Six Danish pension funds have decided to leave the private organisation behind the UN-backed Principles for Responsible Investment (PRI).

The investors said in a joint statement that they will continue to follow the principles, but will remain outside the organisation "until it again lives up to basic requirements for good corporate governance – including restoring membership democracy in the organisation".

ATP, Industriens Pension, PensionDanmark, PFA Pension, PKA and Sampension said in a joint statement that the PRI has an "important" role to play in promoting responsible investment, however they have "observed with concern that the governance of the PRI organisation does not live up to the basic standards" they as investors would expect of the companies in which they invest.

The group of pension funds said that they have tried on "numerous attempts" to improve conditions within PRI, but have not been successful.

They said: "We have chosen to leave the PRI organisation until the organisation re-establishes the fundamental principles of governance that existed before the organisation in 2010-11 on its own initiative radically changed the organisation's constitution without the involvement or consent of its members at the time."

The funds said that they will continue to be "dedicated supporters" of the six principles, but from 2014 onwards they will not be able to report to the PRI organisation about their implementation of the six principles and will instead individually report on how they work with responsible investment.

The Danish schemes added that if the governance of the PRI organisation improved to a "satisfactory level" then they, as individual investors, will give "serious thought" to re-joining the organisation.

In response to the Danish pension schemes' statement, Fiona Reynolds, PRI managing director, said: "The PRI is deeply disappointed that this has occurred. At our annual signatory general meeting in Cape Town in October, the PRI committed to undertake a review of its governance.

"The Council's governance committee has already begun to define the scope of this review, which will be led by a new council chair expected to be appointed in early 2014."

Reynolds said that the PRI advisory council is democratically elected by signatories and is "globally diverse".

"Accountability and transparency are fundamental to all of the PRI's work and we have recently launched a new mandatory public Reporting Framework for our 1,200 signatories to ensure both they and the PRI itself continues to lead by example," Reynolds said.

She added: "Given the important work of the Danish pension funds in responsible investment, we hope that the funds concerned will reconsider their decision at some point in the near future."

First published 17.12.2013

monique_simpson@wilmington.co.uk