Danish pension funds and climate change

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Danish pension funds and climate change

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Title: Danish pension funds and climate change
Risks and opportunities in investment strategy
Author: Jørgensen, Hanne
Abstract: This thesis represents a study of Danish pension funds and identifies their perception of and reaction to climate change in their investment strategy. The thesis looks specifically at the relationship between investor and investees and classifies the pension funds’ role in this setting. Initially, through exploration of various literature a theoretical analysis of pension funds and climate change is carried out, where establish financial and strategic theories are drawn upon. Risk management, corporate governance and socially responsible investment (SRI) are central terms in this respect. The theoretical analysis shows that it is crucial for investors to understand the potential impacts climate changes have on their investments. In addition, pension funds can play a key role in the development towards a low carbon economy. Next, an empirical analysis is conducted. Eight of the largest pension funds in Denmark (in terms of wealth management) participated in the research. Active ownership is an emerging issue throughout the Western world, and the Danish market is no exception. By conducting interviews with experts from the pension funds, I found that engagement of Danish pension funds in respect to climate change up until now has been close to non-existing. However, the majority of the funds studied are starting to increasingly integrate climate change in their investment analysis. The funds’ engagement is mainly evident in the support given to intergovernmental institutions, such as UN PRI and CDP. Nearly all the pension funds see it as their role to influence ESG strategies of their investees; however, over half of the funds have outsourced both their asset management as well as their active engagement to external parties. The thesis shows further that Danish pension funds wish to be responsible investors in addition to live up to their fiduciary responsibilities. In the end, the results of my analysis are benchmarked with studies of British and French investors, which show that the investors in the three countries are not that different.
URI: http://hdl.handle.net/10417/1154
Date: 2010-09-21
Pages: 88 s.
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