Provisum, the €1.5bn Dutch pension fund of clothing retailer C&A, has put half of its equity holdings into a passive ESG mandate, according to an update for members on its website.
The mandate, for €250m, went to State Street Global Advisors (SSGA), and is for worldwide developed and emerging markets, including China and India.
The other half of Provisum’s equity holdings remain actively invested in investment funds with Anthos Fund & Asset Management, the in-house asset manager of family firm C&A.
Jan Bezemer, chair of the scheme’s investment committee, said a survey had indicated that Provisum’s participants found climate risk and socially responsible investment important.
He said the passive ESG investment would satisfy return demands and give the pension fund increased say about the investments.
“As these holdings are directly owned by Provisum, we can directly affect policy at companies on subjects such as labour conditions and climate policy through voting at AGMs as well as engagement,” said Bezemer.
The mandate went to SSGA because the asset manager was “ahead in offering fiscally attractive products and services,” according to Bezemer, who also cited low costs.
On the scheme’s website, he pointed out that investing through SSGA enabled the pension fund to reclaim dividend tax, improving returns as a result. The pension fund did not reply to questions from IPE.
As previously reported, after an asset-liability management (ALM) study in 2018, Provisum increased the interest rate hedge on its liabilities by 10 percentage points to 60% and reduced its equity holdings.
It also decided to divest its stake in hedge funds, citing “generally disappointing results” delivered by the asset class. Previously it had argued that the hedge fund holdings no longer matched a sustainable investment policy and indicated that management costs were too high.
Provisum had allocated approximately 10% of its investment portfolio to hedge funds in the preceding years.
The ALM study had suggested that these measures would protect the scheme’s coverage ratio in times of stress and increase the potential for a contribution reduction, while keeping its indexation goal unchanged.
Since it was established more than 75 years ago, Provisum has always been able to grant full inflation compensation. At the end of January, its funding stood at 130.9%.