Denmark

Financial industry overview

The Danish financial services industry is characterised by a large number of well-established asset owners, notably in the form of private and labour market pension funds covering the bulk of the Danish labour force. Despite its small size, Denmark hosts nine of the world’s 300 largest asset owners. As compared to asset owners in other European markets, Danish asset owners have, in general, considerable in-house investment expertise and rely only to a small extent on investment consultants and asset managers.

28 of the largest 50 institutional investors are asset owners who with a total AuM of €386 billion (at the end 2014), almost “equally split” the market with asset managers at €436 billion. It is important to note that this category also includes asset managers such as banks with pension funds which are asset owners at the same time.

Characteristics of the SRI market

SRI is well-established in the Danish financial sector with a set of rather mature players. In the past couple of years, several Danish institutional investors have dropped out of PRI due to governance concerns with the organisation of PRI. This has led to a significant drop from a 54% membership rate of PRI in 2012 among the 50 largest Danish institutional investors to currently 32%.

In the same period, Dansif has experienced a constant increase in membership, now representing close to half of the 50 largest institutional investors. The commitment to the UN Global Compact has slightly increased in the past year.

Dansif serves as the key convening actor for SRI in Denmark with a broad membership base of asset owners, asset managers and service providers. The organisation regularly launches surveys and hosts debates among investors, NGOs and other interested parties, as well as experts from both Denmark and abroad. Dansif also initiates in-depth studies on specific focus areas chosen by the members and thus contributing to the specialisation.

SRI Market and strategy overview


All the surveyed asset owners and asset managers have a general exclusion policy in place and Exclusions remain the most popular strategy with AuM at €305 billion with an increase of 25% over four years (Dansif did not feature in the Eurosif 2014 SRI Study). Norms-based Screening follows closely, registering an increase of 22% at €261 billion of AuM.

Engagement and Voting has also increased significantly by 21%, confirming a strong interest in the local market and a rising trend since 2012. The top 5 issues on engagement – 3 of which are environment focused – are human rights, corporate governance, climate change, environmental controversies and environmental impact related. Over 75% of respondents have a formal policy on Engagement and Voting which specifically focuses on ESG issues.

Danish institutional investors are highly involved in alternative investment with a focus on low-carbon and climate-friendly infrastructure such as on and offshore wind farms. This is in line with one of the most significant trends regarding Sustainability themed Investments, which reached a total AuM of €5 billion against €43 million in 2012. There are clearly two preferences of themes for investors, almost equally split amongst the building sector and renewable energy. Denmark set a new world record for wind production in 2014, getting 39.1% of its overall electricity from the clean energy source. The latest figures put the country well on track to meet its 2020 goal of getting 50% of its power from renewables.

This year’s results indicate a decrease in the use of Best-in-Class investment strategies. However, this is due to the absence of a large Asset Manager whose assets this year were allocated under the Swedish market.

Regulatory framework

The Danish government has set the goal to be independent of fossil fuels by 2050, with the 2020 targets of reducing gross energy consumption by 12% from a 2006 baseline, reaching a share of 35% renewable energy and 50% wind energy in Danish electricity consumption. According to the Danish Ministry of Foreign Affairs, Cleantech has been the fastest-growing sector of Danish exports in recent years and a large growth in Cleantech exports is expected over the next four to five years. The ambitious climate targets and the rising Danish Cleantech industry are expected to boost sustainability themed investments, in particular in the areas of renewable energy and energy efficiency. These developments are already apparent in the findings of this Study.

Denmark is also a signatory of conventions that prohibit the production and use of landmines and cluster bombs. In 1998, Denmark ratified the Ottawa Convention’s ban on the production, use, stockpiling and transfer of landmines. In 2006, the Norwegian government initiated the so-called Oslo Process, aiming to secure a new convention against cluster weapons. Denmark has actively supported the Oslo Process. The Danish Parliament has approved Denmark’s ratification of the convention on cluster munitions, which entered into force on 1 August 2010. Moreover, as a NATO ally, Denmark recognises the Treaty on the Non-Proliferation of Nuclear Weapons. Given these processes, the Danish government has developed soft law initiatives, including recommendations for investing in controversial weapons.

According to the Danish Financial Statements Act, the Danish financial sector is subject to reporting requirements for social responsibility which needs to cover the core business of investors, i.e. their investment policy. Additionally, more than 90% of investments by institutional investors are either directly covered by the conventions or subject to policies for responsible investments. Under these policies, enterprises manufacturing weapons subject to the conventions are screened and can lead to the systematic exclusion of such enterprises. With regard to pension assets managed by life-assurance and pension companies, over 99% are covered by policies against investments in weapons subject to the conventions and by screening and systematic exclusion).

In the coming years, we foresee an increase in the use of active ownership among investors in Denmark. Furthermore, climate will play an increasing role in both investments as well as in RI policy through Engagement and Exclusion.

The Danish Committee for Corporate Governance is expected to start work on a stewardship code for investors in 2016. However, most Danish investors have already implemented guidelines for active ownership, so the impact of a new stewardship code is not expected to have major implications for most investors.

As regards asset class allocation, no major changes can be foreseen although alternative investments are expected to increase in infrastructure and real estate.

The contents of this country profile are based on research and analysis conducted by Dansif and Eurosif