The €72bn Dutch metal industry scheme PMT will no longer invest in the fur and pornography industries, after giving its members a say in its investment policy.
In addition, the scheme said it would also cut investments in the tobacco and weapons sectors. Its combined holdings in these four sectors amounted to €1.3bn.
The decision came after it had developed its own criteria for its €16bn developed markets equity allocation, in part based on its members’ opinions, and checked against companies’ long-term financial viability as well as ESG criteria.
The outcome was a portfolio that also met the scheme’s return requirements, according to PMT.
It said it no longer wanted to use standard benchmarks set by third parties, arguing that this was often a “black box”.
PMT said that the new portfolio – customised in co-operation with its asset manager MN – had led to an entirely new and “explainable” equity strategy.
Index provider MSCI and asset managers BlackRock and JP Morgan Asset Management were also involved with the development of a new benchmark, which would be kept passively managed at a low cost.
PMT highlighted that, as of now, its holdings only comprised “solid and well-performing companies, which operated responsibly and were approachable”, adding that these firms also covered the sectors matching its members’ preferences.
The pension fund said that, as a result of its new investment approach, it had divested its stake in 50% of the 1,600 companies in its initial investment universe.
PMT emphasised that it would not make any concessions to risk and return, and that its target remained to outperform its liabilities by 1.5%.
It also intended to apply the same approach to its €3bn equity holdings in emerging markets, and that it would also make a “conscious” selection of investments in the remainder of its portfolio.
The metal sector scheme said it had already developed a benchmark with financial and ESG criteria, which applied to its €4bn stake in emerging market debt.
A number of other Dutch pension funds have made changes to their investment strategies following feedback from members, including the multi-sector fund PGB, the pension fund for the retail sector (Detailhandel) and the fund for the hospitality industry (Horeca & Catering).