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Philips €13bn pension fund to invest in green companies and ESG ‘frontrunners’

RI integration follows pilot portfolio launched in 2008.

The €13bn ($18bn) Philips Pension Fund, one of the largest corporate plans in The Netherlands, is to invest part of its assets in companies it says are “clear frontrunners in the ESG field”, including allocations to specific environmental themes. It said it had also started an engagement strategy to lobby companies that fall short on responsible business practices.
The fund has not confirmed how much of its assets will be earmarked for the new sustainability theme. However it said the initiative, which will also see it integrate environmental, social and governance (ESG) research factors into its total investment portfolio, accompanied its signing of the United Nations Principles for Responsible Investment earlier this week.
The fund said the allocation to environmental companies would create a “direct link with sustainability” and reflected a desire to invest in companies providing alternative sources of energy. It said this matched Philips’ own corporate strategy of investing in energy-saving solutions.
In 2008, the Philips fund set up a pilot ESG equity portfolio, the results of which led the board of trustees todecide at the beginning of 2009 on the step-by-step integration of ESG across its total investments. The ESG content of all equity portfolios is already being measured and screened for investment in companies linked to the production of anti-personnel mines, cluster bombs and biological, chemical and nuclear weapons. The fund said the rest of its portfolio would now undergo an ESG ‘scan’ using data from ESG research providers. At the end of 2008, the fund invested approximately three quarters of its assets in fixed income instruments.
Philips said the pension fund engagement strategy with companies would focus on issues of the environment, human rights, working conditions and good corporate governance.
In 2005 the Philips’ Dutch Pension Fund (Stichting Philips Pensioenfonds) outsourced the majority of its asset management, ex real estate, to Merrill Lynch Investment Managers, which subsequently merged with Blackrock, the US fund manager. Blackrock runs one of the Europe’s largest green funds, the Blackrock New Energy Fund, with assets of €2.24bn.