Sustainable pension investments for a liveable world
Question: "Like many people, I am concerned about the climate and biodiversity. That is why I want my pension money to be invested in a truly sustainable manner. Can I opt for an extra sustainable portfolio at ABP?"
No that is impossible. ABP manages one investment portfolio in which everyone participates. Collectivity and solidarity have been chosen. This means that all participants jointly bear the investment risks and the costs are lower. Another advantage is that a joint portfolio creates the possibility of securing investments of hundreds of millions of euros for a very long period.
But good news: ABP phased out its investments in fossil fuels last year. Who fought for this is Gerian Alofs. She is a lecturer at the Hogeschool Utrecht and AObmember of the Accountability Council of the ABP. Years ago she joined the ABP Fossil Free campaign. “An important goal has now been achieved, which is very nice,” says Alofs. “When you see the scientific reports about the climate, you are shocked. Such big changes are needed. Pension funds invest a lot of money and can therefore make a positive contribution.”
Pension funds invest a great deal of money and can therefore make a positive contribution
As an active shareholder, ABP previously thought it could encourage oil companies to make the transition to renewable energy. But that hope has evaporated over the years, says Aldert Boonen, who, as a representative of, among others, the AOb on the board of the pension fund. “ABP has been involved in sustainable and responsible investment since 2007. Since then there has been a transformation in thinking. We have noticed that our talks with oil companies have not turned out as we hoped. Shell, for example, is doing something, but it's not going fast enough. Companies are still drilling new wells for oil and gas extraction.” Nearly all shares in this sector were sold at the end of last year. ABP is still looking for buyers for some direct investments in oil companies.
Dutch investments
But of course there are many more polluting companies, what about that? According to Boonen, if fossil energy is not the core activity, these companies are more susceptible to alternatives. He cites the production of steel with green hydrogen instead of coal as an example. “We expect that as a major shareholder in such sectors we can add something by entering into dialogue and encouraging companies to produce greener.”
In addition, ABP invests billions of euros in companies that advance the energy transition. For example, the pension fund has a substantial interest in Avantium, a Dutch company that makes soft drink bottles from sustainable materials. ABP also invests in wind farms and solar parks in the Netherlands and across the border, such as in Germany, Sweden and the US. At the end of last year, the pension fund registered with the Noordzeker partnership for the construction and management of a wind farm off the coast of IJmuiden. Extra money will go to Dutch initiatives, is the plan. For example, ABP has a 50 percent interest in Groendus. This company helps municipalities and schools with their energy transition, including the installation of solar roofs.
What good is a good pension in an unlivable world?
In the end, it is about the existence of our own participants, emphasizes board member Boonen. “With sustainable investments, ABP is committed to a liveable world. Also for our 20-year-old participants who have just graduated from primary school and who may still be here in eighty years.” Lecturer Alofs agrees: “What good is a good pension in an unlivable world?”
In a row:
ABP's total invested capital amounts to €461 billion.
€30 billion must be invested in the climate transition by 2030, of which €10 billion in companies that make a measurable positive contribution (also known as: 'impact investments'). In 2030, the CO2 footprint of ABP investments must be halved compared to 2019. In 2050, the investment portfolio must be climate neutral, i.e. no longer cause any additional CO2 emissions.
Are you still concerned about ABP's investment policy? Let one know AOb'there in the Accountability Body of the ABP, such as Gerian Alofs: gerian.alofs@hu.nl. They can ask questions to the board.
And the return? The return on sustainable investments is good. The ABP has commissioned various scientific studies into this and consulted more than two thousand studies. Conclusion: sustainable investments are not at the expense of returns. This strategy actually reduces the risk of investing, especially in the long term. The rising price for CO2 emissions gives large emitters a competitive disadvantage and ultimately lower chances of survival.
This is an issue in the Pension Affairs section of the May issue of the Education magazine. Know more about all the benefits of it AOb-membership? Look here.
