Strategic Shift in Climate Benchmarking
Industriens Pension has introduced a new climate-related benchmark, the ‘MSCI Climate Action Index’, for its listed foreign share portfolio. This new benchmark, alongside the existing MSCI ACWI, aims to encourage individual asset managers to focus more on companies’ climate transition and carbon emissions (page 3, Annual Report). This presents an opportunity for asset managers specializing in climate-focused strategies or those with strong ESG integration capabilities to align their offerings with Industriens Pension’s evolving climate objectives.
Deepening Engagement in Active Ownership
Continued further development of active ownership was a high priority in 2024 and will remain so in the years ahead (page 3, Annual Report). Industriens Pension engaged in 1,171 ESG-related dialogues with companies in its portfolio and voted on 20,301 general meeting proposals in 2024 (page 5, Annual Report). This indicates a strong preference for engagement over divestment, signaling that asset managers with robust active ownership frameworks and a track record of influencing positive change in portfolio companies will be well-positioned.
Expanding ESG Data Collection for Unlisted Assets
Extensive work continued in 2024 to expand source data on ESG factors from different asset classes, including unlisted assets (page 3, Annual Report). This is a major task that still poses many questions and will require continuous, long-term focus. In 2024, Industriens Pension strengthened ESG-related due diligence of asset managers in unlisted investments to gain greater insight into their approach and processes in sustainability (page 14, Annual Report). Asset managers with strong data collection and reporting capabilities for unlisted assets, particularly those that can demonstrate robust ESG integration and due diligence processes, will find this a key area of interest for Industriens Pension.
Focus on Responsible Tax Behavior in Unlisted Investments
Industriens Pension, in collaboration with other Danish investors, has prepared a common tax code for unlisted investments, which contains principles and recommendations for responsible tax behavior among external asset managers (page 15, Annual Report). They require external asset managers offering unlisted investments to monitor and manage relevant tax risks responsibly and encourage them to adopt their own tax policies (page 15, Annual Report). Asset managers with transparent and responsible tax policies for their unlisted investment strategies will be favored.
New Carbon Reduction Targets for 2030
Industriens Pension set a new target in 2024 to reduce its carbon footprint by 40% from 2019 to 2030 for listed shares, corporate bonds, and directly owned properties (page 15, Annual Report). They plan to include more asset classes in these targets as data on emissions develops (page 15, Annual Report). Asset managers offering strategies that can contribute to these ambitious carbon reduction targets, particularly those with verifiable methodologies for measuring and reducing carbon footprints across various asset classes, will be attractive.
Continued Investment in Sustainable Solutions
Industriens Pension has been investing in climate solutions, such as renewable energy and sustainable construction, for many years (page 15, Annual Report). They expect these investments to continue to be attractive (page 15, Annual Report). For Danish properties, new buildings must have sustainability certification to a minimum of DGNB Gold, and they aim to certify operations of all 100%-owned properties (page 15, Annual Report). Asset managers with expertise in renewable energy, sustainable infrastructure, and green real estate investments, especially those with DGNB certification experience, should highlight these capabilities.
Emphasis on EU Taxonomy Alignment and Data Development
Industriens Pension’s calculation of sustainable investments is in accordance with the EU Taxonomy (page 16, Annual Report). In 2024, 3% of the market rate product was classified as Taxonomy-aligned, noting that this low proportion is due to a lack of data (page 16, Annual Report). They will continue work to assess unlisted investments against the taxonomy in 2025, expecting their DGNB-certified property portfolio and renewable energy investments to be considered (page 16, Annual Report). Asset managers who can provide robust, taxonomy-aligned investment solutions and contribute to improving data availability and quality, particularly for unlisted assets, will be valuable partners.
Annual Review of Investment Strategy and Return Targets
The Board of Directors revisits the investment strategy annually to secure the highest possible long-term real rate of return, taking risk into account (page 7, Annual Report). The target real rate of return for 2025 has been set at 3.0% (page 7, Annual Report). Asset managers should be aware of this annual review cycle and the long-term real rate of return objective when proposing investment strategies.
Increased Investment Assets and Diversification Across Asset Classes
Total investment assets increased by DKK 17 billion to DKK 255 billion in 2024 (page 3, Annual Report). The total portfolio of unlisted investments amounts to DKK 87 billion, with the majority in unlisted companies (DKK 30 billion) and infrastructure assets (DKK 28 billion) (page 12, Annual Report). Asset managers with expertise across a broad range of asset classes, particularly in unlisted strategies, will find opportunities.
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