Nowadays, investing in a European pension fund can be more complex than it may sound.

Equity is not necessarily the problem for the time being. Many pension funds and institutional investors are out there trying to get their wealth placed in attractive ways.

Finding investments is not the most significant issue – from PE and infrastructure to real estate or credit, there are many possibilities; even though the actual challenges such as supply chain issues or rising interests are changing the markets again.

However, being responsible for the pension fund, I am often faced with the challenge of finding sustainable investments. For a long time, sustainability has been on the agenda of many investors. There has been a shift from “nice to have” to “need to have” in the last years. It should be reflected in investment funds and how their managers establish new investment possibilities. For this reason, when looking at further opportunities, our focus has been on compliance with ESG matters, such as taxation – no use of tax havens, hybrid financing or aggressive tax planning.

Our expectations from a fund and its manager are not only an investment case that is solid and shows the possibility for a good yield within a reasonable time frame. ESG focus is extremely relevant. In Denmark, the pension fund industry has a pretty strict approach to abiding by ESG goals. Negotiations can be challenging, lengthily and even end in a walk-away scenario if a manager cannot meet the investor’s expectation regarding ESG matters. However, most of the time, the parties can agree, and more and more, managers start to accept stricter ESG terms and work together with investors to meet sustainable goals in a fast-changing world.