Eloy Lindeijer, Chief of Investment Management at €218bn Dutch pension investment giant PGGM has written a detailed response to Greenpeace’s call for it and other leading investors to get out of tar sands pipeline firms – explaining that simply selling shares will not eliminate the problems.
The NGO had targeted PFZW and fellow Dutch investors ABP, Aegon and Nationale Nederlanden, calling them the “Vieze Vier” or Dirty Four. It comes as PGGM has just signed a deal with EDF Renewables to take a stake in almost 600MW of wind and solar projects.
Lindeijer said the environmental campaign group, which has also targeted Sweden’s AP3 recently, confronted PGGM and its main client, healthcare fund Pensioenfonds Zorg en Welzijn (PFZW) about their €66m stake in Enbridge, Energy Transfer Partners and TransCanada, which represents 0.03% of PFZW’s capital.
PGGM is often approached by NGOs, he said, and always enters into dialogue. “However, we are often unable to accommodate their wishes – the sum of all wishes does not relate to our central task: generating a financial return for a sufficient pension, with due regard for sustainability.”
“To Greenpeace, and to anyone else who wants to listen, we explain that as a pension investor we want to comply with ‘Paris’, but by a route different from that which the environmental organisation is demanding.” He pointed out that the total carbon footprint of PFZW’s listed equities portfolio was 28% smaller at the end of last year than two years earlier. In one and a half years this footprint must be halved.
And he adds that PGGM has (as at the end of 2017) €6.4bn in companies and projects that offer climate solutions, including sustainable real estate.
“Nevertheless, we will be retaining our interests in the three companies mentioned.” Why not sell? It is due to PFZW’s choice to be a passive investor with a globally diversified portfolio in all sectors of the economy, to keep risks to a minimum.
But shareholder engagement is “central to our approach”.“Enbridge, Energy Transfer Partners and TransCanada are each in their own way engaged in the energy transition, determining what role they see for themselves,” Lindeijer says.
Energy Transfer Partners, which is involved in the controversial Dakota Access Pipeline (DAPL) project, last year filed a lawsuit against Greenpeace and others, calling them “rogue eco-terrorists”.
“Simply selling shares alone will not eliminate the problems. Perhaps in PFZW’s figures it will, but not for the world. After all, there are more than enough buyers for these shares who have neither the experience of conducting a good sustainability dialogue with a company, nor the intention of doing so.
“PGGM and PFZW have no intention of ducking this responsibility.”
Meanwhile PGGM has signed an agreement with EDF Renewables under which it will acquire a 50% stake in various wind and solar projects with a total capacity of 588MW. The terms of the deal weren’t disclosed.
Meanwhile, PGGM is involved with UBS Asset Management in sponsoring a research project with Wageningen University & Research (WUR) in the Netherlands and Harvard University to develop an impact measurement framework and methodology that tackles food security.
The aim of the research is to build scalable models that can be applied to global listed equities of companies that sell technologies that can improve agriculture yields and access to nutritious food.
This is part of a programme of research to develop an overall framework in partnership between pension fund manager PGGM and UBS-AM. The programme began when UBS-AM’s sustainable investment team won a PGGM mandate to manage $1.5bn listed impact equities.
“We are still in the early days, but are happy to lead the charge and hope to demonstrate that mainstream investors can deliver both market-rate returns and measurable impact,” said Piet Klop, senior adviser of responsible investment at PGGM.
With reporting by Sophia Grene.