Responsible Investor

ABP’s total responsible investment strategy

Rob Lake, senior portfolio manager for environmental, social and governance at ABP, the €221bn ($311bn) pension fund for Dutch civil servants, talks clean tech, engagement and cluster bombs.

Responsible Investor: Can you outline how ABP approaches responsible investment?
Rob Lake: ABP has been working on sustainability issues for a long time, and certainly for a long time before I was here. Initially this involved a lot of academic research looking at financial performance and evidence of links between the financial performance of funds and the sustainability quality of the underlying companies to build up the understanding of the underlying issues. That led to a decision on the most recent three-year investment plan, put in place towards the end of last year, to start to incorporate systematically environmental, social and governance issues right across ABP’s mainstream investment processes. The position that I now have is to work out how we do that and put the flesh on the bones of that commitment.

Responsible Investor: How does this work in practice?
Rob Lake: You can imagine that getting to grips with a portfolio like ABP’s is quite a task, so we’ve started with a particular, but not exclusive focus on two of ABP’s internal equity portfolios: one is the fundamental stock selection fund – a bottom up stock picking fund, the other is the global thematic fund – a top down, theme-driven investment fund, and those two together total €22bn. I’m working intensively with the portfolio managers and looking company by company and sector by sector at the relevant ESG factors and then through a process of intensive dialogue with the portfolio

managers working out what the investment implications are.
Responsible Investor: What is the philosophy behind ABP’s responsible investment strategy?
Rob Lake: The fundamental reason behind it is that ABP wants to improve and increase its risk adjusted financial return, so it’s a way of doing ABP’s core business better. ABP exists to make investments to pay its pensions and we want to find better ways to do that.
The concept of social responsibility for an institution like ABP is relevant as well. In a context where issues of great public concern are finding their way into the business and investment world, in the way that governments respond to issues like climate change, for example, it creates a lot of very fertile ground for looking at sustainable issue in a financial context.

Responsible Investor: Is there any difference between the responsible investment strategy for in-house and externally managed assets?
Rob Lake: ABP is slightly unusual as a pension fund in that 80% of the money is managed in-house and 20% by external managers. So in the first instance, we’re looking at the 80% and concentrating on internal funds. We have a commitment to start to roll out the approach we are developing internally to other asset classes beyond equities and then to external managers in due course. So, in principle we would expect external managers to follow a similar approach to what we are

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