Pensioenfonds Huisartsen, the pension fund for Dutch General Practitioners (GPs), cannot implement the wish of its participants to divest from fast food chains because of its passive investment policy. This has prompted the fund to consider switching to an active strategy instead.

The fund surveyed members last year asking them which categories they no longer want to invest in. The responses confirmed broad support for existing exclusions including tobacco, weapons and gambling, while revealing that GPs no longer want their pension fund to invest in fast-food chains either, because of their unhealthy menus.

But Pensioenfonds Huisartsen cannot simply exclude fast-food restaurants, a spokesperson told IPE. “Unfortunately, we cannot isolate this category from other restaurants so we cannot divest from fast food restaurants,” he said. For equity investments, Pensioenfonds Huisartsen operates a so-called best-in-class method: it invests only in the companies with the highest ESG scores.

As a result of this policy, the fund is no longer invested in certain fast-food chains with poor ESG scores, such as Domino’s and Restaurant Brands International, the parent company of Burger King. But fast food restaurants with sufficiently high ESG scores do pass the filter. For example, the €9.6bn GP fund, invests about €5m in McDonald’s, and another €1m in Yum!, the parent company of Kentucky Fried Chicken and Pizza Hut.

‘Third of GPs demand immediate oil and gas divestment’

Pensioenfonds Huisartsen still invests in oil and gas, despite strong opposition from some of its members. According to the GP Fund, however, these opponents are a minority. About a third of the participants demand immediate divestment from fossil fuels, but two thirds find investments acceptable on the condition that these companies reduce their CO2 emissions and work towards a more sustainable business model.”

Active investing

The impossibility of divesting from fast food companies is one of the reasons that the Dutch GP Fund is considering changing its investment strategy, and returning to active investing. Another is that the current investment policy is often difficult to explain to participants, the fund said in its annual report that was published last month.

“’We get recurring questions from participants about our investments. This is despite the actions taken in recent years to make the portfolio more sustainable. Participants often look more bottom-up and pay attention only to the investment that catches their eye. The pension fund, on the other hand, looks technically and top-down. As a result, the pension fund cannot always explain to participants’ satisfaction why it invests in certain stocks,” it says.

nienke kuppens huisartsen

Nienke Kuppens at Pensioenfonds Huisartsen

The new “long-term value strategy” (LTW) offers a solution to this problem, the pension fund believes. That new strategy should “focus on a small group of carefully selected companies,” says responsible investment strategist Nienke Kuppens in an interview on the pension fund’s website.

“At the moment we invest in shares of about 3,000 companies, that would become maybe 60 to 100,” according to Kuppens. In principle, the fund wants the new strategy to be implemented by one external manager. Currently, its investments are managed by Achmea Investment Management.

The pension fund’s board is in favour of a new active investment strategy, but whether it will materialise is not entirely clear.

“In particular, the framing, governance and support from members are important and impactful issues to follow up on. A solid implementation is a prerequisite in this and only if this is guaranteed will the actively managed portfolio actually materialise because a lot of pension money is involved,” the GP fund said in its annual report.

Alongside the new active strategy, the fund also wants to engage more in impact investing.

“We are looking into expanding our impact portfolio beyond the current healthcare real estate allocation. This would involve smaller, unlisted companies with a social impact,” Kuppe said.

Pensioenfonds Huisartsen is already engaged in impact investing through investments in nursing homes, health centres and assisted living centres for people with care needs, for a total of €80m.

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