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Lærernes Pension (LP) is a Danish pension provider dedicated to the country’s teachers. It operates as an insurance company and serves more than 160,000 teachers employed in municipal and private primary and lower-secondary schools, as well as those working in adult education. LP managed assets worth approximately EUR 21.2 billion as at end-2023.
In 2008 LP collaborated with PKA and PBU, two other Danish pension companies, in forming Forca. This is a service company that takes care of fund administration, accounting, and member services for the three pension providers, thereby providing economies of scale and freeing up staff for strategic and investment-related tasks.
LP also seeks to reduce costs for its members by outsourcing most of their investments to external asset managers and selecting passive products where possible.
LP’s investment strategy operates under a fairly stringent responsible investment policy as set out by the LP Board. This includes a list of companies and sovereign nations excluded for violations of international norms (including the UN Global Compact, OECD guidelines for multinational companies, and ILO conventions), activities related to controversial weapons or the military, tobacco industry, and fossil fuels. The list is updated every 6 months. LP also seeks to take and active approach to sustainability by investing in companies that support the transition to a low-carbon economy.
LP’s portfolio includes developed and emerging markets sovereign debt, as well as investment grade, emerging market, and high yield bonds. Global developed markets listed equites are supplemented by a dedicated emerging markets allocation. LP also invests in private equity and real assets including infrastructure, property, and forestry.
In terms of climate-related ambition, LP has committed to reducing the carbon footprint of its listed equity, corporate bond, and Danish property portfolios by 58% by 2025, based a 2019 baseline. It aims to reach a 66% reduction by 2030, and ultimately achieve carbon neutrality for the whole portfolio by 2050 providing governments also follow this pathway as laid out in the Paris climate agreement.
LP aims to have a 15% allocation to companies and issuers with positive climate and environmental characteristics by 2030. As well as reducing the carbon footprint of the portfolio, LP seeks to divest from the most climate damaging holdings. This does not involve a hard sector-wide exclusion of fossil fuels, as LP prefers to engage with companies to evaluate their transition plans. It also allows for certain fossil fuel related revenue streams within set thresholds.
In 2022 LP Pension was the subject of criticism from the Danish press and the local Consumer Council over its fossil fuel investments and their alleged incompatibility with the sustainability guidelines communicated to members. Among the discrepancies was a lack of clarity over hard exclusions for thermal coal and tolerance levels for other limited coal-related activities. While defending the rationale for the remaining fossil-related holdings LP and its Chief Investment Officer Morten Malle acknowledged at the time that external communications on the matter could be improved.
