Danish pension fund AkademikerPension has terminated its asset management contract with State Street Global Advisors (SSGA), due to responsible investment concerns.

The pension fund said the decision is primarily driven by its new equity strategy, but it also believes that SSGA’s changed approach to active ownership and responsible investment no longer meets its expectations.

AkademikerPension undertakes a self-described “rigorous assessment” to ensure that the asset managers it works with meet its responsible investment standards. It has an ESG rating scale from A to C – with C being the lowest rating.

Asset managers that do not meet AkademikerPension’s requirements, which receive a C rating, are generally not used by the pension fund and existing managers may risk losing their mandate if they do not improve.

The rating is carried out by the ESG team in collaboration with the investment teams, but it is the ESG team that ultimately recommends the rating for approval by the Accountability Committee.

AkademikerPension investment director, Anders Schelde, said: "We have quite high standards for sustainability and responsibility in our investments, and our asset managers don't have to think exactly like us, as these are obviously complex issues and there may be different ways to achieve the same goal. But they must be in line with our fundamental approach and the way we see the world.”

In February, AkademikerPension published a position paper on the assessment of external asset managers, where it described its approach and the requirements it places on business partners.

The pension fund said it is committed to ensuring that responsibility and high returns go hand in hand. With asset managers playing a “key role” in this work, AkademikerPension said it will continue to continuously assess business partners to ensure they support its ambition of both responsibility and solid long-term returns.

In response, a spokesperson for SSGA said: "As shared by AkademikerPension, the decision to reduce the use of external managers was prompted by an exercise to increase insourcing capabilities. As a manager with approximately USD 50bn in AUM for Nordic institutional investors, a 35 per cent year-over-year increase in AUM, SSGA looks forward to continued discussions with MPIM [AkademikerPension's in-house asset manager] on future opportunities.

Earlier this month, AkademikirPension announced its decision to divest from Tesla due to ongoing concerns about labour rights, corporate governance, and Tesla CEO and co-founder, Elon Musk's behaviour.

Akademkir Pension CEO, Jens Munch Holst, said: "It's no secret that Tesla has been a market leader in the green transition for years. But when we can tick off a wide range of problems year after year without any prospect of any improvement – in fact, quite the opposite – it is difficult to argue that we should remain invested.”

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