Responsible Investment Policy

1. Introduction

According to Article 36 of Act No. 129/1997 on the Obligatory Pension Rights Insurance and the Operations of Pension Funds, a pension fund must set ethical standards for investments. This Responsible Investments Policy, together with the fund’s Shareholder Policy, sets out the fund’s criteria in this regard.

Responsible investments include that environmental issues, social issues and corporate governance are considered in investments. Gildi Pension Fund places special emphasis on corporate governance, and the fund’s Shareholder Policy discusses how the fund acts as an owner in that context. Refer to the fund’s Shareholder Policy regarding Gildi pension fund’s policy as an owner in the field of corporate governance.

Gildi Pension Fund is a relatively large professional investor in the Icelandic securities market. The size of the fund abroad is relatively small compared to the size of companies, funds and other investors in those markets. For this reason, Gildi Pension Fund has fewer opportunities to apply itself abroad, except in cases where the size of the holdings warrants it. The fund achieves asset distribution abroad by investing in funds, but as a general rule not in individual companies. Emphasis is placed on domestic investments in this policy, as well as emphasis on domestic companies in the fund’s Shareholder Policy.

This Responsible Investment Policy covers the fund’s direct investments in (i) listed companies and (ii) funds (excluding index funds) that invest mainly in shares, e.g. mutual funds, investment funds and other collective investment funds. It is possible to consider the fundamental considerations of the policy with other investments as appropriate. The implementation of the policy towards domestic investments is discussed in more detail in Article 4.a. and foreign investments in Article 4.b.

2. Purpose of the Policy

Gildi Pension Fund is a long-term investor and aims to maximise pension payments to fund members and guarantee them the best possible pension rights through premium returns, risk management and cost-effective operations, in accordance with the fund’s Investment Policy at any given time. Gildi Pension Fund’s investment strategy is set by the fund’s Board of Directors every year, and it sets the direction for how the fund’s asset composition should be structured, taking into account return and risk.

The purpose of this Responsible Investments Policy is to set the policy of Gildi Pension Fund as an owner in the companies it invests in, in the field of environmental and social issues. Gildi Pension Fund takes these factors into account to the extent that they fit within the above-mentioned overall goals of the fund to maximise pension rights for fund members. Gildi Pension Fund considers that consideration of these factors can be the basis of the fund’s long-term returns.

3. On the Implementation of the Policy

The Responsible Investments Policy is taken into account in Gildi Pension Fund’s decisions on individual investments and follow-up of such investments, as well as being taken into account in formulating and reviewing the fund’s Investment Policy.

The Managing Director handles the implementation of the policy in consultation with the fund’s Board of Directors and employees. When implementing the policy, the relevant rules on conflicts of interest and disqualification must be observed.

4. The Implementation of Responsible Investments

Gildi Pension Fund’s policy as the owner is to protect the interests of the fund’s members in the long and short term. Gildi Pension Fund acts as owner, cf. below, in order to promote the long-term interests and sustainability of the companies in which the fund invests. The core values ​​of the fund in the field of environmental and social issues are based on the core values ​​of the Icelandic state, which are, among other things, expressed in the provisions of the constitution and general laws.

Gildi Pension Fund is concerned with environmental and social issues and takes action if incidents arise in these areas, cf. below, with the aim of influencing the attitudes and policies of the companies in which the fund invests towards environmental and social issues.

a. Domestic investments
Registered companies must disclose annually an assessment of the company’s development, scope, position and impact in relation to environmental, social and HR matters, as appropriate, and also report on the company’s policy on human rights issues and how it deals with corruption and bribery issues as applicable, cf. Article 66(d) in Act No. 3/2006 on Annual Financial Statements. Gildi Pension Fund encourages companies to provide detailed information on issues that concern them in the field of environmental and social issues, focusing on the areas that are relevant to the respective operations.

If a company registered on the domestic market is involved in a violation in the field of environmental and social issues in the opinion of the competent authorities, the fund’s goal is to act as the owner so that the relevant violation is stopped without delay and also request that appropriate measures be taken in order to ensure that similar incidents do not occur again. If such actions do not bring satisfactory results, the fund will consider the sale of the relevant holdings in whole or in part, and in the case of persistent or repeated violations, it may exclude individual investments until adequate improvements have been made. By acting in this way, Gildi Pension Fund can have a constructive effect on the behaviour of companies in the long term and take into account the fund’s overall goals.

Gildi Pension Fund has expectations that the asset managers with whom the fund does business apply the appropriate measures in a similar way to their investments. Gildi requests that asset managers inform whether they have set a policy on environmental and social issues before investing in the respective funds. Such policies are not a condition of investment in the respective fund, and an assessment is made on the basis of the fund’s overall goals.

b. Foreign investments
The fund can decide to support the actions of other investors regarding environmental and social issues when incidents arise, as well as act on its own if the fund’s holdings in the company in question warrants it. Gildi requests that asset managers inform whether they have set a policy on environmental and social issues before investing in the respective funds. Such policies are not a condition of investment in the respective fund, and an assessment is made on the basis of the fund’s overall goals.

5. Review and Publication

This policy shall be reviewed by Gildi Pension Fund’s Board of Directors annually and as the occasion arises. This policy shall be published on the fund’s website. Any changes that may be made to the policy must also be published on the website.

The policy was originally set by the fund’s Board on 28 June 2017. It was last reviewed by the Board on 25 February 2021.