PFA's initiatives and dialogues with companies

TotalEnergies in the oil and gas sector

The mining sector

Climate Action 100+

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. 

You can read more about PFA’s position in relation to the transition from fossil to climate-friendly energy here

In continuation of PFA’s own support for the Science-based Targets Initiative (SBTi) in February 2024, PFA has been in dialogue and sent investors letters to priority companies where we have urged companies to align CO2 reduction targets with the SBTi framework for this. This is an effort that we will continue to work with in 2025.  

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. The dialogues started in 2024 and, in addition to acknowledging the companies’ ambitions to contribute positively to nature, the focus has been on the companies’ efforts in assessing nature-related impacts, dependencies, risks and opportunities, which is currently the biggest challenge for all companies in the Nature Action 100 initiative.

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. The programme involves dialogue with the priority companies in order to promote the integration of nature-related risks. In 2024, a particular focus has been on nature-related reporting in line with increased regulation in the field (including the CSRD Directive) and the TNFD recommendations.

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. In 2023 PFA was in dialogue with European Energy and Copenhagen Infrastructure Partners, and in 2024 PFA initiated talks with Ørsted as infrastructure manager. Renewable energy is essential for the green transition, but must be established with regard to nature. 

In 2024, PFA held dialogues with a number of managers in the due diligence phase for new unlisted investments – including Verdensmålfond II (‘Global Goal Fund II’), a public-private partnership between IFU (Investment Fund for Developing Countries) and private investors – where we have uncovered sustainability-related risks and opportunities associated with the investments.

In 2024, PFA remained focused on improving the availability and quality of ESG data for unlisted investments in a partnership with our data supplier so that also here we can have a solid foundation for working with CO2 reduction targets and prioritise action areas for climate and sustainability issues and report on this pursuant to the new EU frameworks for working with sustainability and ESG. The ESG data basis has increased since 2023, but in 2024 PFA has continued to seek to gather and improve the data base by contacting the vast majority of unlisted investments, both direct and fund investments. In addition, PFA has held dialogues with selected trustees with the same aim.  

As a construction client and property investor, PFA has, throughout 2024, maintained an ongoing focus making energy optimisation and CO2-reducing initiatives from previous periods by way of entering into dialogues with contractors and property administrators and managers. Among other things, automated energy and resource management systems has been installed on properties as well as additional electric car charging points and solar panels. The process from 2023 to transform from natural gas to district heating/heat pumps continued in 2024. The majority of properties in the product now have district heating/heat pumps. In 2024, as well as in 2023, focus has also been on waste prevention and circular economy in renovations and remodels.

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 actively working to reduce the use of virgin plastic and to ensure that the packaging of the goods they sell can be recycled, including by setting goals in line with the Ellen MacArthur Foundation framework for this. At the same time, further action is still needed from companies, the public sector and consumers to ensure that plastic does not end up in nature, and PFA expects that the possibilities for this will improve when the UN hopefully adopts a legally binding global treaty against plastic pollution in 2025.

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. In 2024, the companies progressed in the areas of human rights oversight, link between human rights integration and executive remuneration as well as grievance mechanisms.

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 2024, this resulted in dialogue with 36 companies about issues such as corporate governance, environmental management and social matters. 

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 dialogues 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 implementation of the specific initiatives proposed in the report was evaluated in 2024. PFA has been in direct contact with Rio Tinto, and almost all measures are implemented as planned. At the same time, the company acknowledges that changes in work culture require a continuous effort over time, which is why there are still cases of discrimination, bullying and abuse. PFA follows up through the dialogue and status reports from the company.

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’ 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. In 2024, through emails and a meeting with Amazon, we have pushed for the company to document how the right for employees to organise in a trade union as well as negotiate wages and working conditions collectively is incorporated into Amazon’s processes.

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. 

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.  

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. PFA’s external advisor, Sustainalytics, is conducting the dialogue with Freeport-McMoRan and BHP through the initiative.

Active ownership dialogue is a fundamental part of the work to reduce CO2e emissions from PFA’s investment portfolio. Although PFA believes that divestment cannot stand alone as a long-term strategy for achieving CO2e reductions in the real economy, PFA does not exclude divestment if, for example, the possibilities for dialogue are assessed as being exhausted and/or the risks associated with the investment are assessed to be too high.

In 2024, we have chosen to divest our investment in the oil and gas company Royal Dutch Shell (Shell). PFA has had a constructive 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 share exposure to two companies: Shell and TotalEnergies. We did this to increase the opportunities to exert influence as an investor while focusing on companies that were most serious in their work with transition. In 2024, PFA has had ongoing dialogue with Shell, and at the beginning of the year we physically attended the company’s sustainability strategy day. PFA has expressed to the company (including during our attendance at the company’s general meeting in 2023) the need for clarity about Shell’s future CapEx for low-emission energy solutions and about which threshold values are used to ensure that the climate impact is limited by new oil and gas extraction. We had expected both elements to be more clearly reflected in the company’s updated transition strategy in the first half of 2024. Against this background, PFA has chosen to divest Shell in 2024.

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 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). The programme was completed in 2024 and has resulted in improvements in corporate transparency and tax policies (internal governance). Some have introduced tax policies for the first time. 

PFA has been in dialogue with and/or sent investor letters to Blackstone, Hiscox, Charles Schwab and Great-West Lifeco on the establishment of an explicit human rights policy following a screening of potential negative sustainability impacts of the investments in 2023. Two of the companies (Hiscox and Charles Schwab) have now established policies for the upholding of human rights.  

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.  

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.

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. While the company seeks final decisions on various lawsuits related to the product safety cases, the dialogue is considered closed for the time being. 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.

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).

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.  

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. 

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.  

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. 

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. 

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 TotalEnergies’ 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.

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. 

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. 

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.

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.  

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.