Pensioenfonds Gasunie, the pension scheme of the firm that owns the infrastructure for the transport of natural gas in the Netherlands, has transferred its entire €1bn equity portfolio from BlackRock to State Street Global Advisors.
The fund’s new index follows the MSCI ACWI Climate Transition Benchmark and excludes companies with poorer than average ESG scores.
Pensioenfonds Gasunie, which does not have a fiduciary manager and does its manager selection in house, has moved its entire equity portfolio from a set of BlackRock funds to a mandate run by State Street Global Advisors.
The fund chose to benchmark its investments to a Climate Transition Benchmark rather than a Paris Aligned Benchmark because this fits better with both the fund’s employers and the philosophy of the board, according to the fund’s president Joost Hooghiem.
Gasunie is predominantly a fossil fuel company itself, responsible for the transport of natural gas throughout the Netherlands.
“Being such a company, we understand the importance of making the transition to the energy system of the future and eventually to carbon neutrality,” said Hooghiem.
“But companies like Gasunie that are capital-intensive cannot be switched from fossil fuels to renewable energy overnight. At the same time, these firms have an important role in the energy transition and need capital to make this transition. So I’m not sure it’s the right approach to just exclude all fossil fuel firms from your investment universe,” he said.
He added: “You can also stay invested to make sure companies van meet their goals for 2030 and then 2050, while only excluding businesses if they don’t follow the agreed path.”
The index that Pensioenfonds Gasunie now follows is based on the MSCI ACWI Climate Transition Benchmark, with an additional ESG filter, Hooghiem noted.
“We use a 20% ESG uplift. This means we only select companies that score better on ESG than the average. As a result, the total ESG score of our index is 20% better than the main index: 8 on a scale of 10 instead of 6.7 for the regular MSCI ACWI Index.”
While the original index includes about 2,900 companies, the CTB variant only has 1,600. The 20% “ESG uplift” reduces this number to about 900, but the tracking error is kept at 0.65%.
This article was first published on Pensioen Pro, IPE’s Dutch sister publication. It was translated and adapted for IPE by Tjibbe Hoekstra