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How BPL pension fund invests in biodiversity

Eric Douma is a board member of BPL Pensioen: the pension fund for the agricultural sector. Besides this, he also represents agricultural entrepreneurs as a member of the board of LTO Noord, the Agriculture and Horticulture Organisation for North Netherlands, and as a portfolio holder for LTO Nederland. Last but not least, he is also a farmer himself.

Can you describe how your experience and your different roles have formed your vision of sustainability and biodiversity?

I have been involved with sustainability topics for some time now. At first, my focus was mainly on climate and clean energy. About ten years ago, biomass used to be seen as a clean energy solution. This made me realise that sustainability is not at all a black-and-white issue. In the case of biomass, your actual approach determines your impact on nature. For instance, you have to think about whether you use waste or grow new crops for biomass, and it makes a huge difference whether you chop wood by hand (powered by a peanut butter sandwich) or by using a diesel-powered engine. These choices require knowledge and involvement, and this understanding is also essential to prevent greenwashing. This approach, of making well-informed decisions, is central to our biodiversity strategy at BPL Pensioen.

What is BPL’s approach to biodiversity?

BPL Pensioen developed a vision paper on biodiversity a few years ago. Our vision is to aim for a stable pension on a healthy planet for all our participants. This is now the foundation of our investment policies. From there, we decided that societal needs, such as a viable climate, water and biodiversity, are essential topics to focus on. These are all topics where we saw opportunities for improvement and stable returns, and where we wanted to make an impact. To continue making informed decisions, we feel it is important to regularly reflect on our policies and assess the actual impact of our choices.

We did not start out by thinking from a financial perspective; instead, we began from where we saw opportunities. This might seem an unusual approach; however, it allowed us to do a deep dive and gain insight into what biodiversity entails beyond the financial frameworks. Then, we went back and looked at how we could apply our insights in the context of BPL Pensioen.

Can you describe the role of the board in this process?

Our entire board has been involved in every step of the process. We started small, building up our knowledge with partners such as LTO and through education sessions with knowledge institutes such as CREM. We took the time to get together and develop our understanding of biodiversity. This requires commitment and an investment in time. But it has paid off, not only in additional knowledge but also in alignment with the board. This has improved our decision-making process on biodiversity. We have more ownership and make better-informed decisions. My advice would be to immerse yourself in the topic and don’t take the easy way out.

How do you translate all this to investment decisions?

Let’s take real estate as an example: for instance, investing in a real estate fund. We assess the sustainability issues in this asset class and analyse where we can make the most impact. In the case of real estate, the first thing is sustainable energy and insulation. Here, a lot of impact can be made by, first, reducing energy use and, second, using a sustainable source for the remaining energy needed. Another aspect is the avoidance of embodied carbon by choosing or reducing specific building materials. If we use wood, we look to reuse wood instead of using new timber. Then we see how we can improve the external and surrounding areas, to make the urban area greener and more biodiverse. In this way, we integrate our vision step-by-step in the construction process. This is our approach for illiquid assets, where we really seek to make an impact. For investments in listed companies, our focus lies more on ESG integration. 

How do you make sure that policies have the intended impact?

By remaining critical of the solutions offered, continuing to ask questions and seeing for ourselves whether the story on paper also exists in real life and whether the data is correct. Policies are important, especially for an investor working with frameworks and data. However, sustainability does not only exist on paper. It is not abstract; it is real. That is also the case for impact, or rather it should be. That is why you have to actually go out there and see if the real impact matches the intended impact. If you make such policy choices as a fund, you must also take into account in advance that this will involve a time commitment.

There is no one-size-fits-all method. We cannot visit every one of our investees. However, when it comes to our real estate and agricultural land investments, we do visit. In those cases, you don’t necessarily need a lot of quantitative data to ensure that you make an impact. What you need is a clear goal to work towards, and realistic and measurable steps to reach that goal. An example is that we decided that 20% of the agricultural land that we own should be used to create more space for biodiversity, instead of using 100% of the land for agriculture. We understand that promoting nature will create value in another way in the long term, instead of receiving short-term exploitation returns on that land. For the rest of our portfolio, we are more dependent on external data. Minimising ESG risks is the focus here; biodiversity risk is one of those risks.

What is the role of data?

Data plays an important role in justifying choices to our participants and in providing a clear perspective for the future. We don’t gamble with our participants’ money, and we should be able to measure and monitor the results of our choices to evaluate whether we realise the intended goals. If you only base your choices on circumstantial evidence, it is much harder for a board member to validate your claims and to maintain a consistent story for the participants and other stakeholders.

However, we can’t know everything. There comes a point when you have to decide whether you want to keep gathering data or take action. You never know the exact moment when you know just enough to take the first step; you just have to take it. For that, you need a conviction on what is important first and foremost. Other sustainability topics also used to lack data, but we started working on them anyway from a clear and strong conviction. More and better data eventually became available for these subjects, and I believe that, in the future, we will also have that for biodiversity.

At BPL Pensioen, we are convinced that we must and can deploy the capital under our responsibility to take a step forward towards a liveable world with a lifelong income that is stable in value. We have a long-term horizon, which fits well with sustainability… as long as we make the right, well-informed decisions.

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“we can’t know everything. There comes a point when you have to decide whether you want to keep gathering data or take action. You never know the exact moment when you know just enough to take the first step; you just have to take it.”