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Dutch fund giant PGGM plans to intensify engagement activities

Dutch fund giant PGGM plans to intensify engagement activities

€120bn investor to target more risky companies and sectors

PGGM, the Dutch fund manager with €120bn in assets under management for six pension fund clients, says it plans to “intensify” its corporate engagement efforts to target more risky companies and sectors.

“We shall intensify the engagement programme in 2012,” PGGM said in its new Responsible Investment Annual Report released today (April 26). It comes as PGGM’s overall equities portfolio has been reduced from around 4,000 companies to around 2,800.

Another priority will be the integration of environmental, social and governance (ESG) factors into strategic asset allocation for clients. “All individual investment teams have planned follow-up steps for 2012 based on the ESG frameworks,” the report says, adding it has been implemented for 88% of total assets.

Also on the agenda is PGGM’s ‘More responsible beta equity portfolio’ project looking at how to incorporate sustainability into its passive, indexed portfolio. “A follow-up investigation with the instruments of a stricter exclusion policy, more intensive engagement and selection based on ESG performance will be developed further in 2012,” the report states.

Zeist-based PGGM says its targeted ESG mandates have risen to €4.7bn at the end of 2011, from €3.7bn in 2010. They are projected to grow to €5.2bn in 2012.

The wide-ranging, 86-page report also disclosed that PGGM has excluded Israeli defence firm Elbit Systems from its investment universe after an unproductive dialogue about its role in a security system in the West Bank.

The number of excluded companies has now grown to 40, from 33 at the end of 2009. PGGM had direct engagement with 154 companies in 2011, which is up from 48 in 2009.

Also a focus in the report is PGGM’s project with the Erasmus University of Rotterdam to measure the social impact of investments.

“Responsible investment can play an important part in restoring trust in the financial sector”

This is done via a graphical representation on a ‘Social Impact Scorecard’ showing the expected impact on eight different areas. These are: employment; local development; capacity building; empowerment; health and safety; material use; ecosystems; and waste and emissions. For each investment, this impact is set out in a Social Impact Fund Fact Sheet.

“We shall continue to develop the framework. We are currently working closely with various external fund managers in order to measure the actual impact,” PGGM says.

PGGM is also committed to helping to restore faith in the financial system in the wake of the financial crisis, saying: “We believe responsible investment can play an important part in restoring trust in the financial sector.”

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