Responsible investing
Virtually all the Dutch pension funds have a socially responsible investment policy. Their policy includes consideration of ESG (Environment, Social, Governance) factors. Sustainability is a high priority for the Dutch pension funds, both today and in the years to come. Each pension fund makes its own decisions as to how it reflects this sustainability, in a way that is appropriate for the pension fund and its participants.
For the pension funds, it is essential that decisions relating to a responsible investment policy are supported by the participants. As institutional investors, the pension funds, taking account of proportionality, bear responsibility to the companies in which they invest. They may, therefore, vote at shareholder meetings, apply influence through engagement and apply an exclusion policy to industries in which the pension fund does not wish to invest.
The participants consider it important that their pension fund does not invest in companies, where abuses may occur in their supply chain. These include child labour, poor working conditions or environmental damage. However, the exclusion of investment in companies with potential risks in their supply chains does not mean that problems are addressed. For this reason, many pension funds choose to apply their influence on the company in question to urge it to address abuses.
More than 80 pension funds signed the International Responsible Business Conduct (IRBC) Agreement for Pension Funds in 2018. Under this agreement, the pension funds undertake to implement the OECD guidelines for multinational companies and the UN Guiding Principles on Business and Human Rights in their investment policy. This agreement is a unique cooperation between 80 pension funds, 6 NGOs, 3 trade unions and 3 Ministries. The aim is to identify, address and mitigate potential abuses in supply chains behind investee companies.
A number of pension funds have also committed to the Dutch Climate Agreement in July 2019, and have adopted the targets in the Climate Agreement with respect to the reduction of CO2 emissions. From 2020, the pension funds will report on the climate impact of their investments and will have developed action plans for limiting this impact by 2022. They will therefore contribute to realisation of the goals of the Paris Climate Agreement.
The influence of the financial sector in general on the energy transition is a prominent item on the national and European agenda. The pension funds are thus playing a leading role in ensuring a good pension in a sustainable world.