Denmark’s MP Pension said it will exclude from investments 14 countries that it accuses of systematically violating human rights. The move includes divesting DK400 million ($61 million) worth of investments in companies that are controlled by those countries.
“With this approach, we get the financial industry’s most consistent criteria for accountability when it comes to investment in government bonds,” Anders Schelde, investment manager at MP Pension, said in a release. “It’s an area we’ve been working for a long time, but now the time has come to strengthen efforts to promote respect for human rights.”
The 14 countries the pension is excluding from investment are Bahrain, Benin, Burundi, Comoros, Congo, Ethiopia, Iran, Mozambique, Papua New Guinea, Rwanda, Saudi Arabia, Swaziland, Tajikistan, and Thailand.
The pension has fairly strict guidelines on what it can invest in, and excludes companies and countries that have had problems with human rights, labor rights, environment and climate issues, corruption, and controversial weapons. Each quarter the fund scrutinizes the inventory of listed shares, corporate bonds, and government bonds for any possible breach of its policy of responsible investments.
“As an active owner, our focus is on targeted analysis and dialogue with improvement for purposes, rather than exclusion,” said the company. “If a company violates our policy of responsible investment, we try to influence companies in a positive direction by entering into dialogue and voting at the company’s general meetings.”
The fund added that if its efforts don’t help bring about change from a company, then it will stop the investment and exclude it from its portfolio.
“It’s really not an easy task, but we try to solve it best by being very methodical and basing our decisions on a broad set of information,” said Schelde. “We also place a lot of emphasis on the trend. We would like to support a country that is on way in a positive direction, but instead, we move faster if the level is low and the trend is pointing downwards.”
However, the fund said there are still more countries with human rights issues that it has to stay invested in because of its fiduciary responsibility to its 130,000 members. This includes countries such as China and Russia, which the fund said are difficult to divest from while still maintaining good portfolio management.
“We must accept that large issuers like China and Russia also find space in the portfolio,” said Schelde. “Therefore, we can not invest 100% in line with our accountability standards when it comes to government bonds, because we also need to consider the return. But what we can do is challenge ourselves to invest as responsible as possible—and be open about our dilemmas.”