Pension funds should assess a company’s corporate social responsibility policy ahead of building significant stakeholdings, the chief executive of Dutch manager SPF Beheer has argued.

According to Albert Akkerman, the asset manager’s approach of thoroughly screening firms ahead of engagement and only increasing the stake after a successful dialogue had paid off.

The chief executive was referring to the €3bn compact strategic equity portfolio, consisting of merely 70 companies, that SPF has been managing for the €14bn railways scheme (SPF) over the past four years.

Speaking during a meeting of CIOs in Amsterdam on socially responsible investment (SRI), he said that the scale of the stake allowed for good access to the companies’ top echelons.

“This facilitates an effective dialogue, ultimately resulting in considerably higher returns than the MSCI World Index, against comparable or even lower risks,” said Akkerman.

The management, focussing on absolute returns for the long term, delivered cumulative returns of no less than 80% during this period, said Akkerman.

That exceeded the equity benchmark by 30 percentage points, he added.

Roelie van Wijk, chief executive of Aegon subsidiary TKP Investments, discussed a recent initiative by TKP, the €16bn transport scheme Vervoer and asset manager Robeco, to begin a dialogue with Dutch companies on social issues, the environment and corporate governance.

Currently, the three investors are attempting to engage with energy giant Shell over its gas field in the Dutch province of Groningen – near which a number of earthquakes have recently occurred – about its risk assessment of the gas extraction project, as well as the potential consequences for company and the local population.

According to Van Wijk, Shell is reluctant, and TKP, Vervoer and Robeco are intending to increase the pressure, preferably together with other institutional investors.

“We want to prevent that nasty things happening,” she explained.

Van Wijk added that an earlier engagement with retailer Ahold has lead to a more generous and stable dividend policy.

Two other pension funds, meanwhile, highlighted other ways of promoting sustainable investments.

Progress, the €5bn fund for employees of Unilever, said it had committed a further  €250m in an Aegon fund of Dutch mortgages.

Martin Sanders, CIO of Unilever, said the allocation combined attractive returns with social support.

He stressed that the risk profile of the investment was excellent, following the mandatory 30-year pay off period and stricter conditions for borrowers, and concluded that a growing number of non-bank lenders would lead to lower costs for consumers.

With an estimated annual return of 4%, the asset class was also suitable for matching liabilities, said Sanders, who added that the returns were exceeding the current government bond yield by around 200 basis points. 

Asset manager MN added that it was to invest another €250m in sustainable rental properties in the Netherlands, completing the transaction for the €53bn metal scheme PMT, which already has a €1.5bn allocation to Dutch direct real estate.

By investing an additional €130m in improving thermal insulation and boilers in its existing stock, the pension fund would contribute to employment, a reduction in carbon emissions as well as cost reduction and increased living comfort for its tenants, argued Gerald Cartigny, deputy CIO at MN.

He added that the rental increase for the tenants would be no more than 55% of the achieved reduction of energy costs.

Cartigny estimated the returns on its sustainability project would be 5% to 6%.