DK, Pension Funds Launch SDG Investment Fund

Stockholm (NordSIP) – A new investment fund to promote the UN’s 17 global goals worth DKK 4.1 billion has been launched by the government of Denmark, together with six of the most preeminent pension funds in the country.

The Verdensmålsfond [Danish SDG Investment Fund] will invest primarily in sustainable projects in developing countries, and is forecast to attract a total of DKK 30 billion for projects in Africa and Asia.

The agreement to establish the fund was signed last Thursday (June 7th) by pension companies PKA, PensionDanmark, PFA, ATP, JØP/DIP and PenSam at ‘UN City’ in Copenhagen at an event hosted by the UNDP. The Danish SDG Investment Fund is a public-private partnership in which state and pension companies join forces to solve major social challenges, including how to help increase private investment in developing countries, one of the prerequisites for realising the global goals by 2030.

“The Danish SDG Investment Fund can mean new, sustainable investments of up to DKK 30 billion in the world’s poorest countries,” said Denmark Minister for Development Ulla Tørnæs in a press release.

“The fund is a concrete example of the paradigm shift in Danish development cooperation – we can not meet world goals and lift people out of poverty without private investment. The involvement of pension companies in the fund shows great leadership and global responsibility. The private sector’s potential in developing countries is huge and can result in jobs, education and a better life for many people in some of the poorest countries in the world.”

“I am extremely pleased with the agreement,” Tørnæs added.

The Danish state is contributing DKK 1.6 billion, a sum obtained from Investeringsfonden for Udviklingslande (IFU) [the Investment Fund for Developing Countries], which is funded via Denmark’s assistance to third world countries. IFU, which, in cooperation with over 900 Danish companies, has invested in over 1,250 companies in over 100 developing countries, will also manage the fund.

The investment from pension funds amounts to DKK 2.4 billion, with another private investor contributing DKK 80 million. A short-term objective is to raise more than DKK 1 billion in the fund’s second closing.

The Danish SDG Investment Fund will invest equity capital in companies in Africa, Asia, Latin America and in parts of Europe in cooperation with Danish business. The fund will be run on market terms and ensure investors competitive returns. Returns of 10-12 per cent are forecast.

“The Danish SDG Investment Fund is a good example of how Danish pension funds in cooperation with government funds can help make a positive difference in developing countries while achieving solid returns and offering Danish companies better access to new markets,” the six pension companies said in a joint statement upon signing the new agreement.

“The SDG fund is the first global example of a model that, in practice, mobilises large-scale private capital to implement the UN global goals. So there is no doubt that, with this launch, we will be able to position Denmark at the forefront of global efforts to put words into action in terms of the sustainability goals,” added Torben Möger Pedersen, Director of PensionDanmark, one of the fund’s investors.

“We are looking forward to the opportunity for reasonable returns while promoting world goals,” said Möger Pedersen.

“Private investment is crucial,” added Nicolai Boserup, senior vice president of the IFU. “ In fact, we ourselves have become richer in our part of the world, gaining an advanced economy and a knowledge-based society with high education and incomes. We can also see that this has worked in China. So we need more of this.”

Dansk Industri (DI) [The Confederation of Danish Industry] also expressed delight with the new investment fund. “There is no doubt that the SDGs have also brought companies and government closer together in investing in developing countries. Of course, we think that’s positive,” said COO Thomas Bustrup.

There are also high expectations in Africa itself, considering that a large part of the fund’s future investments are expected to be undertaken there.

“Ghana would like to commend Denmark on the launch of its SDG fund. When investing in each other’s countries, the world becomes a better and richer place,” commented Ghanaian Foreign Minister Shirley Ayorkor Botchwey.

Image: (c) Lars Løkke Rasmussen, Twitter