Only a limited number of large Dutch pension funds have incorporated the UN’s Sustainable Development Goals (SDGs) into their investment policies, according to a survey.
The Netherlands’ largest schemes have adopted the SDGs because they have the necessary capability and expertise, reported the Dutch Association of Investors in Sustainable Development (VBDO).
The lack of clarity about financial consequences and the measurability of progress also limited uptake of the SDGs, according to the VBDO’s report.
The lobbying organisation, which looked at the 42 largest schemes, said that smaller pension funds in particular found it difficult to apply the UN goals.
According to the VBDO, the most cited reason why Dutch pension funds embraced the SDGs was that they considered it part of their fiduciary duty. They also cited “ethical” and reputational reasons.
The organisation said that just seven of the participating schemes – including the €407bn civil service scheme ABP, metal industry pension funds PME and PMT, and multi-sector scheme PGB – reported SDG-related investments or policies.
Jacqueline Duiker, researcher for the VBDO, said that most pension funds were discussing how to meet SDG targets, such as combating poverty and climate change, before 2030.
“Such an approach takes much time, whereas most SDGs still lack very concrete investment criteria,” she said.
She suggested that a pension fund could also opt for a step-by-step implementation, citing as an example PME, which intends to invest 10% of its €47bn of assets in SDGs over the next five years but hasn’t yet decided how to do so.
“Such a decision, however, indicates a direction and acts as a dot on the horizon for everyone in the organisation,” Duiker said.
APG, PGGM and MN – the providers for the Netherlands’ largest four pension funds – are considered as the frontrunners on the implementation of the SDGs, with APG and PGGM having developed a taxonomy that could assist other schemes when assessing their investments.
Duiker said she expected that a dozen other pension funds would start implementing and reporting about the UN’s sustainable goals in the near future.
In her opinion, SDGs were not an ad hoc phenomenon “as they are easy to understand and less abstract than ESG criteria”.
“Moreover, these targets generate a common language, enabling better communication between governments, investors and asset managers,” she argued.
The VBDO found that pension funds had a significant preference for the SDGs relating to climate and affordable clean energy, as many of the goals were not defined in terms of measurable targets.
Duiker said pension funds already involved in the implementation of SDGs could educate other schemes by being transparent about their activities.
The survey showed that 17% of the participating schemes never discussed SDGs and one-third did so only once a year.