“Denmark’s PFA says sustainable investment does not harm returns” – Investment & Pensions Europe – June 29, 2020

On June 29, 2020 Investment & Pensions Europe reported that “(t)he chief strategist of DKK688bn (€92bn) Danish pension fund PFA has set out a series of arguments to show that investing sustainably does not jeopardise returns, and said firms with top environmental, social, and governance (ESG) credentials outperformed in the worst of the COVID-19 crisis.

Tine Choi Danielsen, chief strategist at the Nordic country’s second-biggest pension provider, said:  ‘If you look at the development, there is no doubt that sustainable and responsible companies have performed at least as well as the remaining in the stock market – and in some periods even noticeably better.’

She said history, the fund’s own experience and societal trends showed returns on investments were not compromised when investing responsibly and sustainably.

In the coronavirus crisis, companies with high environmental, social and governance (ESG) standards outperformed the overall market, and in emerging markets in particular, sustainable companies had returned more than the index over the last few years, she said in a commentary on the commercial mutual provider’s website.

Choi Danielsen said since index provider MSCI launched the ESG Leaders version of its All-Country World Index, the return difference between the ESG-filtered and standard indices had grown to around 20 percentage points in favour of the ESG Leaders.

However, stripping out emerging markets from both indices would trim that return premium to just 0.5 percentage points, she said.

In emerging markets, Choi Danielsen explained, a high ESG score resulted in a wider return advantage than it did in developed markets, partly because of the greater variation in ESG development which existed in the corporate scenes of emerging markets.”

You may read the article on the Investment & Pensions Europe internet site.

You may read PFA’s responsible investment policy on the PFA internet site.