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APG teams up with PGGM, MN to build sustainability benchmarks

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APG, the €443bn Dutch asset manager, is developing a market standard for measuring the CO2 emissions of companies in which it invests, according to Corien Wortmann-Kool, chair of APG’s largest client, the €380bn civil service scheme ABP.

Speaking at an event organised by IPE sister publication Pensioen Pro, she said APG is working together with other large asset managers, including the €200bn PGGM and the €110bn MN, on the Portfolio Decarbonisation Coalition (PDC), an international institutional-investor initiative.

Wortmann-Kool said APG was also developing a benchmark for measuring the performance of its sustainable investments, adding that ABP had revised its carbon-emission reduction target.

The pension fund is now aiming for a 30% cut by 2020 rather than the initial target of 25%, as emissions increased by 5% last year.

Wortmann-Kool said this was the consequence of APG’s making “attractive investments” in energy companies last year without having sufficient data about the carbon effect of the deals.

She said the crucial information had become available in the meantime and assured attendees that the asset manager would make up for the arrears.

ABP’s chair reiterated that the pension fund would not immediately divest its entire stake in fossil fuels or in coal-related investments, “as a gradual divestment better matches the scheme’s long-term investment horizon”.

Since ABP launched its sustainability targets last year, it has already achieved 22% of its planned increase in “sustainable solutions”, from €29bn to €58bn.

Wortmann-Kool said the stake in sustainable property had increased by €5.5bn to €20bn, adding that the portfolio had returned 14% on average over the past three years.

During this period, ABP’s green-bond holdings increased from €45m to €798m.

The chair said the pension fund was well on its way to meeting a €5bn target for clean-energy investments by 2020 but that it had found it difficult to find proper local investment propositions.

She also took pains to emphasise that the transition has been quite a burden for APG.

“The investors must flick their switch and adjust their methods and processes, as every asset class requires a different approach,” she said. 

“APG has also had to set up an IT infrastructure to enable it to manage the entire equity portfolio.”

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