Danish fund follows trend on cluster bomb divestmentApril 2008
The pensions arm of a leading Danish bank is removing its investments in companies that make cluster bombs. Danica Pension, a €33billion ($50.6bn, £25.2bn) division of Danske Bank, will sell its shares worth €13.8million in General Dynamics, Lockheed Martin, L-3 Communications and Raytheon.
The decision has been prompted partly by public pressure in Denmark following campaigns by the media and Amnesty International, Danish Church Aid and the Danish Red Cross.
Under similar pressure another large Danish pension fund, the €6.25bn Industriens Pension, serving blue-collar workers, made divestments, but has not revealed their value.
Other European investors have also recently sold stakes. Media and NGO pressure in the Netherlands last year led the Dutch pension fund managers ABP and PGGM to withdraw millions of euros, while KBC in Belgium, the UK’s Co-operative Bank, Storebrand in Norway and the Norwegian Government Pension Fund have also divested.
The Irish government, too, appears close to removing such investments from its €21.3bn Irish National Pension Reserve Fund, in advance of a diplomatic conference on cluster munitions that its foreign affairs department is hosting in May.
Eighty-six countries including Ireland have agreed a draft text for an international ban which is expected to be finalized at the Dublin conference. The Oslo Process, as it is known, began when the Convention for Conventional Weapons failed to produce results. A similar initiative led by Canada in 1997 resulted in the Ottawa Convention against the use of anti-personnel landmines.
The exact amount that the Irish fund invests in such manufacturers is unavailable but a spokesman said it holds about €28million in businesses that are negatively screened by Norway’s government pension fund. That list includes cluster bomb companies and is used as a benchmark by many international pension funds.
Sabrina Bhangoo, spokeswoman for FTSE Group, which last year developed an index excluding cluster bomb manufacturers, told EP the issue had come to prominence partly because negative screening was returning to favour among socially responsible investors.
‘Over the past five or six years there has been a trend to focus on best-in-class or positive selection criteria, but there has recently been a re-emergence of institutional investor interest in negative screening and divestment,’ she said.
‘What is different now is that there are much smaller, more targeted divestment campaigns focusing on countries such as Sudan, and products such as cluster bombs, where there are very significant international humanitarian concerns but only relatively small numbers of companies involved.’
Bhangoo said NGO campaigns and the prospect of international regulation ‘are acting as drivers’ for investors to begin to re-examine their policies.
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