impacts in 2023. Two of the companies (Hiscox and Charles Schwab) have since established explicit human rights policies.

Dialogue on water supply management:

Water scarcity is a global challenge that requires local solutions. The growing pressure on freshwater resources represents an economic, social and environmental risk worldwide, and poses a significant challenge for many companies.

Through the thematic engagement programme Localized Water Management, PFA has sought to improve water management practices among 18 companies, in collaboration with our external advisor and like-minded investors. The programme, which began in 2020, initially focused on companies operating along the Tietê River in Brazil and the Vaal River in South Africa.

The programme was completed in the first quarter of 2023 and resulted in improvements in companies’ water management practices, including the establishment of water consumption targets, reductions in water use, and the implementation of climate scenario analyses.

Dialogue with Bunge on deforestation:

In the spring of 2022, PFA entered into a dialogue with Bunge regarding the risk of deforestation associated with the company’s sourcing of palm oil and soy in Brazil.

Following in-depth responses from the company outlining its practices to mitigate deforestation risks—including the tracking and monitoring of suppliers and a commitment to deforestation-free supply chains by 2025—the PFA-driven dialogue has, for the time being, been concluded without further action.
However, PFA will continue to monitor Bunge’s development on an ongoing basis in collaboration with our external advisor, who will maintain the dialogue with the company.

Dialogue with Johnson & Johnson on product safety:

In collaboration with our external advisor, PFA has engaged in dialogue with 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 presented, including the introduction of a new, group-wide safety standard.

In November 2019, PFA held a conference call with J&J, where we gained insight into the company’s views on ongoing legal cases concerning talcum powder, opioids and Risperdal.

In April–May 2020, there was further dialogue in connection with COVID-19, where PFA questioned how J&J ensured the continued application of its established R&D protocols despite the speed at which a vaccine was developed.

While the company is still seeking final decisions in several product-related cases, the dialogue is currently considered closed. PFA expects the company to incorporate its experience more systematically into its safety protocols and control procedures, thereby reducing the risk of future product safety cases.
At the same time, it is recommended that the company develops guidelines for increased transparency around product-related data, so that any issues can be communicated to consumers as early as possible.

Dialogue on TCFD reporting with Carrefour and Ahold Delhaize:

Since 2021, PFA has engaged in dialogue with Carrefour and Ahold Delhaize – two of the world’s largest retail companies – on the integration of TCFD recommendations, in collaboration with an external advisor and investors in the Nordic Engagement Cooperation (NEC).

The TCFD (Task Force on Climate-related Financial Disclosures) is an internationally recognized framework for the identification, management and reporting of climate-related risks. PFA encourages the companies we invest in to follow these recommendations, as failure to manage climate-related risks can negatively affect the companies and, ultimately, the value of our investments.

The dialogue with the two companies has now been concluded following improvements in their integration of TCFD recommendations. In addition, both companies have set science-based reduction targets verified by the Science-Based Targets initiative (SBTi).

Dialogue and investor letters on SBTi and value chain emissions (Climate Plus):

In 2022, PFA sent investor letters to, and/or entered into dialogue with, companies in the PFA Climate Plus equity portfolio that had not yet joined the Science-Based Targets initiative (SBTi). SBTi is among the most recognized initiatives for the scientific validation of companies’ reduction targets, which makes participation important for PFA’s work to reduce the carbon footprint of our investment portfolio.

At the same time, PFA engaged with companies that had already obtained SBTi validation, with a view to addressing reductions in greenhouse gas (GHG) emissions across the value chain. As companies’ activities are closely linked to their suppliers and customers, emissions reductions must also consider Scope 3 emissions. It is therefore important for PFA that companies take a holistic approach to their reduction plans.

In total, PFA contacted 40 companies, including through investor letters to 21 companies and dialogue with 19 companies.

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

The thematic engagement programme Child Labour in Cocoa, carried out in collaboration with PFA’s external advisor and like-minded investors, was completed in summer 2022.

The programme focused on addressing child labour in the cocoa sector, particularly in Côte d’Ivoire and Ghana, where it remains a systemic issue.
As part of the programme, PFA and other investors encouraged companies to strengthen supply chain controls through Child Labour Monitoring and Remediation Systems (CLMRS).

Despite a global increase in child labour following the COVID-19 pandemic, six out of seven participating companies have now implemented CLMRS systems covering more than 50% of their supply chains.

Dialogue with Danske Bank on money laundering:

In the period from 2007 to 2015, Danske Bank carried out illegal transactions for customers in its Eastern European branches.

As the case developed, PFA continually requested further information on the bank’s review of earlier high-risk transactions and the allocation of resources to its anti-money laundering efforts. PFA expects the bank to continue its work to improve transparency in this area.

PFA acknowledges that the bank has undergone a transformation process and continues to support its efforts to move in a more responsible direction. We have supported the establishment of a new board of directors to strengthen the bank’s focus on its business and its relationships with investors, customers and society.

In December 2022, Danske Bank agreed to pay a fine of DKK 1 billion to US and Danish authorities. PFA continues to monitor developments but considers the dialogue closed.

Dialogue with TotalEnergies on activities in Russia:

PFA strongly distances itself from the completely unacceptable Russian aggression and war in Ukraine and expects companies in which we have invested 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 the company conducts activities in Russia through a number of minority stakes in non-state-owned oil and gas companies and that it purchases Russian oil and gas primarily for the European market.

Key developments:

o March 2022: TotalEnergies announced a plan to stop purchasing oil from Russia as quickly as possible, and no later than by the end of 2022, and to gradually suspend its Russian activities. The company notified its intention to stop purchasing oil from the end of 2022 in week 12 of 2022.

o December 2022: The company has stopped purchasing Russian oil and has gradually suspended its Russian activities. TotalEnergies has removed its two representatives from the board of Novatek, Russia’s largest private gas exporter. The company has reduced the value of its 19.4% minority stake in Novatek but does not have the option to divest this holding, as one of Novatek’s major shareholders is subject to Western sanctions.

Dialogue with Freeport-McMoRan on environmental impacts:

PFA has entered into a dialogue with Freeport-McMoRan to gain insight into the company’s practices relating to environmental challenges associated with its mining operations. This includes, among other things, the use of river tailings disposal in Indonesia and issues related to water consumption in Chile. Through this dialogue, PFA seeks to ensure that the company makes sufficient efforts to protect its surroundings and the environment.

Dialogue with TotalEnergies on activities in Myanmar:

PFA has entered into a critical dialogue with TotalEnergies regarding its activities in Myanmar following the removal of the country’s leader, Aung San Suu Kyi, and the democratically elected government by the military junta in a coup in February 2021. PFA distances itself from the military junta and considers the situation in Myanmar to be serious, which is why we sought to understand the rationale and scope of TotalEnergies’ continued presence in the country. In particular, we sought clarification of the relationship with Myanmar Oil & Gas Enterprise (MOGE) and how TotalEnergies managed the risk of indirectly supporting the military regime through its business activities.

The dialogue proceeded as follows:

o In the period from May to December 2021, PFA held several meetings and exchanged correspondence with TotalEnergies, where we requested the company’s assessment and handling of the situation in Myanmar. PFA communicated its concerns and requested responses to a number of questions. TotalEnergies acknowledged the complexity of the situation and indicated that it would seek to address it, including through engagement at board level.

o At the same time, PFA consulted an NGO with expertise in the conflict and assessed the company’s precautionary measures. Based on input from Sustainalytics, PFA considered these measures to be appropriate in the short term, although a prolonged military regime would present challenges for the company’s continued presence.

o In February 2022, one year after the military coup, TotalEnergies’ top management informed PFA that the company would withdraw from its activities in Myanmar due to the unsustainable situation and external expectations. TotalEnergies divested its interests and transferred operations over six months.

o On this basis, PFA considers the dialogue regarding Myanmar to have been concluded. PFA continues to engage with TotalEnergies on the company’s green transition, which we follow closely.

Dialogue with Rio Tinto on violations of indigenous peoples’ rights: 

Over time, Rio Tinto has been involved in several cases concerning violations of indigenous peoples’ rights. In 2020, the company was involved in another such case when it destroyed two sacred Aboriginal sites in Australia in connection with the expansion of an iron ore mine. As a result, three members of Rio Tinto’s management team, including the CEO, were dismissed.

The purpose of the dialogue is to ensure that the company compensates the affected community. In addition, Rio Tinto must ensure that its community relations function is fully integrated into its operations, so that operational decisions do not violate the rights of local communities and similar incidents are avoided in the future.

Dialogue with Macquarie on dividend tax fraud:

Since 2018, PFA has been in dialogue with Macquarie following the disclosure of the company’s involvement in dividend tax fraud. PFA continues its critical dialogue with Macquarie on this issue and has decided not to enter into new partnerships with the company until the full facts of the case are clarified.

The outcome of ongoing investigations will be an important factor in determining whether PFA will engage in future business with the company. Among other things, PFA is awaiting the outcome of an ongoing court case in Germany involving Macquarie before reassessing its position. PFA shares this view with both ATP and PKA.

Dialogue with Samsung Electronics on corruption allegations:

PFA’s external asset manager, which holds investments in Samsung Electronics, has been in dialogue with the company’s management regarding concerns about transparency and allegations of corruption. Samsung Electronics has launched initiatives to strengthen its governance, and PFA will continue to monitor developments together with its external asset manager.

Support for CDP’s Science-Based Targets Campaign:

Building on earlier efforts in 2022 and 2023 to promote externally verified emissions reduction targets among listed companies in Climate Plus, PFA has chosen to support CDP’s Science-Based Targets Campaign.
The campaign promotes the adoption of the Science-Based Targets initiative (SBTi), including through investor letters sent to more than 1,000 companies globally.

Investor letters to US banks on fossil fuel financing:

As a follow-up to voting at the general meetings of six US banks in spring 2022, PFA sent letters outlining our key messages to the banks in question (JP Morgan, Morgan Stanley, Goldman Sachs Group, Wells Fargo & Co., Bank of America and Citigroup) regarding their policies on fossil fuel financing.

PFA did not support the shareholder proposals on fossil fuel financing, as these proposed an immediate phase-out of all financing of the oil and gas sector within the current year. Such a sudden transition could have negative implications for energy security, dependence on Russian energy, and the financial stability of the banks in which pension funds are invested.

While PFA does not seek to impose overly restrictive frameworks on companies through shareholder proposals, we see investor letters as an effective way to communicate our expectations and influence company direction.

Divestment of Anta Sports due to human rights violations:

Anta Sports withdrew from the Better Cotton Initiative (BCI) in order to continue sourcing cotton from Xinjiang in China, despite widespread concerns about human rights violations in the region.

On this basis, PFA contacted the company to seek clarification regarding these issues. Due to the lack of response and the significant sustainability risks associated with the company, PFA chose to divest its investment in Anta Sports in 2022.