THE NETHERLANDS- Dutch minister of finance Gerrit Zalm has urged the country’s pension funds to sharpen up their corporate governance and to take a more active role in companies they invest in. He said that pension funds’ inactivity is detrimental for them as active involvement can enhance the company’s returns.
The minister was speaking at a conference organised by Stichting Corporate Governance, a forum launched in 1998 by eight of the country’s largest pension funds including ABP, PGGM and KLM, aimed at helping to promote corporate governance in the pensions industry.
Zalm cited The US$160bn (e171.5bn) California Public Employees Retirement System (CalPers) as an example for Dutch pension funds. CalPers has a reputation for exercising its shareholder rights and its size translates into a significant influence.
He said one of the reasons for inadequate corporate governance is pension funds’ ability to invest more freely than before. Increased liquidity and access to Euroland has made it easier to sell out of a unsatisfactory company rather than to exert pressure and try to change it from within.
Also speaking at the conference was ABP’s chief investment officer Jean Frijns who said that there is a link between the activity and involvement of the shareholder and the return of the company. In addition he said that the integration of international capital markets is leading to more competition between corporate governance models.
A spokeswoman for PGGM, one of the founder members of the Stichting Corporate Governance, said one of the reasons the group was launched four years ago was to overcome the inadequate corporate governance in the Netherlands.