Occupational Pension Funds (IORPs) & Sustainability: What Does the Prudent Person Principle Say?

The Nordic Journal of Commercial Law 2017/1

27 Pages Posted: 2 Oct 2017

See all articles by Alexandra Andhov

Alexandra Andhov

University of Copenhagen - Faculty of Law; University of Copenhagen - Centre for Private Governance (CEPRI)

Rasmus Kristian Feldthusen

University of Copenhagen - Faculty of Law

Vibe Ulfbeck

University of Copenhagen - Faculty of Law

Date Written: September 29, 2017

Abstract

The European Union encourages individuals to save in private and occupational pension funds to complement their state saving-plans. Throughout their lives, employers directly sponsor occupational retirement saving plans, so individual employees may top up their future pensions. While the European Union clearly supports the formation and cross-border participation in these financial vehicles by adopting regulatory framework, the EU has also decided to determine a common investment decision standard to be used in all Member States, called the Prudent Person Principle. According to this principle, the fund - the future retirement for many - shall be managed with care, the skill of an expert, prudence and due diligence. Under this principle, the pension fund's governing body is given a broad authority to invest the pension assets in a prudent fashion in light of the particular investment plan of a fund. At the same time, the EU is also moving towards more Responsible Investment and inclusion of the ESG - principles (Environment, Social and Governance). The question we aim to answer in this paper is how these principles co-exist and whether, due to the new Directive in 2016, all funds are obliged to make only responsible, environmentally and socially beneficial investments.

Keywords: IORPs, Sustainability, Prudent Person Principle, ESG

Suggested Citation

Andhov, Alexandra and Feldthusen, Rasmus Kristian and Ulfbeck, Vibe, Occupational Pension Funds (IORPs) & Sustainability: What Does the Prudent Person Principle Say? (September 29, 2017). The Nordic Journal of Commercial Law 2017/1, Available at SSRN: https://ssrn.com/abstract=3045086

Alexandra Andhov (Contact Author)

University of Copenhagen - Faculty of Law ( email )

Studiestraede 6
Studiestrade 6
Copenhagen, DK-1455
Denmark

University of Copenhagen - Centre for Private Governance (CEPRI) ( email )

Karen Blixens Vej 16
Copenhagen, 2300
Denmark

Rasmus Kristian Feldthusen

University of Copenhagen - Faculty of Law ( email )

Studiestr├Žde 6, 3rd. floor
Copenhagen, 1455
Denmark
+4535323198 (Phone)

HOME PAGE: http://jura.ku.dk/virksomhedsansvar/english/staff/profile/?id=97549

Vibe Ulfbeck

University of Copenhagen - Faculty of Law ( email )

Karen Blixens Plads 16
Copenhagen, DK-2300
Denmark

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