Benchmark Responsible Investment by Pension Funds in the Netherlands 2011

Benchmark Responsible Investment by Pension Funds in the Netherlands 2011 Pieterstraat 11 3512 JT Utrecht T +31 (0) 30 234 00 31 info@vbdo.nl www.vbdo.nl Benchmark Responsible Investment by Pension Funds in the Netherlands 2011 A research paper by VBDO (Dutch Association of Investors for Sustainable Development) VBDO: Rudy Verstappen In cooperation with Profundo: Anniek Herder en Jan Willem van Gelder October 2011 This report has been made possible by Oxfam Novib. The contents, conclusions and recommendations are, however, the sole responsibility of the VBDO. © VBDO report by the Dutch Association of Investors for Sustainable Development (Vereniging van Beleggers voor Duurzame Ontwikkeling) Disclaimer VBDO will assume no responsibility or legal liability for incorrect or misleading information provided by the sources used for this report. THE DUTCH ASSOCIATION OF INVESTORS FOR SUSTAINABLE DEVELOPMENT 2 Contents Executive summary 5 Chapter 1 Chapter 2 2.1 2.1.1 2.1.2 2.1.3 2.1.4 2.1.5 2.1.6 2.1.7 2.2 2.2.1 2.2.2 2.2.3 2.3 2.3.1 2.3.2 2.3.3 2.4 2.4.1 2.4.2 Chapter 3 3.1 3.2 3.3 3.4 3.5 3.6 3.7 3.7.1 3.7.2 3.7.3 3.7.4 3.7.5 Introduction 8 Towards responsibly invested pensions 10 Dutch pension system 10 Three pillars 10 Pension sector regulation 12 Organization of pension funds 12 Investments 14 Solvency II 16 Financial crisis 17 Future of the pension system 18 Motivations for pension funds to invest responsibly 19 Public attention for responsible investment 19 Universal ownership 21 Fiduciary duty 21 5LVNPDQDJHPHQWDQGÀQDQFLDOSHUIRUPDQFH Responsible investment developments 25 Implementation 25 Services of third parties 28 Reporting 28 Relevant international standards and initiatives 29 International standards 29 Initiatives 29 Research objective 33 Research objective 33 Description of the researched pension funds 33 Research period 33 Research process 34 Division of tasks and responsibilities 34 Advisory panel 34 Scoring model 35 Asset classes 36 Responsible Investment Strategies 38 Category 1: Policy 40 Category 2: Implementation 41 Category 3: Accountability 47 3 Chapter 4 4.1 4.1.1 4.1.2 4.2 4.3 4.3.1 4.3.2 4.3.3 4.3.4 4.3.5 4.4 4.4.1 4.4.2 4.5 4.5.1 4.5.2 Chapter 5 5.1 5.2 Chapter 6 6.1 6.2 6.3 6.4 6.5 6.6 Results 49 Research group characteristics 49 Description of the researched group 49 Response rate 49 Category 1: Policy results 51 Category 2: Implementation results 52 Public equity 52 Corporate bonds 53 Government bonds 53 Real estate 54 Alternative investments 54 Category 3: Accountability results 55 Accountability of the responsible investment policy 55 Accountability of the responsible investment implementation 55 Overall results 56 Analysis of overall results 56 Results per pension fund 56 Conclusions and recommendations 59 Conclusions 59 Recommendations 60 Practical supplement to VBDO’s responsible investment benchmark of Dutch pension funds 61 What is ESG integration? 61 Why do we need ESG integration? 62 How do investment managers integrate ESG considerations in investment decision-‐making? 62 What does a good ESG integration process look like? 63 What can investment managers do? 64 What can asset owners do? 65 Appendices 66 4 Executive summary 7KHÀIWKHGLWLRQRIWKH%HQFKPDUN5HVSRQVLEOH,QYHVWPHQWIRU3HQVLRQ)XQGVLQWKH1HWKHUODQGV is published by the VBDO (Dutch Association of Investors for Sustainable Investment), in co-‐ operation with research consultancy Profundo, and puts forward the development of Dutch pen-‐ sion funds in formulating, implementing and reporting on their responsible investment policies. /DVW\HDUWKHUHVHDUFKPHWKRGRORJ\ZDVULJRURXVO\FKDQJHGWRIRFXVRQÀYHGLIIHUHQWDVVHW classes: public equity, corporate bonds, government bonds, real estate and alternative invest-‐ ments. This methodological change brought to light that the implementation of the respon-‐ sible investment policy was not developed to the same extent in different asset classes. The implementation of the asset class public equity was best developed while government bonds on average were the least developed. This year, the methodology remained largely unchanged to maintain the comparability of the benchmark research. The responsible investment policies of 50 Dutch pension funds have been scored and ranked using 29 assessment issues divided into three categories with the following weightings: ‡ 3ROLF\ ‡ &RQWHQW ‡ 9ROXPH ‡ &RPPXQLFDWLRQZLWKSDUWLFLSDQWV ‡ ,PSOHPHQWDWLRQ ‡ 3XEOLFHTXLW-‐ Exclusion -‐ ESG-‐integration -‐ Positive selection -‐ Engagement -‐ Voting -‐ Impact investing ‡ &RUSRUDWHERQGV -‐ Exclusion -‐ ESG-‐integration -‐ Positive selection -‐ Engagement ‡ *RYHUQPHQWERQGV -‐ Exclusion -‐ ESG-‐integration -‐ Positive selection ‡ 5HDOHVWDWH -‐ Direct real estate selection -‐ Direct real estate maintenance -‐ Indirect real estate ‡ $OWHUQDWLYHLQYHVWPHQWV -‐ ESG-‐integration -‐ Impact investing 5 ... - tailieumienphi.vn