Opinion by Benedikte Nielsen in Børsen: ”Why can’t I invest my pension funds in equality?”

Benedikte Nielsen can only see benefits in personalization in the pension funds’ investment products.

Pension funds should offer greater flexibility and personalization in their investment products

A study conducted by the Denominator and Matter shows that pension investments of 97 billion DKK are placed in companies without women in the executive team or board. This corresponds to 15% of all Danish pension investments being deliberately placed without consideration of inclusion and diversity. Why don’t we see this as a societal problem?

We know that our pension funds have a significant impact on the direction in which both the Danish and, to some extent, the international society develops. We know that by changing capital flows and adding investments to what we define as important, we can make sustainable changes.

The green transition is an excellent example of this. As pension customers, we can choose exactly how green we want our investment portfolio to be, ensuring that our investments are not placed in tobacco or oil. However, we don’t have the option to ensure that our pension savings are not invested in companies without a diversity and inclusion policy. Why is that?

Three problems

Is it because Danish pension customers don’t demand such pension product? Is it because pension companies simply don’t know how to invest in diversity and inclusion?

Or is it because the current data protection regulations simply have made it impossible to measure diversity and inclusion for effective reporting?

I believe it’s a mix of all three. Pension products are intransparent, and pension funds have power over the pension products they choose to offer. However, pension funds also face the problem of a strict GDPR and necessary equal-treatment-legislation which have made it extremely difficult to report on the parameters that would enable the existence of such product.

They need to be revisited so the rules both protect individuals but also allow reporting on equality and inclusion.

“Research has shown that companies that have a diverse leadership perform better long term; both on profit, innovation, and quality of product development – a perfect retirement investment.”

However, I don’t believe it should be up to individuals to drive change in either Danish pension funds’ investment products or in requirements for regulation that both protect individuals and enable effective data reporting.

As consumers, we can demand it, but unless there is a push from the political side to make it a prioritization, I don’t think the major pension funds will place it on the agenda. But why are pension funds not more interested in creating more personalized investment products?

It can’t be right that in 2024 we have to move our pension savings to platforms like Nordnet or Saxobank and invest our pension privately to choose which sectors or social goals we want to invest our pension funds in.

Hidden competitive advantage

It should be a competitive advantage for pension funds to offer greater flexibility and personalization in their investment products, not just within the green transition.

Research has repeatedly shown that companies with diversity in leadership perform better in the long run; both in terms of profit, innovation, and quality of product development – a perfect pension investment.

Out of the 97 billion DKK invested pension funds, the analysis from Denominator and Matter showed that 86 billion is invested in companies without women in the executive team and 11 billion without women on the board.

Research shows that the more women in the executive team, the stronger a correlation to the number of female leaders, middle managers, and the number of female employees overall.

From a societal perspective, we should focus more on redirecting investments to companies with a higher level of existing diversity or a very specific goal to increase diversity in the top leadership.

My wish is that I can use my pension portfolio to both ensure a high return, strengthen diversity in Danish and international companies, and ultimately invest in a future where women have the same career and leadership opportunities as men.

I can only see advantages. So why don’t we dare to offer that product? Why don’t we dare to invest in equality on par with the green transition?

This is an opinion; the post is an expression of the writer’s position. The piece is translated from Danish and originally published on April 7th 2024 by the Danish business media Børsen and written by Benedikte Nielsen, chairwoman of the NGO the women’s economy (Kvindeøkonomien).

Archive photo: Liv Latricia Habel/Ritzau Scanpix

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