Industriens Pension in Denmark has announced it is adjusting the benchmark for its DKK60bn (€8bn) of foreign equities to partially take account of a climate index, in a change it said suits its aim of focusing on the hard transition faced by higher-emission companies.

The DKK235bn labour-market pension fund said the MSCI Climate Action Indices – which include companies with the lowest CO2 emissions within each sector as well as those able to document a significant gradual transition and a credible transition plan – will now be used exclusively as the benchmark for three of its large foreign equity mandates.

As well as this, the pension fund said it would assess the overall performance of its listed foreign equities portfolio using a benchmark consisting of 25% MSCI Climate Action Indices and 75% MSCI ACWI.

Morten Rask Nymark, head of equities at Industriens Pension, said: “The new benchmark fits very well with our wishes not only to go after investments in sectors with low CO2 emissions, but also to focus on the difficult transition for companies with higher emissions.”

In this way, he said, it was possible to contribute to a real reduction in greenhouse gas emissions at the same time as having full focus on creating good returns.

The Copenhagen-based pension fund said that in practice, the new equities benchmark would have a significant influence on its foreign equities investments.

“By partially introducing a climate-related benchmark that, among other things, focuses on companies’ transition processes, Industriens Pension is encouraging individual managers to focus even more on the firms’ transitions and CO2 emissions,” it said.

Axel Kilian, managing director, EMEA client coverage at MSCI, said investors were navigating an increasingly complex landscape when it came to making investment decisions that both created sustainable value and protected returns.

“We are proud to see our innovative tools and solutions being used to help bridge these two targets,” he said.

Read the digital edition of IPE’s latest magazine

Rachel is IPE's Nordic correspondent. She has long been a freelance writer, and over the years, has written for The Telegraph, The Independent, The Observer, AMWatch and elsewhere. In 2001, Rachel's personal finance book Kickstart Your Money was published by John Wiley & Sons.View full Profile

More from Rachel Fixsen

Topics