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PGGM comes clean on private equity
Fund will increase ‘renewables’ if €500m venture with ABP is successful.
As institutional investors grapple with the need to incorporate environmental sustainability into their allocation decisions, Dutch superfunds PGGM, the €85bn pension scheme for healthcare and social workers and ABP, the €210bn plan for civil servants are, as so often, proving to be leading lights.
Together the funds have a socially aware membership that totals 4.6 million and keeps responsible investment issues at the top of their agendas.
Clean technology, in which the funds recently announced a joint €500m investment in unlisted companies – one of the largest ever such placements on the private equity market – is their latest contribution to fiduciary environmentalism.
It is the first time the two pension funds have jointly invested in venture capital and private equity based on sustainability.
As a result, the eyes of the world’s investors will be fixed on the strategy and outcome.
Marcel Jeucken, head of responsible investment at PGGM, says the first step for the fund was to revisit and refine its already comprehensive responsible investment policy.
“In most of our investments to date, sustainability has always been seen in terms of equities. We wanted to broaden this out across our investments, including private equity.
“The next step was to look at exactly what the environmental, social and governance (ESG) integration was within our portfolios and then to ask whether we needed direct principles to apply to each asset class. We then looked at whether we could start specific mandates.”
In its public equity investments, PGGM has already made significant strides towards incorporating ESG with a climate change capital mandate for €160m and overlay mandates based on geopolitical factors for €250m of its assets.
For the move into private investment, Alpinvest, the private equity fund of funds manager, jointly owned by ABP and PGGM, was asked to carry out a market study and find out whether the funds could create an ESG mandate in renewable energy and clean technology.
The result was a proposed private equity fund of funds based on late stage investments that incorporates minimal thresholds for venture capital allocations.
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