On March 19, 2025, AkademikerPension, a major pension fund in Denmark, announced its decision to terminate its collaboration with State Street Global Advisors (SSGA), highlighting a significant shift in its investment strategy largely influenced by environmental, social, and governance (ESG) concerns. Anders Schelde, the Chief Investment Officer of the DKK157bn (€21bn) fund for academics, articulated that the termination stemmed primarily from the pension fund’s evolving equity strategy. He asserted, "The decision is primarily driven by our new equity strategy, but we also assess that State Street’s changed approach to active ownership and responsible investments no longer meets our expectations."
The decision indicates a broader trend in the finance industry where pension funds and investors are increasingly prioritizing sustainability and responsible investment practices. AkademikerPension emphasized its rigorous assessment process regarding how external asset managers handle these important issues. This process is carried out by its ESG team alongside investment teams, which together rate managers on a scale from A to C, with C representing the lowest standards, an initiative that clearly reflects their commitment to responsible investing.
In the context of this decision, it is worth noting that in late February 2025, The People’s Pension in the UK made a strategic move to appoint Amundi and Invesco, taking over management of £28bn (€34bn) of its assets. This shift has resulted in the assets managed by State Street being slashed from £32bn to around £5bn. The People’s Pension articulated that these appointments are a vital step toward better alignment with their stewardship approach and priorities.
Discussing sustainability, Schelde mentioned that while high standards for sustainability and responsibility do not require the pension fund’s asset managers to think in exactly the same manner, there remains a fundamental need for alignment. He stated, "But they must be in line with our fundamental approach and the way we see the world." This perspective underscores the complexity of navigating various paths toward responsible investment while adhering to strong sustainability metrics.
Looking back, the past year did not bode especially well for State Street. Around March 19, 2024, the investment giant exited the Climate Action 100+ investor coalition amid a growing backlash against ESG-focused investing in the United States. This marked a pivotal moment that would unfold into present ending partnerships and collaborations across various regions.
In response to AkademikerPension's decision, a spokesperson for State Street noted that the reduced usage of external asset managers arose from company efforts to enhance its insourcing capabilities. The spokesman remarked, "As shared by AkademikerPension, the decision to reduce the use of external managers was prompted by an exercise to increase insourcing capabilities." State Street, despite recent challenges, remains committed to engaging with pension funds, with recent reports indicating that they manage approximately $50bn in assets under management (AUM) for Nordic institutional investors, marking a 35% year-over-year increase.
This latest occurrence represents a significant chapter in the discourse on responsible investing, amplifying calls for transparency and accountability from asset managers. As institutional investors like AkademikerPension and The People’s Pension continue redefining their investment frameworks, aiming for greater ESG compliance, the repercussions for large asset management firms become increasingly profound. SSGA, once a steadfast company in the ESG realm, faces a new reality as it navigates through the changing landscape of responsible investment.
As businesses and funds are prompted to ensure their compliance with evolving sustainability criteria, the financial sector observes closely. The actions taken by these pension funds may serve as a harbinger for wider market shifts as more investors embrace responsible investing over what might have otherwise been classified as traditional investment strategies.
Ultimately, as the conversation around sustainability continues to evolve, industry players will undoubtedly observe the outcomes of such pivotal decisions by organizations like AkademikerPension. With its mandate firmly focused on responsible investing and sustainability, the trajectory of asset managers will be closely scrutinized to see how they adapt to or resist the shifting paradigms that are taking shape.
