Denmark’s Sampension has tightened the climate requirements placed on its fund managers following slower than hoped progress on sustainability issues.

The company suggested that whilst there had been improvements, fund managers still generally have too little focus on sustainability considerations.

In light of this, it confirmed that it is stepping up its own requirements for both existing and potential managers in relation to environmental, social and governance (ESG) issues, with a particular focus on climate.

Sampension head of ESG, Jacob Ehlerth Jørgensen, commented: “Sustainability and not least climate have in recent years generally come higher up on the agenda of companies, where the focus has especially been on the listed companies’ responsibilities and contributions in this connection.

“But companies in the unlisted part of the market must of course also lift their share, and here the fund managers play an important role.

“Managers typically manage significant billions of dollars for investors, which in itself requires managers to focus on sustainability in investments for the benefit of both investors and society.

“And this is reinforced by the fact that fund investments for investors are long-term, illiquid investments, which you as an investor can not just get out of, unlike investments in the listed market.

“Therefore, it is crucial that the managers take on their social responsibility and e.g. ensures that their investments on behalf of the investors contribute to the green transition."

Sampension has already worked with managers to increase focus on ESG matters “for several years”, previously highlighting successes it achieved through dialogue with companies.

“They have generally become more willing to enter into dialogue with us as an investor on issues such as labour rights, tax payments and climate impact, and they are increasingly meeting our demands on them in the ESG area," Jørgensen added.

Indeed, the proportion of Sampension fund managers that have signed the UN Principles for Responsible Investment had risen from 54 per cent in 2019 to 81 per cent in 2021.

However, Ehlerth Jørgensen warned that progress was being made "too slowly, especially in the climate area".

“We experience that the managers generally have too little focus on working with their climate footprint, and here we will in future have them to a much greater extent to commit to e.g. to invest in line with the Paris Agreement," he continued.

“That is why we are now tightening up the requirements for managers, and not least in the climate area. At the same time, it must contribute to realising our own goal of reducing the climate footprint of the overall investment portfolio, so that it is CO2-neutral in 2050.”

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