The first prize of ‘Pension fund with best strategy for responsible and sustainable investment’ was awarded to Erikrådet, the first to the fourth AP funds Ethical Council. PP Pension, the Swedish pension fund for journalists and media employees, was awarded ‘Pension fund with best practice investment strategy – smaller pension fund’. Finally, pensions company Länsförsäkringar received the prize for ‘Pension fund with best practice investment strategy – larger pension fund’. No award was given in the category ‘Outstanding contribution to the pensions sector’, since the jury was unable to identify a worthy winner.

The event was hosted by TV4 journalist and commentator Lennart Ekdal. Carl Rosén, who was recently appointed executive director for the International Corporate Governance Network, delivered a keynote speech in which he discussed management incentive programs. Mr Rosén began by saying that he was willing to take the risk of addressing the contentious issue of bonuses as he is no longer living in Sweden. Legislators may feel a need to address incentive systems in companies following the crisis. However, Mr Rosén believes that putting a ceiling on or banning bonuses, like the Swedish government’s recent attempts, is counter-productive. That usually leads to an increase in fixed salaries, argues Mr Rosén, and removes companies’ flexibility. Instead, more power should be given to shareholders. That will force both shareholders and company boards to take more responsibility for incentive programmes. He believes incentive programmes have a role to play unless they are too short-term focused and not contributing to the long-term value of a company or promoting excessive risk-taking. He is also hopeful that handing responsibility to shareholders would force institutional investors to co-operate more, in order to increase their negotiation power.

Best strategy for responsible and sustainable investment

Etikrådet

The award for “Pension fund with best strategy for responsible and sustainable investment” was handed out to Etikrådet, the first to the fourth AP funds’ Ethical Council.

“This recognition of our work makes us very proud. We’ve already been successful in many company dialogues and also encouraged other foreign investors to co-operate with us,” says Christina Hillesöy, AP3’s representative and chairwoman of the Ethical Council.

Unlike many other investors, the Ethical Council, which was formed by AP1, AP2, AP3 and AP4 at the beginning of 2007, is very transparent about their work. “We want to influence companies to be as transparent as possible and did not feel that it would be credible if we weren’t transparent ourselves,” Ms Hillesöy says. The purpose of the Ethical Council is to co-ordinate socially responsible investment analysis of environmental and ethical compliance in the foreign companies where the funds have holdings. It also combines the four funds’ resources and votes for greater leverage.

Best practice investment strategy

PP Pension

PP Pension, the Swedish pension fund for journalists and media employees, was awarded the prize for ‘Pension fund with best practice investment strategy for pension funds and companies smaller than SKr40bn’.

Over the past 10 years, PP Pension has had average returns of 7.5 per cent, which are some of the highest in the industry. Cecilia Thomasson Blomquist, chief investment officer at the fund, believes there are small scale advantages for a pension fund like PP Pension.

“We have to use our resources wisely, but it also means that we have greater opportunities to adapt our portfolio to the market and can more easily shift our asset allocation,” says Ms Thomasson Blomquist.

She joined the fund this summer, but gives credit to former CEO Tomas Lindstrand: “I’m proud to join as CIO to such a well managed investment process. I think there are good opportunities to continue and develop the long term strategy, although I have a humble attitude to the challenge.”

Best practice investment strategy (SKr40bn)

Länsförsäkringar

Länsförsäkringar was awarded the prize for pension fund with best practice investment strategy for pension funds and companies larger than SKr40bn.

Gustav Karner, chief financial officer at Länsförsäkringar, was surprised and says that he had thought the prize would go to AMF. Nonetheless, he still believes that the pensions company is a worthy winner.

“We’ve concentrated on the asset allocation, which is the one thing that really matters. We’ve also worked very hard with keeping the risks down, which I think that we’ve succeeded pretty well with,” he says. While Länsförsäkringar managed to pull in returns of -0.1 per cent during the difficult 2008, the first nine months of 2009 has not been as successful. The pensions company only posted returns of 0.1 per cent.

“We tend to have lower returns in a bear rally, but over a long-term perspective, our returns are still some of the best in the industry,” says Mr Karner.

Outstanding contribution to the pension fund industry

Not awarded

No prize was handed out for the category ‘Outstanding contribution to the pension fund industry’. After such a difficult year, the jury could not identify a worthy winner for the award and had prepared the following statement:

“The jury believes that it is not possible to identify anyone who has given an outstanding contribution to the pensions sector during the past year. It would be the wrong year to appoint a winner – in the same way as you do not give out a bonus when you have made a loss.”

The announcement was met with amusement from the audience.

judging criteria

Criteria

1. Pension fund with the best practice investment strategy: - Pension fund/company larger than SKr40bn (as of January 1 2009); - Pension fund/company smaller than SKr40bn (as of January 1 2009). In this category, the jury will award the pension fund with the most inspiring investment strategy – an investment strategy that can serve others as an example of best practice. Criteria such as diversification, risk management, sustainable and ethical responsibility, and performance will be assessed. Out of these criteria, the jury will look at the extent to which the investment strategy in these areas is innovative, serves its purpose and serves as an example to others.
   
2. Pension fund with best strategy for responsible and sustainable investment Most Nordic institutional investors have had guidelines for ethical and environmental consideration in place for some time. This category will reward the pension fund that has succeeded the best in implementing a comprehensible and forward-thinking strategy on how to be a responsible investor, taking both environmental, social and governance criteria into account. The jury will look at transparency, having a clear set of rules as well as if the pension fund can serve as examples to others.
   
3. Outstanding contribution to the pension fund industry Many people contribute to the pension fund sector – from board members to politicians, from investment experts to academics, and from professional associations to research groups. Which person or organisation has done the most for the sector in the past year?

Methodology

The Swedish pensions and investment industry was invited to submit entries to the different categories. Entrants could either nominate themselves or be nominated by a third party.

All entries were judged by a panel of independent experts drawn from the Swedish pensions and investment arena. Jury members did not judge any entries submitted by or on behalf of any of their clients. The resulting winners were determined solely by the jury – nrpn did in no way influence the judging process or results.

The jury’s motivations

Etikrådet
For the most developed process, clarity and a transparency that is necessary to achieve changes. The winner can be regarded as a role model for others, not least through co-operation both within and across Sweden’s borders.

PP Pension
For a well-thought out long-term strategy and for the combination of creating good returns over time but still being able to reposition and handle 2008 in a satisfactory way. The winner has demonstrated an ability to have the right assets at the right time.

Länsförsä- kringar
For good risk management, a successful use of protective strategies and an innovative strategy, which last year was put to the test with a satisfactory result. The winner has dared to do something different and is an inspiration for other managers of large portfolios.

Jury members

Hans Ahlin
Former CEO of Stockholms Sjukhem. Former CFO and deputy CEO of Postgirot Bank. Member of the board at Brevik Kapitalförvaltning and former member of the board at Kammarkollegiet, Nordbanken Kapitalförvaltning and FSO.

Tord Carnlöf
Consultant at Swedish strategy consultant firm Askus and chairman roles in private equity firms. Previously president and co-founder of Ethix SRI Advisors, CEO of Solving Bohlin & Strömberg, and partner at Finnish consultancy company Synergy.

Gunnar Eliasson
CEO of Finansforum, permanent secretary for Swedish tax academy and chairman of the Swedish Liberal Economists Association. Founder and former CEO of Sweden Bond Promotion.

Staffan Elmgren
Independent investment consultant and owner of Nen Advisors. Nordic advisor for Hermes Pensions Management. Former vice president of SPP.

Märtha Josefsson
Member of the board at AP2 since 2003. Independent investment consultant. Directorships on several boards, including Fabege, Luxonen, Opus Group and Skandia Funds.

Jan-Bernhard Waage
Managing director and co-founder of Wassum Investment Network, former head of funds at SkandiaLink.

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