A senior responsible investment figure at PGGM has said he’s “dispirited” at the pension fund’s position in the EU’s planned new sustainable fund regime.
Speaking during a discussion on the revised Sustainable Finance Disclosure Regulation (SFDR) on Wednesday, Piet Klopp said the current legislative proposal makes “very helpful” improvements on the previous version, “which, to be perfectly blunt, we all hated”.
“It seemed to be missing the point – it gave us so [many] forms to fill out without moving the money,” the senior responsible investment advisor told fellow participants at the event, hosted by the European Sustainable Investment Forum.
“The whole idea behind it should be to move the money to where it is needed, and [the new SFDR proposal] does a good job there.”
“We’re pretty happy with what we see now,” he concluded. “We think the Commission got it right, by and large.”
Klopp urged co-legislators not to “water it down” during political negotiations, amid signs that some member states and politicians are keen to make the rules less strict.
Last week, the European Council agreed its negotiating position, which was strongly aligned with the Commission’s proposal, but included a call for new fossil fuel projects to be considered eligible as ‘transition’ investments.
European Parliament is still deciding its position, with some MEPs pushing for much less stringent requirements across the whole regime.
“We need to have a credible framework,” said Klopp.
In particular, he welcomed the current plan to require just 70% of a fund’s assets to be aligned with the criteria in order to qualify for a label under the SFDR regime.
That allows asset owners like PGGM, whose numerous portfolios are treated as a single financial product under the legislation, to stand a chance of securing a label.
“As an institutional investor, you do a little bit of everything,” explained Klopp.
“You can’t possibly get above 70%, given all the illiquid investments, the Treasuries — all the things that don’t quite lend themselves to an ESG approach. So 70% is good, don’t change it.”
PGGM would still only qualify for the least ambitious of the proposed labels: ESG Basics.
“We feel a little bit dispirited, perhaps, that we’re just ESG Basics, even though we think we do a whole lot more,” said Klopp — but he was quick to note that, unlike many other pension funds, PGGM wasn’t asking to be exempt from SFDR.
“[Just] don’t change our ability to communicate about all the things we do by way of transition investment, or sustainable investment, or impact investments,” he requested.
“We can’t aim higher than ESG basics across the entire pension fund, but for individual strategies, we are very proud to aim a whole lot higher.”
