The majority of Dutch pension funds want to increase efforts to make their investments more sustainable, according to a qualitative study by consultancy firm Finance Ideas.
The study, which involved interviews with pension fund executives representing 31 Dutch pension funds with more than €775bn in assets between them, suggests Dutch funds are defying a sustainability backlash seen elsewhere.
Moreover, the survey shows that the vast majority of funds (23 out of 31) want to increase efforts in making their investments more sustainable over the next two years.
This has led to friction with asset managers, said Vincent van Bijleveld, managing consultant sustainable investing at Finance Ideas.
“Almost all the pension funds we spoke to indicated that it is very important that the vision of sustainability of their asset managers is in line with that of the pension fund,” he said.
Van Bijleveld notes this is a very different picture compared to a few years ago. “Earlier, no one saw this as a problem, as long as a pension fund’s investment and voting policy was implemented,” he added.
So far, this has not yet spurred a big trend in pension funds switching asset managers. But this is about to change, Van Bijleveld predicts on the basis of interviews with pension fund managers that he conducted.
More pension funds are likely to follow the example of technology industry scheme PME, according to Van Bijleveld.
The pension fund broke ties with BlackRock at the end of last year, because the US asset manager did not sufficiently align with PME’s “values and beliefs regarding investing for the future”.
In recent years, following political and legal pressure in the US, BlackRock withdrew from the Net Zero Asset Manager Initiative, while also partially leaving Climate Action 100+.
Impact investing
Dutch pension funds, by contrast, are still increasing their ambitions, notably in the field of impact investing, according to Van Bijleveld. But there are two rival interpretations of this, he adds.
“Some of the funds engage in impact investing within the current strategic asset allocation, by investing in greener stuff within infrastructure, for example. Others take a separate, often smaller allocation with a deeper impact,” Van Bijleveld says.
An example of a fund with this approach is BPL Pensioen, which set up a special impact mandate of €1bn earlier this month.
Home bias misconception
Pension funds have a strong preference for impact investments close to home, according to the Finance Ideas survey. “There is a strong idea among pension funds that participants want impact to be made especially close to home,” says Vincent van Bijleveld.
But this image can be based on a misconception as pension funds rarely ask their members in which regions they would like the fund to invest, he notes. Pension funds tend to restrict themselves to only asking their participants which themes they consider important for the investments.
An exception is the retail sector scheme Pensioenfonds Detailhandel, which discussed the subject extensively with participants in 2024. “This showed no uniformity at all for investments specifically in the Netherlands. Participants also wanted impact investments in other parts of the world,” says Van Bijleveld.
Smart followers
Another striking finding from the survey is that although pension funds almost unanimously agree with the statement that they have a financial interest in combating climate change, this is less reflected in their investment priorities.
For example, the report found little willingness to invest in riskier investments with more potential impact.
Only one fund fully agreed with the statement that it will invest more in innovation and transformation.
Pension funds are also not enthusiastic about investing more in market segments with capital scarcity, such as venture capital and emerging markets.
“Pension funds prefer to be smart followers. There are very few with the ambition to be leading,” Van Bijleveld said.
“And if it is difficult to raise money for something, that usually also means that it is more difficult to raise money here,” he added.
