Nine Out of ten pension funds make use of exclusion, ESG integration and engagement when investing. Sustainable investment has thus become the undeniable standard within the sector. Nevertheless, there is still much to be achieved in terms of concrete implementation, according to research by the Association of Investors for Sustainable Development (VBDO) among the 50 largest Dutch pension funds. For example, more than half of the pension funds do not yet meet the climate commitment of the climate agreement and less than one in five funds have a strategy for implementing net-zero emission targets.
Tuur Elzinga, chairman of the FNV union, indicates the importance of this research: ‘The pressure from society on pension funds to invest sustainably is increasing. We also notice this among our members. We are happy with the steps that are taken every year, but we are not there yet. There is still a lot to gain in the field of climate and human rights, and in particular workers’ rights. Hopefully the benchmark will encourage the sector to do more. To look at the good examples and to implement them ourselves.”
ABP most sustainable fund
The VBDO annually examines the responsible investment policy and performance of Dutch pension funds, with the support of FNV. The benchmark assesses the 50 largest pension funds in the Netherlands, together accounting for 89% of assets under management with a total value of more than €1,540 billion. This year again, ABP is the highest scoring pension fund for the fourth year in a row with a score of 4.0 out of a maximum of 5.
Corien Wortmann, chairman of the board of ABP: ‘We consider it a great boost that ABP has been named the most sustainable fund by the VBDO for the fourth year in a row. The VBDO is raising the bar considerably and we are also raising our ambition. We want to make a very concrete and measurable contribution to the Paris climate goals and a better world. Large groups of our participants and employers find this urgent and important. We look critically at our performance. What do we achieve, what can be more effective. How do we achieve more positive impact for a sustainable world? At the same time, together with other pension funds, we are showing that this is possible while maintaining returns and pensions. It is nice to see that pension funds are investing more and more sustainably and reporting on it. In this way we inspire and stimulate each other to do better and better.’
ABP is closely followed by BpfBouw (3.9) and PME (3.6). Pensioenfonds ING climbs from 46th to 29th place, making it the fastest climber.
Climate strategy is missing in more than 80% of the funds
Less than 1 in 5 pension funds in the Netherlands have a climate strategy with net-zero emission targets. As a result, the pension sector does not yet meet the climate commitment that was issued in 2019, 2022 is the deadline.
Smaller funds faster sustainable
Xander Urbach, Sr. project manager of the benchmark notes that this picture may change in the future: ‘We see that scores in the implementation category are increasingly converging. For example, the smaller funds can increasingly make use of ambitious instruments such as the European Commission’s Paris-aligned benchmark, which they do in a number of cases. This offers the smaller funds the opportunity to take over the leadership position from larger funds in the short to medium term.’
The need for a new approach
The survey shows that responsible investment has now become the standard for the vast majority of Dutch pension funds. ‘That is of course good news,’ Urbach explains, ‘but responsible investing has had too little effect on sustainability in the world.’
The benchmark also shows that most (88%) pension funds apply ESG integration to at least some of their equity investments and engagement with companies is done by 86% of pension funds.
Urbach: ‘The sector has shown that it can choose a responsible course, while maintaining returns. Unfortunately, as mentioned, the fact that we are investing more and more sustainably does not mean that the world itself is becoming more sustainable. It is therefore time for that course to be translated from a well-integrated to a comprehensive approach.’
Presentation of benchmark results
You can find a presentation of the benchmark’s most important results on this page (in Dutch), during the Educational meeting for pension funds: Climate Change, Climate Risk and Transition Risk from Financial Investigator.