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Dutch pension funds take lead in ESG

The bulk of these funds follow a more or less integrated ESG policy, through exclusion policies, best-in-class selection and by voting at shareholder meetings. Six in 10 pension funds now vote at shareholder meetings, which is up from less than 50% in 2014.

The number of pension funds using a best-in-class approach doubled in just a year’s time from 12% to 24%. This sharp increase follows from the rise in popularity of passive ESG investing (see the October edition of the Expert Investor magazine for more on this topic). Much of the extra demand for index trackers in the Netherlands (see chart on the right) comes from pension funds, which want to increase exposure to ESG-filtered passive strategies. New passive investments to be made by Syntrus Achmea, one of the largest pension fiduciaries in the Netherlands, will for example all be required to have an ESG-filter. 

Large schemes lead the way

The largest players in the Dutch pension sector, such as government pension fund ABP and health care schema PFZW, have the most stringent sustainability procedures in place, according to DNB. They are also most pronounced in formulating their ambitions when it comes to sustainability: ABP wants to increase the total amount of assets invested in “the sustainable economy” from €35bn in 2015 (10% of its €351bn in total assets) to €58bn in 2020. PFZW, which is about half the size of ABP, aims to have invested some €20bn in sustainable companies and project by 2020.

Because there is a strong relationship between size of the funds and the degree of sophistication of their ESG policies, 95% of Dutch pension scheme members now participate in a fund that has an active ESG policy.

The avid take-up of the ESG themes by pension funds in the Netherlands contrasts with the lacklustre approach of the wholesale sector. Rabobank, the largest retail bank in the Netherlands, has specific ESG funds on its white list, and offers green ETFs to its clients since last year, but this is an exception. ESG is not very much on the radar of wealth managers and private banks in the Netherlands: they tend to only offer an ESG option to clients on request.

Part of the Bonhill Group.