Responsible Investments

As an investor, PFA wants to be responsible and contribute to the creation of the desired level of economic growth on a responsible foundation. For this reason, PFA aims to implement internationally recognised, social, environmental and governmental factors as an integrated part of the investment process.

Policy and guidelines for responsible investments

PFA's policy for responsible investments forms the basis of our work with integrating responsibility into the investment processes. The policy and guidelines are based on international principles and the UN’s conventions and guidelines. The policy has been adopted by PFA's Supervisory Board and is administered on a day-to-day basis by PFA’s RI Board, portfolio managers and the CR Manager.

PFA's policy for responsible investments

PFA’s Responsible Investment Board (RI Board) oversees compliance with the policy for responsible investments and guidelines for the area. The RI Board meets on a monthly basis. Furthermore, the RI Board also makes decisions on matters on a day-to-day basis when necessary.

The RI Board consists of executive employees from the investment area and the CR Manager and reports to Group Management.

Terms of reference for PFA's Responsible Investment Board

 

Read about the scope of the policy

Investments in line with PFA’s policy
PFA’s policy for responsible investments applies to all investments decided on by PFA.

If a company in which PFA invests violates international standards, PFA’s aim is to influence the company to change its practices. If this change does not come into effect within a reasonable period of time, the company may be excluded from PFA’s investment universe. Companies that produce controversial weapons such as cluster weapons, anti-personnel landmines or nuclear weapons are excluded without dialogue.

When PFA collaborates with external investment funds, they all receive PFA’s exclusion list, so that they can ensure that the investments are in line with PFA's policy for responsible investments. In 2014, PFA introduced index-linked funds managed by PFA to ensure that the customers do not accidentally invest in companies that produce cluster weapons, anti-personnel landmines or nuclear weapons.

 
PFA’s targets for compliance with responsible tax practice in the investment process

Responsible tax practice is a vital feature in the work on responsible investments. Therefore, we have policies and guidelines for how we implement responsible tax practice in our investment processes.

Read PFA’s tax policy for the PFA Group

Read the guidelines for implementing responsible tax practice into the investment process

Investor cooperation on a common tax code of conduct

PFA, ATP, PensionDanmark and Industriens Pension have developed a common tax code of conduct with principles and recommendations for unlisted investments.

Read the tax code of conduct

Screening and evaluation of investments

Among other things, PFA’s share portfolio is evaluated and screened for compliance with international conventions that are covered by the UN Global Compact’s 10 principles on respect for human rights, labour rights, the environment and anti-corruption. If a company’s actions conflict with PFA’s standards and guidelines, dialogue is commenced and so is a real engagement procedure to bring about a change in the company’s practices.

If there is a reason to believe that an infringement of standards has occurred, an evaluation process is commenced to clarify whether a potential infringement of standards can be confirmed or not.

PFA’s RI Board reports to Group Management. The RI Board deals with engagement and evaluation issues, assesses to what extent there have been improvements or a backward step, and what consequences this will have for PFA’s investment process.

 

Responsible Investments - process in outline

PFA cooperates with the screening and engagement company GES, which, among other things, screens and enters into dialogue with companies concerning compliance with international conventions that are covered by the UN Global Compact’s 10 principles on respect for human rights, labour rights, the environment and anti-corruption.

An important element in the screening is dialogue with the company to establish whether the company has violated international standards or not. If non-compliance is confirmed, a so-called engagement dialogue commences, during which specific targets are laid down with regards to which changes the company should make in order to change its practices. The engagement dialogue is based on criteria which focus on how the company can change its systems and behaviour in order to reduce the probability of non-compliance in future. The process with the company cannot be completed until it has been established that practices have been changed and that this has been verified by a third party.

PFA regularly receives screening results in the form of a focus list and an evaluation list. PFA assesses the progress in each case and also engages in dialogue with a number of the companies. It is PFA’s Responsible Investment Board that decides whether PFA continues to trust that a company on the focus list is developing positively or whether PFA wants to divest the company.

Process for responsible investments in outline
Active ownership

PFA aims to be an active owner who influences companies to move in the direction of responsible value creation and in that way ensure the highest possible return on investment in the long term. This means that PFA is an investor who monitors and is in continuous contact with a wide range of companies in which PFA invests. On behalf of PFA, the screening and engagement company GES enters into a more formalised engagement dialogue with those companies that violate PFA’s guidelines. PFA also engages in dialogue with a number of these companies.

Engagement is the first solution when a company violates PFA’s guidelines and ethical standards. PFA uses its right to vote at the annual general meeting of listed companies in Denmark and in companies on foreign markets when it is relevant to do so.

  

Nordic Engagement Cooperation
PFA is part of the investor cooperation Nordic Engagement Cooperation (NEC), which, in addition to PFA, consists of Folksam from Sweden, Ilmarinen from Finland and KLP from Norway. The objective of NEC is to cooperate on active ownership dialogue with companies which all four members have invested in. The dialogue prioritises companies with a defined risk in relation to environmental, social or governance challenges.  The dialogue with companies is carried out in cooperation with the engagement and analysis company Sustainalytics, and an annual report is published, which review the activities for the year and describes how the dialogue relates to the UN’s Global Goals for Sustainable Development.

Read the Nordic Engagement Cooperation report 2018

Read more about active ownership

It is PFA’s aim to be an active owner and a responsible investor. This means that we are regularly in contact with the management of a number of companies in which we are investing, in order to ensure a long-term return that is as high as possible. In the dialogue with the management, PFA focuses on a number of elements, for instance:

- An appropriate division of labour between the board of directors and the executive board, where the board of directors participates actively in the preparation of the company’s strategy plan, and efforts are made to ensure shareholder value.
- A high level of information in financial statements, equality of investors in relation to information from the executive board and board of directors, and a good appreciation of the demands and expectations of the shareholders.
- An open ownership structure and equal treatment of minority shareholders.

PFA’s policy on responsible investment
PFA attaches importance to the companies that are being invested in acting responsibly and complying with recognised, international standards and guidelines. Through an external supplier, PFA screens the companies that it invests in, and, based on the results, a dialogue is commenced with the companies that violate PFA’s standards. This happens with the cooperation of the screening and engagement company GES.

PFA’s work with active ownership is most often carried out in a confidential dialogue and process with the company in question. In our experience, this ensures the best results in getting companies to change their practices in specific areas. When relevant, PFA cooperates with GES or other investors. This will typically be in connection with investment in international companies, where the effect of more investors banding together to influence a company is bigger.

Progress of dialogue with selected companies
In 2015, PFA made it an objective to communicate about the progress of the work with active ownership without compromising the confidentiality that is needed in the dialogue with the companies. Therefore, the site is updated regularly.

The process of dialogue with companies
PFA does not wish to contribute to any illegal or convention-violating activities. As a responsible investor, PFA prioritises having a dialogue with the companies in order to work on making them change their behaviour. During the course of the dialogue with the companies, it is PFA’s Responsible Investment Board that continuously assesses whether there is confidence in the company, or whether the company should be divested and excluded.

Danske Bank
The results of the bank’s internal report published on 19 September 2018 establish that the extent of its activities is much more widespread and runs deeper than expected.

It is highly reprehensible and disappointing that, during the period 2007-2015, neither the internal processes nor the control of the activities that led to money laundering proved adequate. Obviously, the bank is facing a much larger challenge of restoring trust than assumed in the first place.

As an active owner PFA has, since March 2017, been in dialogue with Danske Bank regarding illegal transactions carried out in the bank’s Eastern European branches. As the case has developed, PFA has regularly inquired into Danske Bank’s reviews of previous risky transactions as well as the allocation of resources to its anti-money laundering processes. PFA has a clear expectation that the bank will continue to be transparent about its efforts.

PFA recognises that the bank has been through a transformation, and PFA continues to take part in moving Danske Bank in the right direction. Therefore, PFA has supported a wide-ranging adjustment of the Board of Directors in Danske Bank with a view to establishing a new team that can focus on the core business and the important relations with investors, customers and society.

In connection with Danske Bank’s dismissal of several members of its executive staff in June 2019, PFA has opened a dialogue with a member of Danske Bank’s top management. PFA has asked that the bank continues to give priority to transparency in its efforts to uncover the money laundering activities in Estonia and that the present management will continue its review of earlier decisions in order to restore the confidence in the bank.

PFA will continue its dialogue with Danske Bank.

Syngenta

In December 2014, PFA was presented with a report and a video showing highly criticisable conditions in Syngenta’s supplier chain. PFA had an analysis prepared by GES about the company’s practices, and it then initiated a dialogue with the company. PFA has awaited Fair Labor Association’s (FLA) report (Procurement price and credit practices in Syngenta hybrid seeds supply chain, India), on Syngenta’s supply chain, which was published on 1 July 2015. In 2016, PFA followed up on the company in connection with its work in this area. PFA has learned that according to recommendations from, for instance, a multi-stakeholder consultation, Syngenta has initiated two pilot projects in India with the purpose of ensuring a minimum wage to the employees in the company’s supply chain. The projects will run until autumn 2017, and PFA will await the results of the pilot projects. Syngenta has since been acquired by ChemChina, and PFA no longer has any investments in the company. PFA has therefore ended its dialogue.

Volkswagen
PFA is following the developments in the company, including the initiatives that the company launches in order to change its practices and thus ensure that Volkswagen’s products live up to the existing international and local environmental standards. PFA is part of a group action against the company, which has resulted in the company declining to hold investor-related meetings with PFA. PFA is working at establishing a direct dialogue with Volkswagen. Together with 10 other investors, PFA has contacted the company to urge dialogue. The purpose is to address the lack of transparency. If this is unsuccessful, PFA’s RI Board will reconsider the situation.

Ryanair
On behalf of PFA and other investors, the screening and engagement company GES has been in dialogue with Ryanair in order to clarify questions about the company’s practices towards its employees in relation to the rights that are a part of the ILO conventions. In this connection, no clear breaches of international conventions on labour market conditions have been established.

PFA has followed Ryanair's business practices with worry, including the working conditions of its employees and, most recently, the case at the Danish Labour Court. The case illustrates the company’s lack of interest in adapting to local conditions and the related risk. On this basis, PFA’s RI Board has decided that PFA does not wish to invest in the company.

Cement Roadstone Holding (CRH)
Since 2014, PFA has been in dialogue with the company to clarify a number of circumstances in relation to the company’s affiliation with an Israeli company and thus its potential involvement in convention-violating activities on the occupied West Bank. In January 2016, the company went public and confirmed that it had sold off its share of the Israeli company. With that, the affiliation has ended and PFA’s RI Board has decided to halt its dialogue.

Rio Tinto
Since 2016, PFA has been in dialogue with the company to clarify how its mining activities in Indonesia affect the environment. The background for the dialogue has been the company’s use of riverine tailings disposal. The company has confirmed that it is actively working on measuring its impact on the local environmental conditions, and that it has established areas for nature rehabilitation. PFA’s adviser has confirmed that data from Indonesia shows that the company’s practice is ‘best practice’ and that alternative methods for disposal of waste water would not be any better. On this basis, PFA has ended its dialogue with the company about its environmental impact in Indonesia.

Freeport McMoRan
Since 2016, PFA has been in dialogue with the company to clarify how its mining activities in Indonesia affect the environment. The background for the dialogue has been the company’s use of riverine tailings disposal. The company has confirmed that it is actively working on measuring its impact on the local environmental conditions, and that it has established areas for nature rehabilitation. PFA’s adviser has confirmed that data from Indonesia shows that the company’s practice is ‘best practice’ and that alternative methods for disposal of waste water would not be any better. On this basis, PFA has ended its dialogue with the company about its environmental impact in Indonesia.

Maersk
PFA has been in dialogue with Maersk regarding the company’s policy on ship recycling and its cooperation with the ship recycling yard Shree Ram in India. The dialogue has focused on the work with upgrading the facilities in India with a view to ensuring that the ships are scrapped in an environmentally safe manner, including how to avoid that the ship components get in contact with the intertidal zone. The dialogue has also covered the standard used when ships are scrapped outside the EU. Our dialogue with Maersk will continue with focus on the company complying with current environmental legislation, use of external verification, the Hong Kong Convention and the European List of ship recycling facilities.

Nestlé
PFA has entered into dialogue with the company to discuss its sustainability programme, including the handling of child labour in their supply chain. PFA has visited Nestlé in Côte d’Ivoire, where the company has introduced the ’Child Labour Monitoring and Remediation System’ (CLMRS) with the purpose of identifying child labour and finding solutions to the problem. PFA will be in a continuous dialogue with Nestlé to follow up on the company’s progress and discuss the extent of the sustainability programmes.
 
GlencoreXstrata
PFA has been in dialogue with the company regarding the environmental effects of their mine in Mount Isa, Australia. PFA and the company have discussed the company’s progress in reducing air pollution and its work on reducing the negative effects on water quality in the area around the mine. PFA has also been in dialogue with the company’s human rights due diligence in Western Sahara. At the end of 2017, the company confirmed that they were no longer conducting any business operations in Western Sahara, and that the company's human rights policies now comprise activities in areas in conflict. In 2018 PFA sold off the greater part of its investment in Glencore. After the disposal, PFA will no longer prioritize direct dialogue with the company. Instead, the active ownership dialogue will be handled by the screening and engagement company GES International, through which PFA will follow Glencore's progress. 

Chevron
PFA has followed up on the company’s latest annual general meeting, where PFA supported a resolution about the importance of the company reporting its future efforts in relation to strategic climate change adaption activities until 2035.

ExxonMobil

PFA has followed up on the company’s latest annual general meeting, where PFA supported a resolution about the importance of the company reporting its future efforts in relation to strategic climate change adaption activities until 2040.

Expedia
PFA contacted the company to get its opinion on the accusations of being linked to human rights violations described in the Danwatch report ‘Business on forbidden land’ from 2017. We have not yet succeeded in engaging in dialogue with the company, but we continue to pursue this dialogue.

Samsung Electronics
PFA’s external manager, who has invested in the company, has been in contact with the company’s executive management in order to address the lack of transparency and allegations of corruption. Samsung Electronics has initiated a corporate governance review, and PFA will monitor the case in cooperation with the external manager.

Sun Hung Kai Properties
PFA’s external manager, who has invested in the company, has contacted the company in order to address any potential human rights violations as a result of its security contracts on Nauru and Papua New Guinea. The company has informed PFA that it is not considering a renewal of contracts. Together with the external manager, PFA will monitor the case and its developments.

Nordea Bank
PFA has been in dialogue with the company regarding the money laundering case. Nordea Bank has initiated an internal review of transactions that are up to 5 years old. In the meantime, new precautionary measures have been introduced to ensure that similar events will not recur. According to PFA's assessment, the company has taken the necessary steps to comply with the money laundering regulations in the future.

Wal-Mart
In cooperation with 11 other investors, PFA contacted the company to engage in dialogue on labour rights and sustainability. In spite of the initiated dialogue, Wal-Mart will remain on PFA’s exclusion list.

Wal-Mart de Mexico
PFA has excluded Wal-Mart Stores Inc. but not the company Walmart de Mexico (Walmex), which runs Walmart stores in Mexico and Central America, among other countries. PFA has entered into dialogue with its relevant adviser, who confirms that Walmex allows its employees to be members of a trade union. This means that Walmex does not violate the PFA guideline that led to the exclusion of Wal-Mart Stores Inc.

Enbridge Inc.
Together with a number of other investors, PFA entered into dialogue with Enbridge about how the company can make its influence felt in connection with its investments in the Dakota Access Pipeline project (DAPL). The dialogue with Enbridge has focused on how the company will improve its policies and guidelines, especially in relation to the UN Special Rapporteurs' assessment of DAPL’s negative impact on the rights of indigenous people. Enbridge has expressed that the company is working on making its influence felt and updating its policies to ensure compliance with relevant international standards. During 2018, PFA will continue its dialogue with Enbridge as the primary stakeholder in relation to DAPL and follow the company’s work with calling for dialogue in the DAPL syndicate.

Adani
PFA's external manager has been in dialogue with the management of Adani Ports and Special Economic Zone (Adani) in order to address potential environmental damage in Australia and the company’s overall approach to sustainability. Adani has informed PFA that it has not made use of its permission from the Australian authorities to dump sediment near the Great Barrier Reef. Instead, Adani has decided to dispose of the sediment in the countryside. Historically, Adani has generated a large part of its turnover from coal. The company has now set a target to reduce the turnover from coal from 50 % to 20 %. PFA’s external manager will continue its dialogue with the company.

Energy Transfer Equity and its subsidiary Energy Transfer Partners
PFA has tried to establish dialogue with Energy Transfer Equity. This is the parent company of Energy Transfer Partners, which is responsible for constructing and running the Dakota Access Pipeline. The intention was to put focus on the Dakota Access Pipeline’s negative impact on the rights of indigenous people in the area where the pipeline is constructed. However, neither PFA nor PFA’s screening and engagement company has been able to initiate dialogue with Energy Transfer Equity.

PFA supports the UN Special Rapporteurs' assessment of the case concerning the Dakota Access Pipeline, and the activities conflict with PFA's policy for responsible investments. As the company does not wish to enter into dialogue, PFA has sold off its investment and excluded Energy Transfer Equity and its subsidiary Energy Transfer Partners.

JBS SA
PFA has joined 30 international investors to call on the Brazilian company JBS SA to make a number of changes. The group of investors calls on the company to address bribing issues in Brazil, ensure the observance of labour rights in the supply chain and ensure the future inclusion of ESG assessments of the salaries at management level in the remuneration structure. PFA participated in a meeting with the company during which its new compliance process was presented. The new compliance process involves the implementation of a whistleblower scheme, and external consultants are helping ensure this implementation. PFA will continue to focus on the company and its implementation of the compliance processes.

Chevron Corp
PFA is aware of the environmental risks that Chevron has assumed in Ecuador in connection with the company’s acquisition of Texaco in 2001. In 1995, Texaco was sentenced to pay for the rectification of environmental damage in Ecuador. After having paid damages, Texaco’s activities and commitments in Ecuador were taken over by their joint venture partner, Petroecuador. In 2013, Chevron was sentenced to pay damages based on Texaco’s activities – a suit that was later rejected in the US in 2014 and 2016 because of corruption and bribery during the lawsuit in Ecuador. Because of the conviction in the US, PFA has decided not to enter into dialogue with Chevron concerning Texaco’s previous activities in Ecuador, unless new information gives cause for it.

Phillips 66
In cooperation with other investors, PFA has approached Phillips 66 in connection with the company’s investment in the Dakota Access Pipeline project (DAPL). Phillips 66 has agreed to enter into dialogue, and PFA’s focus is on how the company will improve its policies and conduct, especially in relation to the UN Special Rapporteurs' assessment of DAPL’s negative impact on the rights of indigenous people. PFA will focus on the dialogue with Phillips 66 during 2018.

Macquarie
In October and November 2018, it was made public that Macquarie has been involved in dividend withholding tax fraud. Obviously, this is completely unacceptable – and at PFA we strongly dissociate ourselves from this.

PFA co-owns TDC together with Macquarie, and, consequently, since we learned about the fraud, we have been entering into a critical dialogue with the Macquarie management. This also includes demanding a report on their involvement and a clarification of the possible structural, procedural, cultural and managerial changes which the bank has implemented to ensure that such behaviour will not be repeated.

As for our investment in TDC, our co-ownership involves a general obligation towards all our customers in PFA, the employees of TDC and the overall Danish society to protect the investment. When entering into the purchase agreement, we entered into a binding agreement in partnership with the consortium behind the purchase of TDC to ensure that all tax payments will be made in accordance with the Danish tax rules. Already from the beginning, it was critical for PFA to ensure that none of the investors in TDC can withdraw tax-free dividends without approval from the Danish authorities.

PFA will continue the critical dialogue with Macquarie on the dividend tax case and has decided not to enter into new co-operations with Macquarie until we have got to the bottom of the case. The result of this will, be vital for whether we will do business with Macquarie in the future.


Active ownership and the exercise of PFA’s voting rights at foreign companies’ annual general meetings
As part of being an active owner, PFA assesses the possibility of voting at annual general meetings of companies that have proposed resolutions that will promote the specific areas where PFA is in dialogue with the company about improvement. PFA assesses agendas for annual general meetings of the companies on PFA's focus list. PFA’s RI Board decides whether or not PFA should exercise its voting rights. In 2017, PFA will work on introducing a more transparent way of facilitating the progress of these efforts. Below we describe examples of the proposals that PFA has backed in any given vote:

Chevron
PFA has decided to support proposals that: the company should publish a report on its lobbying activities, the chairman of the board of directors should be independent, and shareholders holding more than 10 % of the shares should be able to call an extraordinary general meeting. PFA has decided not to back a proposal that the company should make a report about its transition to a low CO2 economy. The reason behind this decision is that the company has already taken steps in this direction by publishing its ’Managing Climate Change Risk’ report, which already addresses the subject and signals a change of attitude since the annual general meeting in 2016.

ExxonMobil
At the annual general meeting, PFA decided to back proposals stating that the company should publish a report on its lobbying activities, the chairman of the board of directors should be independent,  an analysis of Exxon’s role in a two-degree scenario should be published, and  a report on methane gas emissions should be published.

Glencore
PFA backed that the company from 2017 will focus on reporting strategic adjustments regarding the company’s efforts against climate change up to 2040 and after.

Exclusion list

PFA evaluates its exclusion list at least once every six months. Companies that systematically and regularly violate PFA’s standards and do not respond to dialogue are excluded from PFA’s investment options. If a company can show that it has improved its practices, PFA’s RI Board can decide to remove the company from the exclusion list. In addition, companies which contribute to the production of controversial weapons such as cluster weapons, anti-personnel landmines or nuclear weapons are systematically excluded from PFA’s investment options.

 

PFA's exclusion list

PFA keeps an exclusion list of companies and countries that do not comply with our guidelines for responsible investments. This means that we exclude companies that violate PFA's guidelines and that do not respond to dialogue concerning changing or righting any infringement of standards. In addition, companies that produce certain types of controversial weapons and weapons in contravention of international law are excluded. Finally, countries are excluded if trade sanctions exist against the country, or if PFA’s RI Board has assessed that the country is not suitable for investment.

Exclusion of a company or country may be reconsidered if it can be proven that the reason for exclusion has ceased and that the company or country in question has improved its practices.

Systematic exclusion of companies
PFA does not want to invest in companies that produce controversial weapons such as cluster weapons, anti-personnel landmines or nuclear weapons. Our strategy towards this type of company is non-involvement, and we systematically exclude them from all investment activities.

PFA excludes companies that conflict with the following treaties and conventions:

- The UN Convention on Certain Conventional Weapons (CCW, including Protocols I-V)
- The UN Biological Weapons Convention (BWC)
- The UN Chemical Weapons Convention (CWC)
- The UN Convention on the Prohibition of the Use, Stockpiling, Production and Transfer of Anti-Personnel Mines and on their Destruction (the Ottawa Convention)
- The UN Convention on Cluster Munitions (the Oslo Convention)

Latest exclusions
In 2018, PFA excluded the companies Larsen & Toubro, Rockwell Collins and Bharat Electronics due to their involvement in the production of components for nuclear weapons. PFA has also excluded United Technologies Corporations, which, after its acquisition of  Rockwell Collins, now also carries out activities related to nuclear weapons. The decision for exclusion is based on data provided by the screening and engagement company GES, which through its screening has concluded that the companies are involved in the production of components associated with nuclear weapons.

Latest cancellation of exclusion
In 2017, PFA cancelled its exclusion of L-3 Communications, as it has been confirmed that the company is no longer involved in the production of cluster weapons.

Total overview - exclusions

company country industry Reason for exclusion
Human rights
Elbit Systems  Israel Electronics Violation of basic human rights, which conflicts with UN Global Compact principles 1 and 2
Energy Transfer Equity  USA  Energy  Violation of basic human rights, which conflicts with UN Global Compact principles 1 and 2 
Energy Transfer Partners  USA  Energy  Violation of basic human rights, which conflicts with UN Global Compact principles 1 and 2 
HeidelbergCement Germany Materials Violation of basic human rights, which conflicts with UN Global Compact principles 1 and 2
Incitec Pivot Ltd Australia Chemicals Violation of basic human rights, which conflicts with UN Global Compact principles 1 and 2
Labour rights
Wal Mart USA Retail Violation of basic labour rights, which conflicts with UN Global Compact principles 3 and 4
Environment
Canadian Natural Resources Ltd Canada Energy Primarily involved in tar sands activities, which are especially polluting
Cenovus Energy Inc  Canada Energy Primarily involved in tar sands activities, which are especially polluting
Husky Energy Inc Canada Energy Primarily involved in tar sands activities, which are especially polluting
Imperial Oil Ltd Canada Energy Primarily involved in tar sands activities, which are especially polluting
MEG Energy Corp Canada Energy Primarily involved in tar sands activities, which are especially polluting
Suncor Energy Inc Canada  Energy Primarily involved in tar sands activities, which are especially polluting
Cluster weapons, anti-personnel landmines and nuclear weapons
AECOM Technology Corp. USA  Defence equipment Involved in the production of nuclear weapons
Aerojet Rocketdyne Holdings USA  Defence equipment Involved in the production of nuclear weapons and cluster weapons 
Airbus Group France  Defence equipment Involved in the production of nuclear weapons 
BAE Systems plc UK Defence equipment Involved in the production of nuclear weapons
Bharat Electronics  India  Defence equipment  Involved in the production of nuclear weapons 
Boeing Co. USA  Defence equipment Involved in the production of nuclear weapons
Larsen & Toubro  India  Defence equipment  Involved in the production of nuclear weapons 
Leonardo SPA Italy Defence equipment Involved in the production of nuclear weapons
Flour Corp. USA  Defence equipment  Involved in the production of nuclear weapons
General Dynamics USA  Defence equipment Involved in the production of nuclear weapons and cluster weapons
Hanwha Corp South Korea  Defence equipment Involved in the production of cluster weapons
Honeywell International Inc USA  Defence equipment Involved in the production of nuclear weapons 
Huntington Ingalls Industries USA  Defence equipment Involved in the production of nuclear weapons 
Jacobs Engineering UK Defence equipment Involved in the production of nuclear weapons
Lockheed Martin USA  Defence equipment Involved in the production of nuclear weapons and cluster weapons 
Northrop Grumman Corp. USA  Defence equipment Involved in the production of nuclear weapons and cluster weapons 
Orbital ATK USA  Defence equipment Involved in the production of nuclear weapons and cluster weapons 
Poongsan Corp South Korea  Defence equipment Involved in the production of cluster weapons 
Poongsan Holding Corp South Korea  Defence equipment Involved in the production of cluster weapons 
Raytheon USA  Defence equipment Involved in the production of nuclear weapons 
Safran Group France  Defence equipment Involved in the production of nuclear weapons 
Serco Group UK  Defence equipment Involved in the production of nuclear weapons 
Textron USA  Defence equipment Involved in the production of cluster weapons 
United Technologies Corporation USA  Industry  Involved in the production of nuclear weapons 

 

Excluded countries

PFA’s investment activities do not cover all the countries in the world, but approximately two-thirds of them. It is not possible to invest in a number of countries such as North Korea, Syria and Iran. There is also a wide range of countries in which investments are not possible because the countries have not issued any bonds, or because no market exists..

PFA's exclusion list only includes those countries that it is possible to invest in and that PFA has analysed, and which PFA's RI Board has then assessed to not be suitable for investment:

  • Belarus
  • The Republic of the Congo
  • Rwanda
Guidelines for responsible investments in government bonds

PFA has guidelines and a process for evaluating the countries in which we invest. The guidelines are based on the same internationally recognised norms and standards as PFA's policy for responsible investments. The guidelines and the process ensure an ongoing screening and assessment of human rights in the countries, the level of democracy, corruption etc.

 

Read about responsible investments in government bonds

Responsible investments in government bonds
PFA’s policy for responsible investments is exerted according to the widely recognised international conventions and norms, which are based on the UN Global Compact’s ten principles and the UN-backed principles for responsible investments, PRI.

Investing in government bonds is, in principle, comparable to granting a loan to a country’s government. This may cause challenges in those cases where the country in which the investments are made is characterised by a low level of democratic development with a high degree of corruption. Therefore, PFA has a set of guidelines that incorporate the international principles, and describe the process that applies to those countries in which investments are made.

Read more about PFA’s guidelines for responsible investments in government bonds

Read about PFA’s country screening procedure

In order to implement the guidelines, PFA has developed a process for screening countries. The screening is a three-step process, which includes a number of indicators and country-specific information that are relevant to the assessment of a country, the population's needs and the overall situation in the country. The country screening forms a clear and fact-based decision-making background for PFA’s RI Board, which is the body that determines whether a country is suitable for investment or not.

PFA’s country screening step by step
The three steps that form the basis of the screening are based on all potential countries for investment: Potential countries for investment include approximately 2/3 of all the countries.



First step - Hurdle criteria
Through hurdle criteria, the country is assessed according to the IMF’s categorisation of ‘Advanced Economy’, and whether any sanctions exist against purchasing national debt in the country. Countries that are not categorised by the IMF and which are not subject to any sanctions move on to the next step.

Second step – Country Score Model
The country is assessed according to the Country Score Model, which is based on a number of internationally recognised indicators and indices which cover both human rights, employee rights, the environment and anti-corruption. The model also includes relevant international financial or trade sanctions in which Denmark participates. If a country’s total score is assessed to be unsatisfactory, the country must be analysed further.

Third step – Individual country analysis
The country is assessed on the basis of a country analysis which is based on a range of descriptive indicators from internationally recognised sources, which contribute to identifying the country’s and the population’s situation and development in a number of areas, etc. After the analysis, it is decided whether the country is suitable for investment or not.

At all steps in the screening process, current events, which have not yet been included in the recognised sources, may be considered to be of such importance that PFA decides to either exclude the country based on the events or proceed with further steps in the screening process.

Read more about PFA's country screening procedure

Questions about Corporate Responsibility?


Contact our Public Affairs Director, Janne Bram Hemphrey, at jje@pfa.dk.