Danish pharmaceutical giant Novo Nordisk, world-renowned for its insulin and obesity medication and a strong focus on social responsibility and health, has invested over DKK 100 million of its employees’ pension funds in unhealthy foods and fast food restaurants – commonly known as junk food.
Through pension schemes, which Novo Nordisk offers in the salary package to more than 8,000 employees in US subsidiaries, the pharmaceutical giant invests a total fortune of over 17 billion Danish kroner.
Danwatch can document this after gaining insight into Novo Nordisk’s reports to the US Securities and Exchange Commission (SEC). Below is a list that specifically shows the pharmaceutical giant’s investments of more than 8,000 American employees’ pension savings.
The savings are invested in securities via global investment funds, where ethical screening and policies for responsible investment, as known from Danish pension funds, are absent, according to Danwatch.
At least DKK 100 million is invested in shares and bonds issued by well-known fast food chains that are significant negative actors when it comes to obesity and unhealthy eating habits.
Employees’ pension money is invested in McDonald’s, Kentucky Fried Chicken, Wendy’s, Pizza Hut, Taco Bell and Domino’s Pizza, as well as major soft drink companies like Coca Cola and Pepsi and the world’s largest snack producers, Mondelez International and Hershey.
“We continuously review our guidelines and policies regarding pension schemes for our employees in all countries where we operate. At the same time, we are obliged to comply with applicable legislation, which varies from country to country,” says Novo Nordisk, which has not answered a number of specific questions about the investments in junk food companies.
The American non-profit organization As You Sow, which has studied many US pension schemes, believes that it is legal to include sustainability considerations in investments. They cite a US law from 1974 – ERISA (Employee Retirement Income Security Act), which aims to protect employees’ retirement savings.
“We believe it is legal for Novo Nordisk to offer responsible investment funds in US pension schemes. This was established in the ERISA regulations and was confirmed in a recent legal ruling in Texas. As long as the investor can demonstrate that they are fulfilling their fiduciary duty, there is nothing preventing other considerations,” Andrew Behar, CEO of As You Sow, told Danwatch.”
Andrew Behar continues: “We know that fossil-free 401(k) for tech workers over a decade have been able to provide an 8.9 per cent excess return over the general market. This is according to research from the University of Waterloo,” says Andrew Behar.
Employees without sustainability choices
According to independent investment advisor Nikolaj Holdt Mikkelsen, Novo Nordisk’s pension investments in the US are very unusual when it comes to responsibility and sustainability.
“Novo Nordisk’s pension scheme in the US shows that European and especially Danish pension funds are in a completely different place when it comes to ESG (environmental, social and governance assessment, ed.) and responsibility than the sector is in the US,” he says.
Countless research projects, many with financial support from Novo Nordisk, have carved in granite that consumption of fast food and unhealthy foods is closely linked to the risk of health problems, obesity and type 2 diabetes. These are conditions that Novo Nordisk products Ozempic and Wegovy are designed to counteract.
New research from 2023 has even revealed that just one fast food meal a week carries a serious risk of developing dangerous fatty liver disease in type 2 diabetes patients – the very people Novo Nordisk’s insulin products target.
Nikolaj Holdt Mikkelsen points out that Novo Nordisk could benefit from offering employees a sustainable and responsible choice in their pension investments.
“If Novo Nordisk doesn’t already offer employees a choice of sustainability in the scheme, as many Danish pension funds do for corporate customers, it could be a good compromise between responsibility and return to offer it to the employees,” says Nikolaj Holdt Mikkelsen.
According to an email response from Novo Nordisk, employees do have a choice. However, Novo Nordisk will not disclose to Danwatch what choices the pension scheme offers its employees.
“Under current Department of Labor regulations, we are legally prevented from offering opportunities consisting solely of, for example, ‘sustainable stocks’ that do not seek to maximize investment returns and/or take into account financial risks,” Novo Nordisk said in an email.
However, the rules cited by Novo Nordisk state that ESG (environmental, social and governance) factors can be taken into account if they are financially relevant to the investment.
Journalist and author of two books about Novo Nordisk, Hanne Sindbæk, expects the management of Novo Nordisk to react to the revelation of the investments, even though the company’s colossal growth in obesity medicine may be prioritised over new sustainable initiatives.
“It’s an internal battle in Novo Nordisk between idealists and business people. When sustainability is challenged, the idealists will shout louder and try to pressure management to react,” says Hanne Sindbæk, author of the book “De renfærdige – Fortællingen om Novo Nordisk.” (The righteous – The Story of Novo Nordisk).
Frozen food, chips and frozen French fries
The investments also include manufacturers of frozen food, chips and frozen French fries, snacks and chocolate – including the Daim, Marabou and Toblerone brands. Products in which Novo Nordisk is a shareholder through the investment of employees’ pension money.
This is in contrast to the Danish insulin company’s three-part bottom line, where social and environmental values are included alongside economic ones.
Add to this the contrast with Novo Nordisk’s involvement in both obesity research and projects to protect children and young people from unhealthy eating habits.
For example, the “Healthy Food Challenge” project aims to “find and scale solutions to prevent diabetes and obesity.”
“Sustainability is written into Novo Nordisk’s articles of association, which is why the management is also formally measured on results. Therefore, the outside world also expects Novo Nordisk to live up to common standards within, for example, responsible investments,” says Hanne Sindbæk.
Nikolaj Holdt Mikkelsen is more doubtful about whether Novo Nordisk intends to change American employees’ ability to opt in and out of responsibility.
“I’m not sure that American employees at Novo Nordisk or other companies in the US are looking for sustainability in their pension scheme. And this is probably the reason why the chosen funds do not exclude companies,” says Nikolaj Holdt Mikkelsen.