ABP will ask every company in its investment portfolio to “re-apply” as part of the €356bn civil service pension fund’s new socially responsible investment (SRI) policy.
Outlining ABP’s new approach, chairman Corien Wortmann-Kool said the scheme would ask companies to detail how responsibly they operated and how much attention they paid to sustainability.
ABP aims to reduce its entire portfolio’s ‘carbon footprint’ by 25% by the year 2020.
The pension fund is to double investments in such things as renewable energy, clean technology and commodity recycling to more than €58bn over the next five years.
It plans to increase its investments in renewable energy alone by five times to more than €5bn.
It will also earmark €500m for investment in local education-related infrastructure and property and allocate a similar amount to communications infrastructure.
ABP estimated that its overall holdings would drop from approximately 5,000 to 3,500 as a result of its new policy.
It said it would also increase engagement with those companies in which it remained invested.
The reduction in the overall number of holdings is expected to result in a €30bn shift within the scheme’s investment portfolio.
This money is to be re-invested in similar companies that do meet ABP’s SRI requirements
But Wortmann-Kool took pains to emphasise that ABP did not expect its new policy would come at the expense of returns, arguing that it could even improve results.
The pension fund, however, will not follow a sustainability benchmark, “as this would make portfolio changes predictable and therefore have a negative impact on returns”.
Wortmann-Kool said ABP’s new policy stood to increase its “clout” in engaging with companies.
“Partly due to pressure from us,” she said, “Shell has refrained from drilling in Alaska, and we want more of that.”
As part of its new global engagement policy, ABP said will increase its focus on labour safety in the textile industry and shipping, on human rights in the ICT and energy sectors and on child labour in the cocoa industry.
ABP decided to revise its SRI policy after it found, through a series of surveys, that the changes enjoyed the support of most of its 3m participants.
The pension fund said it would engage with its stakeholders regularly to develop its SRI approach further.
Responding to the policy change, pressure group ABP Fossil Free – in part made of ABP participants and claiming the support of 17 social organisations with more than 1m supporters – said the pension fund should divest from fossil fuels.
It noted that ABP’s current stake in fossil fuels was more than €30bn, compared with €1bn in renewable energy.
Chris Roorda, co-founder of the campaign, said ABP’s fossil fuel holdings were not only destroying the climate but “jeopardising” pensions, as “a majority of fossil fuels can’t be burnt to avoid catastrophic climate change”.