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PGGM makes ESG part of €5bn emerging markets investments

Fund hires Mercer for landmark manager search.

PGGM, the €88bn ($126bn) Dutch pension fund for healthcare and social workers, is to make one of the first investment allocations by a European pension fund into emerging markets where it will demand that managers running the money have environmental, social and governance principles (ESG) embedded in their investment process. The fund has not outlined how much it will invest in the new global emerging market equity mandates, although it is expected to be significant. The fund currently allocates an estimated €5bn of its equity portfolio to emerging markets.
PGGM and ABP, the €215bn Dutch civil service pension scheme recently made a joint €500m private investment in clean technology and a combined €200m allocation to sustainable infrastructure.
The landmark decision on emerging markets shifts responsible investment into the spotlight in countries where observers believe there is a need to encourage good corporate practice. It is expected to encourage other pension funds to follow suit and prompt asset managers to respond to the demand and ensureemerging markets investments are covered by ESG factors.
Marcel Jeucken, head of responsible investment at PGGM, explained: “We believe environmental, social and corporate governance factors will add value to the financial performance of our investments. We expect to find compelling opportunities in emerging markets and therefore think it is crucial that managers start developing strategies that place such factors at the core of their investment strategies. This is why we are conducting a wide search on existing and new products in this area.”
The fund has hired Mercer Investment Consulting to carry out the search for appropriate managers.
PGGM is a signatory to the UN Principles of Responsible Investment (PRI), which commit investors to consider the integration of environmental, social and governance (ESG) issues into their investments. There are currently more than 250 PRI signatories, with more than $10 trillion assets under management.