The Dutch pension sector – the fifth largest in the world – has come under fire from civil society groups over the state of its public investment policies on controversial issues such as climate change, human rights and weapons.
A report from a coalition of Dutch non-profits on the policies of 10 of the largest Dutch pension funds, representing €957bn in assets, has revealed that across 15 “important social themes” most fund’s policies range from “insufficient” (4/10) to “very poor” (1/10).
But the Pensioen Federatie (the Dutch Federation of Pension Funds) expressed surprise that the findings, which were carried out by non-profit sustainability research firm Profundo, were so different from other benchmarks, such as from the Dutch Association of Investors for Sustainable Development (VBDO), which often found the funds to be front runners.
The report Fair Pension Label Policy Study 2019, which was commissioned by NGOs including Amnesty International, Oxfam and PAX, considers themes such as corruption, taxes, climate change, gender equality, human rights and weapons.
All 10 funds – including civil service pension giant ABP and healthcare scheme Pensioenfonds Zorg en Welzijn (PFZW) – scored three (“more than insufficient”) or lower on climate policy and eight out of 10 have no policy on tax avoidance whatsoever, according to the findings.
The report also found that few funds had a public policy to prevent investments in arms trading with “regimes involved in human rights violations”, though all had exclusions on controversial weapons such as anti-personnel mines, cluster munitions, biological and chemical weapons.
Its publication comes just months after more than 70 Dutch pension funds signed a government-backed covenant on socially responsible investment, committing to incorporate internationally recognised standards of responsible investment into their due diligence practices and that of their asset managers.
Nine of the funds that signed that covenant were assessed in the report.
The only highlight in the bleak assessment was on transparency, with six out of 10 funds scoring “sufficient” or higher. PFZW was also awarded eight out for 10 for employment rights.PAX spokesperson Cor Oudes described the results as “alarming”.
“The public investment policy of a fund must at least show the requirements that the fund sets for the companies in which it invests to prevent it from being involved in damage to people, animals and the environment. But the funds do not make it sufficiently clear which criteria they apply in this regard.”
A spokesperson for PFZW told RI that the Fair Pension Label gives it “disappointingly low scores”, which “contrast” to high scores it has consistently received from the benchmark created by the VBDO and from the Principles for Responsible Investment (PRI).
She also questioned the report’s methodology and scoring and added that the results can be “explained” by the research’s focus on public policy alone.
Similar concerns were raised by ABP.
But Oudes told RI that it is “correct that we did not take non-public policies into account”.
“We believe pension savers, as well as society at large, should be able to keep pension funds accountable for the way they invest. That can only be done based on publicly available policies.”
He added that all 10 funds were approached for feedback on the draft results and scoring but only one of the funds took up that opportunity.
Oudes also told RI that it will look at the actual holdings of the funds next year.
The pension funds examined in the report are:
General Civil Pension Fund (ABP)
Pensioenfonds Zorg en Welzijn (PFZW)
Metal and Technology Pension Fund (PMT)
Pension fund Horeca & Catering (PH&C)
Pension Fund for Personnel Services Foundation (StiPP)
Retail Pension Fund
Stichting Bedrijfstakpensioenfonds voor de Bouwnijverheid (BpfBouw)
BPL Pension (Agriculture)
Pensioenfonds van de Metalektro (PME)