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Responsible companies as investment objects

Through its investment activities, the Church Pension Fund wants to advance responsible business practices and the success of responsible companies. The following operational policies describe the Pension Fund’s view of corporate responsibility: 

  • Compliance with laws and international norms is the minimum requirement for corporate responsibility

The Church Pension Fund recommends that companies commit to the UN’s Global Compact initiative and comply with both the OECD Guidelines for Multinational Enterprises and UN Guiding Principles on Business and Human Rights. Corporate responsibility forerunners exceed the requirements of the norms and laws and create a foundation for future regulations.

  • Positive influence

In their use of natural resources, responsible companies consider the needs and rights of future generations and consciously minimise the harmful impacts of their operations on the environment and society at large. Forerunner companies harness market forces to create solutions for the challenges of sustainable development.

  • Focusing on stakeholders

A company that is acting responsibly incorporates the expectations of its stakeholders into its own activities and business development. The basis for corporate responsibility is an understanding that the company has other tasks and obligations in society besides making a profit for the shareholders. Stakeholder-based management involves the perspectives of all stakeholders, as this is beneficial, in the long term, for the shareholders as well. As part of a stakeholder-oriented approach, the principle of double materiality should be considered. According to the principle, companies assess the impact of sustainability issues on their own activities. This assessment will consider, for example, the impact of climate change on the performance and activities of a company (outside-in). The company must also consider the positive and negative impacts of its activities on the environment and society (inside-out). The company is also responsible for the actions of its co-operative partners, such as its network of subcontractors.

  • Commitment of management

Corporate responsibility relies on a strategy in which responsibility is incorporated into the company’s management system and, through that, into the operational guidelines, job descriptions and, when necessary, profit steering and bonus systems. The commitment of the Board and top management is essential in order for the responsibility to penetrate the entire organisation. Training and internal communications ensure that the entire personnel is familiar with and recognises the requirements for responsible practices within the company and their own jobs.

  • Climate change

Climate change is a global phenomenon that will have an unavoidable impact on the world’s societies and businesses. To slow down climate change, companies must reduce the production of greenhouse gases in the atmosphere. Responsible companies prepare in advance for the risks and possibilities brought on by climate change and include the related actions into their overall strategy. The Pension Fund encourages companies to create science-based emission targets (SBTs) as well as carbon neutrality targets in line with the Paris Agreement on Climate Change.

  • Biodiversity

Together with climate change, accelerating biodiversity loss and species extinction is a global change phenomenon that has irreversible impacts on societies and businesses. Biodiversity loss is a risk to the business operations of companies, as all business activities are either directly or indirectly dependent on nature. A responsible company is aware of the impacts of its own activities on biodiversity, takes this into account in risk management and integrates it into its strategy work.

  • Human rights

Human rights are equal rights for every member of humanity. Their purpose is to guarantee a decent life for all. Human rights are defined in international agreements. Every individual has the right to freedom, dignity, and peace. A responsible company takes human rights into account both in its own operations and in its supply chains.

  • Fiscal responsibility

A responsible company complies with legislation and its objectives when carrying out tax planning. The Church Pension Fund views it as important that tax payments reflect a company's financial activities and that taxes should be paid within the different countries of operation in accordance with the actual activities taking place there. We encourage companies to report on their tax policy and tax footprint.

  • Open communications

Corporate responsibility is credible if the company can prove that the requirements for responsibility have led to actual strategic changes. Words complement deeds: transparency and communications that meet the needs of the interest groups create trust. A company’s ability to hold tight to its values, correct its operations as needed and anticipate the risks related to the social, environmental and political conditions indicates good corporate governance and management practices.

  • Reporting

Sustainability reporting is at a turning point globally. More information is required from companies that are invested in, about the impact of their business, their objectives, and their level of ambition. In addition, asset managers are required to be more transparent about the responsibility of their investment products. In Europe, the EU's Sustainable Finance Regulation (SFDR) and disclosure requirements have imposed new requirements on asset managers. As a result of the regulation, the Pension Fund receives better reporting from asset managers on the sustainability of investments.
The Church Pension Fund monitors the development of reporting legislation and encourages companies to be open and transparent in reporting. In addition, the Pension Fund encourages companies to report on climate issues in accordance with the TCFD and on biodiversity with the TNFD reporting frameworks.

The TCFD (Task Force on Climate-related Financial Disclosures) reporting framework provides recommendations on reporting climate-related economic risks and opportunities. There are four areas of reporting: governance, strategy, risk management and measurement and metrics and targets. In October 2023, the ISSB has taken over the monitoring and further development of the TCFD. In 2024, the name will change from TCFD to ISSB S2.
The TNFD (Task Force on Nature-related Financial Disclosures) reporting framework provides recommendations on reporting biodiversity-related economic risks and opportunities. There are four areas of reporting: governance, strategy, risk and impact management, and metrics and targets.