Largest Dutch Pension Schemes Commit To National Climate Agreement

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The scope of carbon emission reduction targets in the Dutch pension sector is set to widen after nine large Dutch pension funds, as well as asset managers, insurers and banks, signed up to the government’s national Climate Accord.

“The signing of the agreement means broadening the current reduction goals,” said Gerard van Olphen, chairman of the Climate Accord finance task force and chief executive of the €500bn asset manager APG.

“We wanted to be more than just onlookers,” he added. 

The agreement, in which financial institutions commit to adhering to the Climate Accord – based on the UN-brokered Paris Agreement – was signed by four industry organisations, as well as 45 other financial institutions in The Hague on Wednesday.

Wopke Hoekstra, the Dutch finance minister, described the agreement as “unique”, and said that foreign colleagues admired the fact that participation was voluntary but that implementation was binding.

Gerard van Olphen APG

Gerard van Olphen, CEO of APG and chair of the Climate Accord finance task force

The Paris Agreement aims at halving greenhouse gas emissions by 2030.

“As a consequence, investors’ commitments are to apply to a much longer period, and to all other relevant asset classes besides just equity,” said Van Olphen. 

Most pension funds used a five year period for their carbon reduction target.

The Dutch pension funds that have signed the domestic agreement have €800bn of assets between them, and include civil service scheme ABP, healthcare pension fund PFZW, the metal schemes PME and PMT as well as BpfBouw, the pension fund for the construction sector.

APG and MN, the asset managers for ABP and the metal schemes, respectively, are also participants.

As of 2020, signatories must report the carbon emissions associated with their holdings. They must make clear by 2022 how they will reduce emissions.

An independent organisation is to monitor progress every five years.

Implications unclear

It is not yet clear how tightening the reduction targets will affect pension funds.

Marcel Andringa, executive trustee for asset management at PME, said the way emissions are measured needed to be harmonised.

Another problem is that the Paris Agreement’s reduction target relates to 1990, whereas pension funds do not know these emissions, as no monitoring was taking place at the time.

The signatories are to exchange their experiences in a forum chaired by Dutch supervisor De Nederlandsche Bank (DNB). The ‘Platform for Sustainable Financing’ is already developing a uniform method for measuring carbon emissions.

Last year, more than 70 Dutch pension funds signed an international responsible investment covenant, known as IMVB in Dutch but Shaktie Rambaran Mishre, chair of the Dutch Pensions Federation, said there was hardly an overlap with the new commitment “as the IMVB covenant predominantly addressed social issues such as labour conditions”.