Recommendations for Stewardship Code

Recommendations for Stewardship Code from the Committee on Corporate Governance

In November 2016 Recommendations for Stewardship Code was published. Topdanmark has a defined approach to each of the items. See Topdanmark's approach under each item.

Recommendations for Stewardship Code

1. Engagement policy

1.1. It is recommended that institutional investors should publicly disclose an engagement with respect to investment in shares companies that are publicly listed in Denmark. 

In connection with equity investment in public companies, Topdanmark publicly discloses an engagement policy which describes how Topdanmark integrates active ownership into its investment strategy.  




2. Monitoring and dialogue

2.1. It is recommended that institutional investors monitor and engage in a dialogue with the companies, in which they invest taking due account of the investment strategy and the principle of proportionality. 

Topdanmark monitor and engage in a dialogue with the companies in which Topdanmark invests taking due account of the investment strategy and the principle of proportionality. 

Topdanmark addresses any key information relevant to investors that the companies, in which Topdanmark has a significant ownership, publish such as the annual report, quarterly and half year reports, period announcements, investor presentations, statements of corporate management as well as ESG and CSR reports, and the statutory corporate governance report.  

As an investor, Topdanmark’s purpose is to exercise active ownership in order to make use of its potential influence to disseminate a responsible and value adding behaviour with due respect towards the surrounding community. However, Topdanmark’s influence should never displace the primary purpose of the stakeholders’ interests to create an attractive profit of investment to the portfolio owners. 




3. Escalation

3.1. It is recommended that institutional investors as part of the engagement policy determine how they may escalate their stewardship activities beyond regular monitoring and dialogue. 

As part of the engagement policy, Topdanmark has laid down guidelines for how Topdanmark can escalate Topdanmark’s stewardship beyond the regular monitoring and dialogue. 

If Topdanmark has a share in a company, where the operation does not live up to the norms of Topdanmark’s Responsible Investment Policy, and Topdanmark’s share is regarded as profitable, a solution must be sought in accordance with this prioritised sequence: 

  • Dialogue with the company to encourage change in behaviour
  • In cooperation with other stakeholders seek to ensure a similar influence 

  • Divest ownership. 




4. Co-operation with other investors

4.1. It is recommended that institutional investors as part of the engagement policy should describe how they will act collectively with other investors in order to achieve greater effect and impact. 

As part of the engagement policy, Topdanmark has addressed how to cooperate with other investors in order to achieve greater effect and impact. 

Particularly in connection with an escalation, Topdanmark works together with other investors cf. paragraph 4.1. 




5. Voting policy

5.1. It is recommended that institutional investors as part of the engagement policy adopt a policy for voting and are willing to publish whether and how they have voted. 

As part of the engagement policy, Topdanmark has adopted a voting policy. 

Pursuant to Topdanmark’s policy, Topdanmark will vote at general assemblies in order to increase the value adding activities, including Topdanmark supporting the long-term value creation by promoting the recommendations for corporate governance in Denmark. At the same time, remuneration of senior executives should be competitive, and Topdanmark supports that standardised incentives are ensured by having both fixed and variable salary components included in the remuneration packages. In their annual reports, the companies should be as transparent as possible and account for the long-term strategy, remuneration, as well as ESG risks and opportunities affecting the long-term value creation.

When voting at the annual general meetings, Topdanmark assesses both the companies’ leadership score in ESG ratings as well as national guidelines for corporate governance.

Especially in small Danish companies, the equity interest can be relatively large even though Topdanmark does not have a seat on the Board of Directors. Regardless of  whether the background for the significant equity interest is business strategic or portfolio investments, it is Topdanmark’s policy to vote at the annual general meetings with the purpose of promoting the value creation, and to have the companies informed about Topdanmark’s position on the strategy of the company.

In Danish companies, where Topdanmark is not represented on the board of directors, annual reporting must include: 

  • Topdanmark's participation in the company’s annual general meeting 

  • How Topdanmark has voted 

  • Whether there are unsettled matters between Topdanmark and the company covered by “Financial Business Act section 78” or other substantial unsettled business concerns with the company in relation to the size of the company. However, this only applies if it can take place within the scope of the current legislation including the rules against insider trading. 

Topdanmark's board of directors sets the framework for exercising active ownership for foreign companies in which Topdanmark has a position that would require that the ownership of a listed company should be flagged according to the stock exchange rules in the company's home country, and where Topdanmark is not represented on the board of directors.

In order to increase the return of investment of Topdanmark’s shares, these have been made subject to stock lending. Topdanmark’s policy is to maximise the long-term return of investment of the shares and only to recall the share loan if it serves the overall purpose of Topdanmark. 




6. Conflicts of interest

6.1. It is recommended that the engagement policy contains a discription of how conflicts of interest in relation to stewardship are identified and managed. 

Topdanmark’s engagement policy includes a description of how conflicts of interest in relation to stewardship are managed. 

  • As mentioned in paragraph 5, annual reporting is made for companies, where Topdanmark is not represented on the board of directors, whether there are unsettled matters between Topdanmark and the company covered by “Financial Business Act section 78” or other substantial unsettled business concerns with the company in relation to the size of the company. However, this only applies if it can take place within the scope of the current legislation including the rules against insider trading. 

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7. Reporting

7.1. It is recommended that institutional investors at least annually report on their stewardship activities, including voting activity. 

Topdanmark reports annually on Topdanmark’s stewardship activities including voting activities. 

For companies where Topdanmark is not represented on the board of directors, Topdanmark reports on the following in the annual CSR report as mentioned under paragraph 5: 

  • Topdanmark's participation in the company’s annual general meeting 

  • How Topdanmark has voted 

  • Whether there are unsettled matters between Topdanmark and the company covered by “Financial Business Act section 78” or other substantial unsettled business concerns with the company in relation to the size of the company. However, this only applies if it can take place within the scope of the current legislation including the rules against insider trade.

Topdanmark's board of directors sets the framework for exercising active ownership and reporting for foreign companies in which Topdanmark has a position that would require that the ownership of a listed company should be flagged according to the stock exchange rules in the company's home country, and where Topdanmark is not represented on the board of directors.