A better environment starts with your ABP pension
Nuclear weapons and tobacco are taboo and sustainability goals are considered in ABP's pension investments. That sounds like a good contribution to a better world, but university administrators are not moving fast enough.
It will be busy at pension provider APG in Amsterdam on Friday 25 June, just before the summer holidays. A colorful procession will again demonstrate against ABP investments that endanger the future of the planet. For this eventful group, 2050, the benchmark year for the Paris climate agreement, is far too far away.
“It is frustrating for teachers that their pension money is invested in companies whose activities are at odds with working for a better world,” says Hiske Arts of the Fossielvrij civil society movement. “Investing in tar sands, coal, shale gas and oil drilling in the Arctic must now be over and within a few years ABP can be completely out of fossil fuels. That would be an important signal to other pension funds.”
'It is frustrating that pension money is invested in companies whose activities are at odds with working on a better world'
The chorus of critics is diverse. From employees of the water boards and municipal officials to the protest movement University Rebellion. In an official letter, Maastricht University called on ABP to radically step out of the fossil fuel industry. Concullega PFZW (the fund for care and welfare) openly disapproved of Shell's climate policy this year during the shareholders' meeting. Petitions and appeals – from Utrecht students, lecturers and researchers, among others – on social media are also putting pressure on ABP to invest the 500 billion euro pension savings pot in a different way.
The pension premium of 25,9 percent is a major cost item in education; although only 30 percent of the deduction is stated on the pay slip because 70 percent has already been paid by the employer. ABP puts that money into global investments, so that retirees continue to enjoy a decent income from the proceeds. But how responsible are these investments, the unions asked decades ago. The discussion started about working conditions in companies and loans to dubious regimes, sustainability was soon added. “Action groups have discovered the power of pension money,” says Auke van Nie, teacher educator and chief executive at the AOb. “I am happy with that awareness. With assets of this size, you can steer developments.”
How the ABP exerts influence with the pension money is a matter for the fund managers. They provide guidelines and the executive organization APG is active in the investment market. Employees, employers and pensioners provide remote advice via the Accountability Council with 48 members, four of which AOb'ers. Among them Auke van Nie and Iris Offermans, trade union consultant and chemistry teacher.
With 3 million stakeholders from the national government and education, ABP is the largest pension fund in the Netherlands. And on paper the best in sustainability, according to the benchmark of the Association of Investors for Sustainable Development. In the comparison of fifty funds, ABP is the topper of 4,3 with 5 out of 2020 points, well above the average of 2,1.
“For the third time in a row, but the bar is raised every year,” says Asha Khoenkhoen, spokesperson for investment policy at ABP. "It's always exciting to see what score we get."
'We share concerns about the climate. With every investment we consider what it means for sustainability'
Satisfied? The spokesperson does not use that word. “We share the concerns about the climate and we see that the world is heading for an unacceptable temperature increase of 4 degrees. Our choices are aimed at being climate neutral by 2050. With every investment, we consider what it means for sustainability.”
Another annual report, the honest pension guide from Amnesty International, Milieudefensie, Oxfam Novib, PAX and World Animal Protection, looks less rosy. ABP scores a modest 6 on two of the fifteen themes, namely the fight against corruption and transparency. Climate change policy gets a 4: do your best, a teacher would say. Kind of encouraging is that the other nine funds assessed are doing even worse on the climate front: twice a 3, three times a 2 and four times a 1.
What does ABP think about it? “Others may give figures,” said spokesman Khoenkhoen. “We talk to all kinds of authorities, scientists and participants about our investment policy, which sharpens us up. We want to contribute to the sustainable development goals of the United Nations and the reduction of CO2 emissions, we have committed ourselves to the Dutch climate agreement, but how do you measure those things in your portfolio? We are pioneering the development of measuring instruments and we share them with other funds so that they can also work with them.”
Every five years, ABP describes the principles for sustainable and responsible investment policy. The latest version from October 2020 has 26 pages. Core objectives: a good pension in a liveable world, recognizable for participants, guiding and leading in collaboration with participants and other stakeholders.
So get rid of those investments in Shell and other fossil industries? That is too easy a choice, says Khoenkhoen: “Not everyone drives electrically, without fossil fuels food production would come to a standstill. Selling such shares is a symbolic gesture that does not help oil companies make the transition to renewable energy.”
'Without fossil fuels, food production would come to a standstill'
ABP representatives do, however, enter into discussions with companies, often with other shareholders. The message of such conversations behind closed doors: work on sustainability, invest and show how you can achieve the goals of the global climate agreement. The persistence wins is part of this strategy of engagement. “We want to make companies change, which sometimes takes a long time. At BP, we only saw movement after a change of management. If there is no prospect of improvement, we sell, as with energy company Kepco, which was going to build a coal-fired power station in South Korea and was unable to move it. We got out but we see that as a failure.”
Movement Fossil Free thinks otherwise. “They want a livable world, but talking and trying to get companies to move has not worked for decades,” says Arts. The action group wants to remove pension funds from the fossil fuel industry, so that those companies have a hard time on the capital market; that forces change. ABP sees no evidence for this in the market and the scientific literature, says Khoenkhoen, and will therefore stick to its commitment as long as there is a prospect of improvement. “We are a long-term shareholder.”
Action groups also believe that ABP operates too conservatively in shareholder meetings, where the fund does not always support calls for climate action – according to the spokesperson, because those calls sometimes ask too much or come too soon after announced improvements.
It's an unsolvable disagreement, thinks AOb'Er Auke van Nie from the Accountability Body. There are more such impasses. Take the shares in energy company Engie: on the one hand active with sustainable sources, on the other hand operator and co-owner of the nuclear power stations near Liège. The students of Iris Offermans receive iodine tablets at home from the Dutch government, as a precaution in case of an accident near the border. “The Accountability Council regularly asked questions about this power station, but whether you have to leave Engie completely for that is complicated.”
'Our house is on fire, but ABP is trying to talk to the fire instead of putting it out'
Currently 15 billion of ABP's assets are in fossil fuels. Fossil is not a spectacular profit-packer and sustainable is just as profitable, according to all kinds of research. ABP's investments in renewable energy increased, from 1,4 billion in 2014 to 13,8 billion at the end of 2020. Accelerate that trend, Fossilvrij argues, following climate activist Greta Thunberg's argument that our house is on fire. Doctor: "ABP is not putting out the fire right now, but is trying to talk to the fire."
Iris Offermans also sees an opportunity for action: “Fire is created by fuel, oxygen and an ignition temperature. As an accountability body, we can advise where the fire extinguisher is, how to remove oxygen and reduce the fuel supply, but that is only an advice." Khoenkhoen: “Every day our people are engaged with the transition. That's how to put out the fire."
And what rating do the AOb'ers in the Accountability Council their pension fund? A 5, the teachers finally agree: almost enough. “It has to go a bit further, that is also part of the subject.”