How we mitigate our negative impact

Through our asset management activities, we invest all over the world, both directly and indirectly in nearly all business sectors, through a range of different asset classes and using different investment strategies.

This means that through our investments we are exposed to many different aspects of the global economy. Adverse impacts can be a result of, or be linked to, the economic activities of the assets we invest in. As described in the previous chapter, PGGM Investments encourages a positive contribution to a sustainable world through its focused investments that contribute to the SDG’s.

As an investor we also have the responsibility to minimize negative impact. Negative impact can be described as negative effects for individuals, workers, communities, and/or the environment. PGGM Investments tries to prevent negative impact and considers this as a highly material topic. Where negative impact cannot be prevented, we aim to limit this to the absolute minimum.


Like many Dutch pension funds our clients have signed the International Responsible Business Conduct Agreement (or in Dutch: IMVB-Covenant), together with the Dutch Pension Federation (Pensioenfederatie), non-governmental organisations (NGOs), trade unions and the Dutch government. This agreement aims to help pension funds gain a better picture of the international investment chain. The main goal of the agreement is to identify, mitigate and prevent negative impact within the investment portfolio, such as human rights violations and environmental damage. In this agreement, parties seek to cooperate to create a more sustainable society. 
Cooperation relates to both practical and legal possibilities as well as taking into account the responsibility of the Dutch government under the OECD guidelines, the UN Global Compact’s Human Rights Principles (UN Global Compact) and the UN Guiding Principles on Business and Human Rights (“UNGPs”).

The signing parties to this agreement have agreed upon a number of requirements that should be implemented by the end of 2022. During 2021 we continued implementing these requirements by incorporating the OECD Guidelines into our policies and setting up a system that helps us continuously screen our entire portfolio for (potential) negative impact. On behalf of PFZW and BPF Schilders we also participated within the ‘Deep Track’ where we collaborated on specific engagement cases. Read more about this engagement here.

To identify and assess the companies in the investment portfolio on their negative impact on people and the environment, we have developed a screening methodology, the so called ‘OECD-Screening’. For this screening we use data from recognized external data providers. We avoid investments that are in very severe violation of the mentioned guidelines. Accordingly, the implementation of this screen is focused on performing an OECD and UN Global Compact screening to identify specific controversies that companies can be involved in. We have been using this screening methodology in our equity portfolios since the beginning of 2021. For the equity portfolios there is a lot of data available which helps us to better create a picture of a company's involvement in a controversy. Based on a score that is awarded to a specific controversy that the company is involved in, we decide to divest from the company or engage in talks with the company to stimulate movements towards better behaviour. In 2021 we divested from 68 companies based on OECD violations. We started engagement with 66 companies to stimulate better behavior.

For private markets data is less readily available. Nonetheless we have been able to complete the challenging task of implementing our OECD-Screening in private asset classes as well. As of the end of 2021, we also screen our existing private equity investments, infrastructure, private real estate, and non-listed credit portfolios for negative impact. Additionally, new investments in these asset classes are subject to strict criteria to minimize the chance of investing in a security that will generate negative impact. In the spirit of the OECD guidelines, PGGM Investments first engages the company or fund manager in talks. If this engagement fails, divestment could be a next step.

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Dilemma: Implementation of OECD Screening in Emerging Market Credit

Our Emerging Market Credit (EMC) team implemented the OECD-screening in the first half of the year in the Emerging Markets Credit mandate. Implementation of the screening meant that several portfolio holdings (approx. 2.7%) needed to be divested.

The main challenge with the implementation of the OECD-screening was to find replacements in the Emerging Markets portfolio with similar strength and similarly attractive risk and return profile. The bonds of Southern Copper, a copper miner with assets in Peru were the only Peruvian bonds with a positive total return, during the turbulence caused by the presidential elections in April. Southern Copper did not survive the OECD-Screening and the EMC team needed to find alternatives. Eventually our EMC team was able to get comfortable with several new issuers, such as CMI in Central America and Clean Renewable Power in India. These are both utilities with renewable power generation capacity and benefit from hard currency power purchase agreements with long tenors. They contribute positively to reducing the carbon footprint of the portfolio.

What we do not invest in

We want to avoid making investments that do not fit with our clients. This is also a topic that is considered material by our stakeholders. In accordance with the PGGM Investments Implementation Framework, we exclude companies that are involved in controversial weapons and tobacco activities from the PGGM Investments’ funds and internally managed mandates. Early 2021 we added coal and tar sand to these product based exclusions.

Companies that derive a large part of their revenues from coal extraction, coal powered energy generation and tar sand oil extraction have proven to be unable or unwilling to embrace the energy transition. The existing listed investments in such companies were sold during the first quarter of 2021. At the end of 2021, we also implemented these coal and tar sands exclusions for (new) private market investments. A total of 109 Coal companies and 10 tar sands companies were excluded.

In addition, we do not invest in government bonds from countries that are the subject of sanctions by the UN Security Council and/or the European Union (EU). We can also exclude companies in the event of heightened ESG risks. In such instances, we first try to realize improvements by engaging in a dialogue with the company. An example of such an exclusion in 2021 is the exclusion of a company due to their involvement with the military regime in Myanmar. This company failed to respond to our engagement requests. Click here for more details.

In 2021 we excluded 207 companies based on their involvement with certain products and additionally we excluded government bonds from 14 countries.

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Our Vision

Our vision on fossil investments

Interest in the climate policy of large investors is growing rapidly. PGGM Investments and PFZW are also being approached more and more directly - as has been the case several times now by amongst others activists of Christians for Climate Action and Extinction Rebellion. Should we follow suit and divest? If not, is the current approach enough? This is a dilemma that many financial institutions around the world are currently wrestling with. 

On behalf of its clients PGGM Investments remains invested in the fossil fuel sector. PGGM Investment’s total listed investments in fossil fuel amount to approximately €4 billion. This is 1.6% of the assets we manage on behalf of our pension fund clients.
Do we not share the concern about the UN’s alarming climate reports? We can be clear about that: we fully share them. So the question is what can we do to help ensure that the gloomy scenarios do not materialise?

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