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Dutch pension funds to use SRI criteria - study

NETHERLANDS - Around three quarters of Dutch pension funds say they expect to be using social, ethical or environmental criteria in their stock selection in the “near future” – according to a new study.

The news comes despite the fact that the Netherlands has no regulations that apply to the promotion of SRI, according to a survey jointly released by the Institute for Responsible Business at the University of Nyenrode and the Dutch Association of Investment Analysts.

The survey had responses from schemes holding almost 70% of total Dutch pension assets. It indicates that a growing number of plans appear to be following the high profile moves by the top two Dutch funds, the civil servants’ Stichting Pensioenfonds ABP and healthcare fund PGGM, into the area of responsible investing.

And according to the survey’s authors, Dr Harry Hummels and Diedrik Timmer of the Netherlands’ Business School at Nyenrode University, this shift to an SRI-based approach is continuing in spite of the current bear market conditions.

The report notes: “Despite this development, pension funds knowingly hold that SRI – and more in particular the development of a SRI policy – is important. For some of the major pension funds the importance of the SRI development is logical, since they expect that SRI will lead to excess returns or to a better insight into the investment risks.”

The survey finds that 74.1% of the funds expect to be using SRI investment criteria in the near future, while 60.5% state that pension funds have a clear responsibility in the promotion of responsible investment.

The report points out though that Dutch pension plans are primarily focused on moral and juridical issues, such as violations of human rights (34.1% say they already take account of human rights in their investment policy), violations of the law, corruption, arms production, child labour and environmental issues.

Interestingly, issues of transparency and corporate governance are regarded as less important with only 11.4% of plans taking into account the former while just 9.1% currently have a clear policy on governance.

Pension funds are agreed though that greater levels of SRI information on their investments would be beneficial, with 80% of respondents concurring that information on the social, ethical, and environmental performance of companies would contribute to better assessment of their financial risks.

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