Responsible Investor

Dutch transport funds lay SRI tracks

SPF Beheer outlines move from best-in-class to engagement.

Dutch superfunds ABP and PGGM may make the headlines in the Netherlands terms of responsible investment, but amongst their smaller and medium-sized peers the trend to SRI is equally important and idiosyncratic. SPF Beheer, investment manager for the assets of Spoorwegpensioenfonds, the Dutch railways pension fund, and SPOV, the Dutch public transport scheme, has had an SRI policy for four years now, covering both funds. Henk Hermsen, head of portfolio management at SPF, says it began with a relatively straightforward underweighting and overweighting of stocks on a best-in-class basis. However, he says the fund found the approach unsatisfying after a year of implementation. “At the time, we also thought about adopting an overall exclusion policy, but weren’t sure that this really helped the underlying issue of how to improve companies.” Just over a year ago, he says, SPF started to introduce some major changes to the approach; one of which was to introduce a strategic equity portfolio with a much longer-term investment horizon that did not follow a traditional benchmark. This strategic equity portfolio, run for both client funds, will grow to 8% of total assets during this year for SPF and 7% for SPOV: “Our decision was based on the fact that looking longer term means necessarily focusing to some

extent on sustainability issues. “The horizon of the investment in the strategic portfolio is for several years performance rather than the next quarter. We actively seek out undervalued companies where we think value might be added over a long period. The strategy is run by SPF’s in-house investment team, as are two-thirds of its total investments.

“Looking longer term means necessarily focusing to some extent on sustainability issues.”

Martijn Huijnen, assistant portfolio manager for socially responsible investing, says the fund does exclude some companies from its portfolio: “We have a controversial weapons blacklist that includes six companies and we will announce some more exclusions shortly. Our ethical guidelines are quite clearly laid out on our web site. We define controversial weapons as those that cause a high level of civilian damage outside the areas of combat. These include cluster bombs, anti-personnel landmines, biological, chemical and nuclear weapons and those using depleted uranium. The difficulty is to identify those companies that supply key components for such weapons because that is our category for divestment.”

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