Active ownership and engagement
In engagement with companies, the Church Pension Fund wants to bear responsibility as an owner by promoting responsible business practices, thereby ensuring long-term value for its investment objects. In order for this to be possible, companies must act persistently and manage risks in the interest of their shareholders.
The Pension Fund initiates a dialogue with a company in order to change corporate practices. Divesting from a security rarely leads to changes in company practices, and in such a case, the investor also forfeits all rights of ownership. If the engagement dialogue has proven unsuccessful, the decision can be made to divest.
The Pension Fund is involved in both direct and indirect engagement. In direct engagement, the Pension Fund attends annual general meetings and participates in company dialogue. In indirect engagement, an asset manager or consultant carries out the dialogue with the companies and participates in the annual general meetings on behalf of the Pension Fund. Direct engagement is primarily used with domestic companies, since the close proximity makes it easier to connect for discussions. The Pension Fund uses external experts to carry out its engagement on the international level.
- Participation in annual general meetings
The Pension Fund participates in the annual general meetings of domestic listed companies in co-operation with its asset managers. The Pension Fund annually negotiates with the asset managers regarding the upcoming general annual meeting season and related themes. The Pension Fund has drafted separate guidelines for the annual meeting representative. A report covering the most critical observations shall be drafted at the end of the general meeting season.
Many of the fund management companies that the Pension Fund's collaborates with conduct proxy voting for their listed equity funds. Proxy voting means in practice, that the investor delegates voting power to an external service provider.
- Meetings with company representatives
Personal meetings with company management or other representatives provide a good foundation for dialogue in a way that is not possible within the context of annual general meetings. The Pension Fund can participate in such meetings together with a consultant, asset managers or other owners. Dialogue can also be initiated with companies by organising seminars and other events.
- Selection of international engagement cases
The Pension Fund reviews all of its equity and fixed-income investments biannually to generate a current overall picture of the content of the investment portfolio. With the help of an external screening and engagement service, the Pension Fund is able to identify, within its own investment portfolio, international norm violations concerning UN conventions related to human rights, labour law, anti-corruption and anti-bribery activities and environmental protection. Through screening and engagement service providers, the Pension Fund participates in engagement discussions concerning the most serious norm violations.
- Theme-specific proactive engagement
The Pension Fund participates in proactive engagement activities intended to influence companies in a constructive manner while takin into account the responsibility challenges of the future and the UN’S Sustainable Development Goals. The engagement activities are carried out in collaboration with an external expert. The engagement activities are targeted to specifically selected responsibility themes according to which the Fund strives to develop the operational methods of companies. Such themes include, for example, the carbon risk to companies, tax responsibilities and the availability of clean water.
- Participation in investor initiatives
In an investor initiative, a group of investors combines its resources in order to present a joint message to a company. Normally, one owner or a group of owners acts as the founder and executor of the initiative. A large number of owners can participate in an investor initiative, and its intent is to get as broad and influential an ownership pool as possible to convince company management to change some aspect of the company’s operations. Through the international investor initiatives, the Pension Fund is involved in, for example, the development of corporate reporting practices.