In PensionUpdate #44, Otto Berbée and Carmen Floristan proudly told us about the new ESG investment policy. ESG stands for Environmental, Social, and Governance: a policy with that takes people, the environment, and good governance into account. In this PensionUpdate, board members Otto Berbée and Pierre Taalman give us an update on this.
Balancing returns with ESG goals
Pierre: “We invest in order to pay pensions now and in the future. That is our obligation. Our main goal is to achieve a good return on investments. The ESG investment policy gives us direction for this, taking into account the need to achieve a good return.”
Otto: “We have invested according to the new ESG investment policy for about a year now. This has changed the composition of our investments. An additional positive factor is that we have increasingly switched to bonds rather than equities. Bonds have a fixed income value, meaning that we run less risk.”
Investments at a country level
Otto: “We invest in countries that are working on renewable energy, adaptation of infrastructure or good governance. Or, for example, countries that encourage industries to reduce CO2 emissions. As a pension fund, we do not directly invest in windmills, for example, but we do this at a country level. On the other hand, we also exclude certain sectors. For example, we are divesting from shares in the tobacco industry.”
Assessing our investments
Pierre: “De Nederlandsche Bank (DNB) requires us to make reports on our investments. This starts with a clear investment policy. Last year, we, as a Board and the ESG working group, started searching for a party to assess our investments against our ESG policy. The first report is a baseline measurement so that we know where we stand.”
Further building on ESG goals
Pierre: “Based on this baseline measurement, we are further building on our ESG goals. In doing this, we are also exploring the right balance between people, the environment and good governance. We cannot focus on all three at the same time. We make adjustments for this with our investments. A good return is paramount as we are committed to paying pension. Both now and in the future.”
We make our voices heard
Otto: “If we see that the bonds are not being used for investments as intended, we react. Our investment managers discuss this and make our voices heard. We also use the rankings of the United Nations to make sure we are investing in the right countries. Every year, the UN publishes a ranking on, amongst other things, the extent to which countries meet the goals set out in the Paris climate agreement.”