Over the last decade, the political push and the public demand for institutional investors to adopt responsible investment practices have increased drastically. Active ownership – by voting at general meetings, as well as engagement activities – is a key aspect of a responsible investment policy. This megatrend implies that to an increasing extent companies are monitored and controlled by their shareholders – and must be available for discussion with shareholders and remain responsive to concerns expressed within the market. In this article, Jens Munch Holst, CEO at the Danish pension fund MP Pension, presents the key issues setting the active ownership agenda for investors and companies, and gives his view on future trends and challenges.

Jens Munch Holst

Jens Munch Holst


MP Pension


In recent years, there has been a surge of new regulatory initiatives to push for responsible investment practices among institutional investors. This started with the launch of UN PRI (United Nations-backed Principles for Responsible Investment) in 2006 and the process was fuelled by the financial crisis and its causes – leading to international, EU and national regulation, and codes/recommendations. In Denmark, the Committee on Corporate Governance published a stewardship code in November 2016 “in order to encourage the kind of stewardship in Danish listed companies that is beneficial to long-term value creation”, and the revised Shareholder Rights Directive (SRD II) will enter into force in June 2019.

These initiatives have had a noteworthy impact: institutional investors have generally developed and published investment policies covering key areas such as voting, monitoring and engaging with investee companies, and consideration of environmental, social and governance (ESG) issues. Subsequently, they have started to “live” their policies and many investors have changed their behaviour towards investee companies.

“During recent years, we’ve seen a major change in institutional investors’ policies and behaviour, motivated by new regulatory initiatives and by new, more explicit demands from members and the general public. The agenda and the interaction between companies and their shareholders have changed significantly – and we’ve witnessed development that we could hardly have imagined 5-10 years ago,” says Jens Munch Holst.

At MP Pension, responsible investment is about engaging, driving positive change and delivering strong investment returns to our members in a sustainable manner.

Jens Munch Holst

MP Pension has the ambition to be at the forefront

MP Pension has publicly stated its ambition to be at the forefront when it comes to responsible investment.

“Delivering generous pensions to our members is, of course, MP Pension’s most important task and we believe that high returns and responsibility can and must go hand in hand. We’ve focused on responsible investment for many years, but during the past couple of years we’ve really put action behind our vision to become Denmark's most responsible pension fund. In 2018, MP Pension became a signatory to the UN Global Compact, and we extensively revised our responsible investment policy. Our policies within such areas as human rights, climate, conflict-affected areas and responsible tax practice have been strengthened, and we now make even more specific demands of the companies in which we invest. In addition to our responsible investment policy, we create standpoint papers on selected topics and have clarified how we work with the Global Compact principles. A specific example of how we put our policy into practice is our decision to be quite public about our engagement efforts. We’ve also decided to sell our shares in companies that extract oil, coal and tar sands, and tobacco countries systematically abusing human rights, and to increase our ratio of climate-friendly investments. We’ve also introduced a new quarantine tool to put selected investments on hold while investigating controversies. Furthermore, we’ve increased our push to promote diversity at the board and management level in the companies in which we invest and we’ve been active in discussions about management remuneration; in some companies we’ve voted against the proposals put forward by the board. With regard to management remuneration, it’s our impression that there are still huge differences in opinion concerning which levels and types of programmes are within reason. All of these initiatives have strengthened our profile and given us an active voice in the debate on responsible investments,” says Jens Munch Holst.

Active ownership is an integrated aspect of responsible investment

Institutional investors’ implementation of responsible investment policies has encouraged active ownership and thereby interaction with the investee companies. Active ownership is generally regarded as one of the most effective mechanisms to reduce risks, maximise returns and have a positive impact on society and the environment.
Jens Munch Holst comments: “We believe that active ownership through direct engagement with the companies we invest in and by voting at general meetings is an important aspect of our ability to create long-term value – and we aim to create positive change. In 2018, we voted at 1,785 general meetings (voting for 38 per cent and against 62 per cent of the proposals) and had engagements with more than 400 companies, either directly in Denmark or via our partner, Hermes EOS, abroad. The number of engagements has increased significantly in recent years, and we have a standard handling procedure, including escalating the dialogue.

He continues: “Before engaging with companies, we outline our concerns, and every year we also send a letter to Danish investee companies describing our key themes and focus areas. We strive to be open and transparent in all phases of the engagement process. In our engagement discussions, we seek to recognise the efforts companies have made to address our concerns, gain a deeper understanding of the barriers companies face in their efforts to meet investor demands, and to demonstrate our support for corporate governance best practice. There is no doubt that companies have become more responsive and we have gained more ‘speaking time’, but in some cases, the companies’ responses are not satisfactory. If our concerns are of a thematic nature, we can escalate the engagement by either exposing our concerns in the media or by selling or excluding the shares. It is our experience that in many cases such actions can have a positive impact on company behaviour.”

Message to companies: be prepared for more to come

According to MP Pension, active ownership will grow even stronger in the coming years.

“We expect regulators, institutional investors, members/customers and NGOs to become more active – and some will probably be very vocal. Given the global social and environmental challenges we face, companies and investors are likely to encounter increased pressure to demonstrate social responsibility – no matter where they are or what they do. We also expect the trend to move from responsibility – not having ‘dirty hands’ – to sustainability, by being part of the global solutions. The circular economy, for example, will be a dominating theme. As part of this trend, investors are also expected to demand more transparency in every respect. Companies cannot and should not hide, and should communicate clearly and openly – also about the thornier issues. There is no doubt that companies will have to respond to these trends and demands, and to adapt their business models, strategies and governance structure – and communication – to the new realities. A lack of action on the part of companies to engage with shareholders and to be responsive is increasingly posing significant reputational and financial risk, which may impact shareholder value negatively,” concludes Jens Munch Holst.

We expect active ownership to gain further momentum in the coming years – and we expect investor focus to move from responsibility to sustainability.

Jens Munch Holst

Flemming Merring

Senior Product Manager, Issuance Products

+45 4358 8968
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- Flemming Merring , Senior Product Manager, Issuance Products