Dutch medical specialists scheme devises new fossil fuel investment policy

The Dutch pension fund for self-employed medical specialists (SPMS) will only invest in oil and gas companies that want to commit to the goals of the Paris Agreement or commit at least 20% of their annual capital expenditure to renewable energy projects, according to the fund’s annual report.

The new policy follows from a survey among participants about their sustainability preferences.

This showed that only a minority of 22% want to exclude fossil fuels altogether. However, 62% want their pension to invest sustainably, the survey showed.

A majority of active members also expect SPMS to assume “a leading role” when it comes to sustainable investments. This is not the case for pensioners, who are less ambitious in this regard.

Climate benchmarks

The new fossil fuel policy only applies to the pension fund’s actively managed equity portfolios for European equities and emerging market equities, as well as to European and US corporate bonds.

This is because SPMS considers that the new policy would “interfere” with the climate transition benchmark it has been running for its passively managed equity portfolios (developed market equities excluding European equities) since 2022, implementing an annual CO2 reduction of 7%.

Climate transition benchmarks are already heavily underweight to oil and gas companies compared to regular indices.

Capital expenditure

SPMS has now determined that investments in oil and gas companies in the actively managed portfolios may only be made if they allocate more than 20% of their annual capital expenditure to renewable energy and/or technology that supports this, such as battery storage, hydrogen, charging station infrastructure or lithium extraction. Investments in carbon storage also count.

The pension fund’s sustainability adviser, Columbia Threadneedle Investments, checks annually which companies meet this criterion. Based on the new policy, 242 oil and gas companies globally have been excluded. Investments can still be made in a small number of firms, which are mostly headquartered in Europe.

“It is ultimately up to our investment managers to decide whether to allocate to these companies,” says Marcel Roberts, CIO of SPMS. At the moment, SPMS invests in eight oil and gas companies, including Shell, Total and Eni.