NETHERLANDS - PGGM, the €85bn pension fund for healthcare and social workers, has announced it will actively engage with all 4,000 listed companies in its investment portfolio on ethical issues.
Executives of the pension fund will target companies seen as falling short in their behaviour on environmental, social and corporate governance issues and will focus, in particular, on weapons, human rights, health and medicine and climate change.
To reach its goals, PGGM will cast ‘informed votes' worldwide at the shareholder meetings of all companies in its portfolio and, based on its own analysis, will actively vote at what it considers to be the 100 most important companies.
At the same time, the pension fund will continue to engage with all companies, both through its own personnel and through external parties.
It is currently screening all of its investments for violations of human rights, such as child labour, said PGGM spokeswoman Ellen Habermeh.
"To keep check on all companies, we will issue our asset managers with the new criteria. Companies with a potential problem will be monitored by PGGM itself," she said.
If engagement doesn't produce results, PGGM said it could remove companies from its portfolio, especially if they are involved in arms production or violations of human rights.
Companies involved in the trade and production of weapons of mass destruction, and weapons which keep on making victims after a military conflict, will be excluded straight away, the scheme added.
PGGM is planning to appoint three external ethical experts, to gain advice on responsible investment and the dilemmas of implementing such a policy.
"We have further detailed our investment policy with our identity in mind. This way, responsible investment becomes clear to our participants, who we want to offer a responsible pension as well," PGGM's CIO Else Bos explained.
Since 1985, PGGM has excluded companies where over 50% their revenue is earned through the trade and production of arms and then began its engagement policy in 2001.
It recently decided to sharpen its policy further by withdrawing investment in four companies - Textron, Singapore Technologies, Rheinmetall and Poongsan - found to be involved in the production of cluster bombs and landmines.
PGGM is the second largest pension fund in the Netherlands, providing pension provision for over two million workers and pensioners.