The current carbon emissions trading system is too limited and should be replaced with an extended economy-wide European levy, the Dutch civil service scheme ABP and PGGM, the asset manager for Dutch healthcare pension fund PFZW, have stated.

In a roundtable discussion in parliament today, they will argue that extending the system would encourage both consumers and companies to adopt sustainability policies, which would make sustainable investment much more attractive.

Geraldine Leegwater, trustee at ABP, is expected to highlight that an improved pricing mechanism is the “most effective way to encourage companies to enhance their efforts for sustainability”.

PGGM is to suggest that the Dutch government could counter undesired effects of companies’ dilemmas of having to choose between sustainability targets and shareholders’ pressure for profit, by pricing carbon emissions and other greenhouse gases.

According to PGGM, the price of carbon hasn’t risen sufficiently during the past years, said Eloy Lindeijer, head of investments.

Under the European emission trading system (ETS) the price of carbon is approximately €25 per ton.

PGGM noted that less than half of emissions in Europe are subject to the ETS because several sectors, including international aviation, are excluded.

The asset manager fears that, as a result of such a low target, carbon intensive companies won’t disappear, but could simply be taken over by investors that don’t follow sustainable benchmarks.

ABP and PGGM further propose that the government creates investment opportunities that contribute to the energy transition, for example through Invest-NL, the government-established agency tasked with supporting innovative companies and projects aimed at an economic and social impact.

According to both players, Invest-NL could play a crucial role by covering the riks-baring part of projects.