Professor and former chief economic advisor lambast exclusion lists

When pension funds exclude companies not living up to the ESG goals, this may impede their own returns without having any real impact, say professor Peter Løchte Jørgensen and former chief economic advisor Michael Svarer.

Coal mines have long since been a source of criticism for ESG investors. | Photo: Bo Svane

It's as if pension funds are competing on how many firms can be excluded from their investment portfolios, but this might be costly on the returns, if they put too many limits on themselves, write Professor Peter Løchte Jørgensen and former Chief Economic Advisor Michael Svarer in a debate article in the news weekly Finans, while also calling the ESG wave beneficial and healthy.

"The primary responsibility and purpose of the pension funds is to deliver the best possible investment returns and pension services for their members. The safe choice is to focus one's ESG resources on the value-creating active ownership over dubious and quite possibly useless investment exclusions," they write.

They point towards the fact that when a share is traded between two investors, this often happens without the involvement of the given company. If you sell the share thinking it will lose its value at some point,  this is based on the belief that the rest of the markets are inefficient and mistaken.

English Translation: Nielsine Nielsen

(This article was provided by our sister media, FinansWatch Denmark)

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