The future has arrived - Dutch pension funds and the practice of responsible investment
The topic of responsible investment is an important challenge to pension funds. This challenge doesn’t only apply to individual schemes, but is also seen as a collective one. That’s why the Dutch Association of Industry-wide Pension Funds (VB), the Dutch Association of Company Pension Funds (OPF) and the Union of Occupational Pension Funds (UvB) have decided to act jointly on this dossier.
With this, the pension funds find themselves in the same position as other institutional investors, such as banks and insurers, which both carry a responsibility for responsible investment. However, one mustn’t forget that the primary responsibility for questions about social, ethical, governance and environmental issues lies not with investors, but with the companies, governments and project developers which are being invested in. There is no doubt that the financial sector can play an important role in this. But this role doesn’t lessen the responsibility of the (executive) boards of these entities to carefully assess other than just financial aspects.
In the past, several pension funds have considered a policy on responsible investment and its implementation. A survey The Power of Pension Funds by the European Centre for Corporate Engagement and Maastricht University’s Business School – published in April 2007 – shows that there is a positive trend in developing and gradually implementing of an ESG policy. The fact that this development has gained momentum since the broadcast by Zembla in March 2007 is clear to all involved. The realization of responsible investment features more prominently on the agenda of pension funds now. To support pension funds in formulating and implementing a policy of responsible investment and the associated accountability, the Dutch pension umbrellas have established the ‘Practical Committee’.
The future has arrived is the outcome of the committee’s activities between May and November 2007. The report offers pension funds’ boards grips for responsible investment. It is the responsiblity of each board to decide – within the framework of the Dutch Pensions Act, the Dutch Act Mandatory Pension Schemes for self-employed persons and the European Pensions Directive - how much space there is for integration of extra financial aspects in the implementation of investment policy.
The report contains concrete suggestions for developing a vision, formulating and implementing a policy as well accountability.