Dutch Pension Funds Agreement On Responsible Investment

This is a translation of the official Dutch version of the agreement. In case of doubt as to the accuracy or interpretation of the English translation, the Dutch version takes precedence. ESG remains an unpopular investment strategy in Switzerland. How will she overcome this lack of enthusiasm? Herman Mulder, former Managing Director and Head of Group Risk at dutch bank ABN AMRO and co-founder of the True Price/Impact Institute, says: „We are in the early design phase and this is an opportunity for us, the financial institutions, to steer funds in a direction that not only creates a tax infrastructure for the overall profitability of the Netherlands. but also social infrastructure. The Dutch financial sector, especially its pension funds, is known to be well advanced in responsible investment. This was largely triggered by pressure from public opinion. All eumedion 65 members are expected to follow the code, including big Dutch investment names such as PGGM, APG, MN and Robeco, but also big international investors like BlackRock. The Dutch authorities are increasingly focusing on responsible investments, as they want to combine financial services with non-financial reporting. Dutch pension funds cooperate with non-governmental organisations (NGOs), trade unions and the Dutch government. Together, they signed the Dutch agreement on pension funds on responsible investment.

Within the framework of this agreement, the parties want to prevent or combat the negative effects of pension fund investments on society and the environment. The Parties shall contribute their knowledge and expertise to this objective. The agreement was concluded under the leadership of the Social and Economic Council of the Netherlands (SER). Another pension fund, which has spoken about the DNB in its role as a pension regulator, said it had an obligation to sell $300 million to impact forestry investments for liquidity reasons. For pension funds, it is essential that participants support decisions on a responsible investment policy. As institutional investors, pension funds assume responsibility towards the companies in which they invest, taking into account proportionality. They can therefore vote at shareholders` meetings, exert influence through commitment and apply an exclusion policy to sectors in which the pension fund does not wish to invest. Through this agreement, the signatory pension funds have chosen an approach based on the OECD Guidelines for Multinational Enterprises and the United Nations Guidelines for economics and Human Rights (UNGPs) to identify, prioritise and address these risks.

In this Agreement, ESG risks relate to risks to society and the environment. In 2007, the Dutch zembla programme made a presentation on Dutch pension funds and made investments of almost €230 million in US companies manufacturing cluster bombs and landmines and in companies that have used child labour. This agreement is the result of a multi-stakeholder dialogue promoted by the Dutch government and the Dutch House of Representatives, involving civil society, trade unions, NGOs and financial market participants. The signatories to the agreement committed to identify, prioritise and address ESG risks that could actually have negative or potential negative effects on the environment and society using as the main framework the OECD Guidelines for Multinational Enterprises and the UN Guidelines on Economics and Human Rights and using the OECD Guidelines on Business Behaviour Institutional investors can be made available. Van Lierop, elected to the Board of Directors of the Institutional Investors Group on Climate Change (IIGCC), continues: „When it comes to regions, MN cannot invest in private equity in emerging markets. This further limits the number of achievable impact proposals from which we can choose. Dealing with such constraints is a challenge, but we manage to successfully find impact investments with market-evaluated returns. She says institutional investors in Sweden, Germany and France have tied large sums to the country`s Development Bank`s private debt funds, but not to Dutch pension funds: „The establishment of restrictive mandates by pension fund boards and stifling governance between the funds and their asset managers seem to be part of the problem,“ She…