The Federation of Dutch Pension Funds, or Pensioenfederatie, which represents around €1.2trn of pension funds in the Netherlands, has issued a fresh set of guidelines to help pension funds create and shape their responsible investment policies.
The body, which in 2014 developed a code for good pension fund governance which now forms part of the Dutch legal code, advises such institutions to develop a cohesive policy for SRI on a “comply or explain” basis, though the document’s authors say it is not intended to “tell right from wrong” given the variety in funds and the companies, industries and professions they serve.
One of the main thrusts of the advice given is that responsible investment should be rooted in self-regulation, given the organic uptake of the practice in the Netherlands, and reports that as of 2013, 75% of Dutch pension funds had already established a responsible investment policy.
The guide is also intended to be a resource for asset managers abroad, says Federation spokesperson Bram van Els, in order to help funds communicate exactly what the Dutch approach to RI entails. For that reason, he explains, the guide has also been translated into English.
Van Els adds: “The Dutch asset management industry is quite ahead in the area of responsible investment. When the Federation started a couple of years ago it was hard to have foreign asset managers report in the detail that we were asking for.”
The guide promotes good stewardship and alerts pension managers to their duty to deliver strong returns to pension customers, though adds that what is considered responsible investing “is not static” and will change according to new regulation or changing cultural values.It also outlines four requirements with which funds must comply, as outlined in the Code of the Dutch Pension Funds and the Pension Act, the former of which was co-written by the Federation and other members of the pension sector before becoming part of Dutch pensions regulation in 2014. They stipulate that the final responsibility for avoiding risk, ensuring stakeholder support and properly reporting on responsible investment lies with a pension fund’s board.
Van Els says that despite the Code being included as part of Dutch corporate law, there are still funds that need guidance with developing and implementing such policies. “The big pension funds are real frontrunners, but there are hundreds of other funds and not everyone is at the same stage of development. We need to share the responsibility as an industry.”
The Federation consists of around 220 of the country’s largest pension funds and managers, including those for large companies and professional groups, including civil service fund ABP, Shell and ING. The majority of the Dutch working population is a member of a collective pension fund, with many representing trade groups and workers unions, with the Federation’s members representing €1.2bn of managed assets.
ABP, whose vice chair José Meijer sits on the Federation’s board, were one of biggest names to implement a new responsible investment strategy in 2014, before drafting plans to introduce an investment carbon budget in time for mid-2016, as RI reported last year. Link