Sustainable investment, sustainable pension
“Integrating sustainability into pension investing is nothing new, really”, says Hans Kraaijeveld, Strategic Product Manager at Nationale Nederlanden, and involved in pension investing. “But you can see that sustainability is increasingly becoming a necessity. It is a matter not just of excluding investments in arms or child labour, but certainly also of helping the climate.
Clients also increasingly inquire into this.” According to Kraaijeveld, sustainable investment is not only about financial returns, but also about the impact on people, planet and society. “It is part of the transition to a more social and green economy. We are using capital to effect a deliberate change of direction towards a sustainable future.”
Debby Broos is Sustainability Risk Manager, and she too sees that sustainable investment is the future: “Some people believe that you have to sacrifice on returns to invest sustainably. But the data shows that greener companies actually outperform ‘brown’ companies in the transition to a sustainable economy.” As with any investment product, sustainable investment involves risks but definitely also offers opportunities. Kraaijeveld: “Analysing them well creates value in the long run. Investing in sustainability poses no higher risk than investing in defence technology or fossil fuels. And pension investing is a long-term story. With that, you can make a nice return and have a good pension in retirement.”
Impact measurement
Sustainable investing is more than ticking a few sustainability boxes, says Broos: “We do not simply consider returns and risks – our philosophy is to actively engage with companies. We exert influence through our voting rights and by actively taking part in discussions at shareholder meetings. We do this independently as well as through alliances. This way we try to shift the course towards more social and sustainable business operations. We always engage with companies because we believe this is how we will achieve the most. Of course if we see that no change is coming in the end, exclusion may follow.”
Kraaijeveld: “In certain sectors like tobacco or tar sands, engagement is useless. But for the rest, we indeed engage with companies. And that really sets us apart from fellow insurance companies that exclude companies more readily.” And that approach also yields results: “We have joined hands with other portfolio managers to urge oil companies to speed up the transformation to a more sustainable model”, says Kraaijeveld. “We really have a lot of pension money under management, but in the global market it is only a fraction. You really have to do it together, and then you can also see developments accelerate.”
Transparency
Company engagements are also carefully reported. Kraaijeveld: “Last year, we monitored 1,300 discussions with companies and public authorities.” This transparency is important. “We show as much as possible what happens to your money. We also provide insight into the carbon emissions, water consumption and waste production of much of your investment portfolio. Employers in particular appreciate this, as sometimes they have millions in ‘their’ pension pot. In such cases, it is reassuring to know that this money contributes to a sustainable society. Employers and advisers get this insight in Nationale¬ Nederlanden’s Human Capital Planner.”
In short, sustainable pension investing has long ceased to be a niche. Kraaijeveld: “We want to make our investment portfolio more sustainable because we want to leave the Earth better than we found it.” Broos, too, sees that sustainable investing is here to stay: “Also we don’t see it as something sexy to be involved in sustainability, it has become completely commonplace.”
The topic is constantly evolving, though. Broos: “The challenge is to incorporate more ESG data in policy and report on that. Carbon emissions of the companies we invest in are fairly ‘easy’ to report, but other indicators also play a role, such as gender diversity, impact on biodiversity or energy consumption. We constantly review our policy, combining the generation of financial returns with impact on people, planet and society. I did a course on climate change last year and it opened my eyes to where that can lead. We really need to do something, and I like to bring across that urgency in my work.”
“Sustainability has become completely commonplace.”