Clients, regulators, society and other stakeholders expect PGGM Investments to act in accordance with applicable laws and regulations and standards of conduct, and to promote a corporate culture that includes acting with integrity. Compliance and integrity are therefore part of our license to operate for us. In order to achieve this, PGGM Investments conducts an active policy with regard to compliance and integrity in line with its core values. PGGM is aware that culture plays an increasingly important role in the management of risks. For this reason, it focuses on ‘soft controls’ (factors that influence behaviour) in the management of risks and the realisation of objectives, as well as ‘hard controls’ (demonstrable measures in processes and systems). Employees are taught how to deal with integrity issues through integrity sessions.’ 

Important developments in laws and regulations

PGGM Investments operates in a highly regulated sector as a licensed institution supervised by the Netherlands Authority for the Financial Markets (AFM). In addition to the AFM, PGGM Investments also needs to comply with rules and regulations from the Dutch Central Bank (DNB) as well as the European Securities Markets Authority (ESMA), since a large proportion of the applicable laws and regulations are enacted at European level. This requires continuous attention by the Management Board and a structured supervision on remaining compliant with applicable laws and regulations. Below we give a summary of the most impactful developments in 2021. 

Sustainable Finance Disclosure Regulation (SFDR)

As of March 10, 2021, the European Sustainable Finance Disclosure Regulation (SFDR) entered into force. With its new rules SFDR redefines mandatory Environmental, Social and Governance (ESG) disclosures and has a significant impact on financial market participants in Europe, such as asset managers like ourselves. The aim of SFDR is to provide more transparency on sustainability in a standardised and structured way, ensuring comparability and hence preventing ‘greenwashing’. It raised the bar for investments claiming to be sustainable, by introducing a new and strict definition of what is defined as a ‘sustainable investment’: (i) an investment with an environmental or social objective, (ii) provided that such investments do no significant harm and (iii) the investee companies follow good governance practices. The SFDR, in combination with the Taxonomy Regulation (TR), requires both asset managers and pension funds to provide additional information for all their products in precontractual documentation, periodic reports and on websites. The financial products of PGGM Investments are its funds and segregated mandates. PGGM classified its funds as article 8 SFDR as is the case for most of the mandates. The other mandates are classified as article 6 SFDR. PGGM Investments currently has no article 9 classified funds nor mandates.

In the first part of the implementation of the SFDR (level 1), we implemented the obligations based on the text of the regulation itself. It mainly consisted of qualitative disclosures, which we had to disclose on our website. Also, in the the annual reports of the funds that we provide the fund participants, we disclosed the necessary information as required in article 11 SFDR. Level 2, the second phase of implementation of the SFDR, was originally scheduled for January 1, 2022, but the implementation date has been postponed by the European Commission to  January 2023. A complicating factor is that the detailed legislation underlying level 2, the Regulatory Technical Standards (RTS), is published at a very late stage.

The SFDR and the RTS are an integral part of the SusFin Strategy of the European Union. The purpose of this legislation is to prevent greenwashing and to give end users of any financial product useful information on the sustainability of that product. SFDR sets a new challenging benchmark for sustainable investments in the EU, with a more detailed focus on reporting, use of data, mandatory formats and indicators. Currently, the main challenges include the (timely) availability of data and the adjustment of current investment policies and processes to the new requirements, including the use of the mentioned disclosure formats.  

European Taxonomy

The EU Taxonomy is a classification system, establishing a list of environmentally sustainable economic activities. It provides a framework to promote sustainable investments. The Taxonomy defines which economic activities the EU considers ‘environmentally sustainable’. It is based on scientific insights to determine the extent to which companies are making a significant contribution to the transition to a carbon-neutral economy. The idea is to combat greenwashing of financial products and to accelerate the transition, to a cleaner economy. Pension funds and pension providers must report what percentage of their investment portfolio qualifies as sustainable under the EU Taxonomy. We believe that a reliable, independent taxonomy contributes to better comparability and further convergence of sustainability data. The EU Taxonomy helps investors and companies to identify economic activities that contribute substantially to sustainability.

Since 2020 PGGM Investments has represented the European pension sector in the Platform on Sustainable Finance (Platform). The Platform advises the European Commission on the EU Taxonomy. Within the Platform, PGGM is providing input particularly on the usability of the EU Taxonomy for investors.

In 2021 the Platform developed the criteria for the additional environmental objectives of the taxonomy on biodiversity, pollution, water protection and circular activities. The Platform also developed a framework for a social taxonomy and proposals for the extension of the Taxonomy towards transitional activities and activities that seriously detract from sustainability. The reports on these proposals are expected to be published in the first half of 2022. 

As chair of the working group for asset managers and pension funds in 2021, PGGM Investments coordinated the industry's feedback on the upcoming taxonomy reports and communicated it to the European Commission and ESAs. A key issue that the industry is struggling with is the interpretation of the reporting requirements associated with the taxonomy and the (inter)relationship with SFDR. In addition, pension funds and asset managers are researching how to surface the required data for the reports in time. For unlisted investments, obtaining sustainability data is a major challenge. 

The independence and scientific basis of the EU Taxonomy is under pressure at the end of 2021. A number of European member states wanted to classify gas and nuclear energy as green in the taxonomy. PGGM, along with other Dutch pension funds has strongly advised against this step as it undermines the credibility of the taxonomy. On December 7, 2021, the Dutch Pension Federation in collaboration with PGGM and APG called on politicians not to allow economic or political interests to play a role and to base the Taxonomy on scientific consensus, as secured through the European Platform on Sustainable Finance (Pensioenfederatie roept op tot behoud wetenschappelijke karakter van de EU-Taxonomie). This is also the input that we have given to the final advice of the advice of the Platform to the European Commission. Until the final decision on the proposal is taken by the European Parliament and the European Council we will continue to emphasize that the broad consensus and the scientific basis are essential to ensure confidence in the taxonomy and to mobilize private capital towards the sustainability transition. 


The AFM conducted a sector enquiry into MiFID II compliance at investment firms in 2018-2019. This study specifically examined compliance with the MIFID II requirements in the areas of cost transparency, product governance and commissions. Partly as a result of this sector-wide survey, PGGM Investments conducted a self-assessment focusing on all the requirements of MiFID II. This resulted in an improvement process that was largely completed in the course of 2021 and will be continued in 2022. 

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The introduction of new legislation and regulations on the the ‘Money Laundering and Terrorist Financing (Prevention) Act

(in Dutch: the ’Wet ter voorkoming van witwassen en financieren van terrorisme’ (Wwft)

and the Sanctions Act 1977

(abbreviation in Dutch: Sw)

in 2020-2021 and forthcoming legislation and regulations inspired PGGM Investments to take a critical look at its own processes for compliance with these laws and regulations in 2020. The importance of adequate compliance with these laws and regulations has also increased socially in the asset management sector, with stricter supervision and enforcement. The resulting outcomes were incorporated in our processes in 2021.  
In order to comply with the Wwft and Sw, PGGM Investments successfully introduced a new board approved CDD Policy. The CDD Policy establishes multiple new processes, for example, analyzing new relations (identification, verification, risks, KYC process) as well as reviewing these parties periodically and is based on event driven alerts. A newly created CDD department will be implementing these processes and will develop a firm broad policy in accordance with the Wwft, Sw, and CDD Policy. By doing so, we maintain the clients’ and participants’ trust by ensuring that their funds are invested in a safe and sustainable future.