Annual report responsible investment 2017 published

The Annual Responsible Investment 2017 report has been published and we are proud of the results. In the report we show the impact of the investments of our clients and discuss the most important developments and dilemmas in 2017. Eloy Lindeijer reflects.

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In 2017 we devoted ourselves to realize financial and social return with the pension money entrusted to us by our clients. We did this, among other things, by investing in solutions for social issues. PGGM has now invested € 13.7 billion for its clients in solutions for climate, health care, food and water. In 2017, € 3.3 billion was spent on new investments in this category.

We want to achieve good returns and at the same time have a tangible impact on a sustainable world.

It is a challenge for us to find such sustainable investments of sufficient size. This applies in particular to private markets such as infrastructure and private equity. That is why PGGM is looking at ways to do smaller transactions and to aggregate investments into investable propositions. We are looking for new opportunities to invest our clients' pension capital in sustainable projects that result in tangible, manageable and profitable investments. To support this development, we organized the first Impact Investment Initiative together with 'Het Financieele Dagblad', a daily Dutch newspaper focused on business and financial matters. Together with Dutch parties, we searched for opportunities for creating investments with a greater impact. At the beginning of 2018 the follow-up took place, a conference with the theme 'The Dutch Watersector'. We want to link up with the knowledge and expertise that the Netherlands has in the field of water safety and water facilities. We want to leverage the knowledge and expertise available in the Netherlands in the areas of water safety and water supply.

Consensus about solutions, selection criteria and impact indicators is very important for the transparency and credibility of such investments. In 2017, we worked together with a number of parties on a standard for investments in the Sustainable Development Goals. We refer to such investments as Sustainable Development Investments. Together with our peer, pension administrator APG, we developed a selection and impact measurement methodology in 2017.

In addition to investing for positive impact, we took further steps this year in incorporating ESG risks and opportunities into our investment decisions. We are convinced that ESG factors are material in the long term. By integrating these risks and opportunities into the investment process, we achieve a better risk-adjusted return. The annual report includes interviews with investors who explain how this works out in daily investment practice.

In 2018, we will continue to work on the further integration of ESG factors into the investments decision-making process. We believe that knowledge is the key to improving ESG integration. More ESG training material will be developed during this year. We have already made a start with a training on human rights with the investment teams.

An important topic to which we have paid much attention in 2017 is climate change. The carbon footprint of our equity portfolio has dropped further and is now 28% lower than in 2014. We have also started implementing the TCFD recommendations, starting with an investigation into the significance of various climate scenarios for our clients' investments. This year, our climate scenarios will be further refined and from there a baseline scenario will be developed.

Good results that are also recognized in the outside world. We were recently included in the Bretton Woods II (BWII) ranking of 25 'most responsible asset allocators' worldwide. This does not detract from the fact that there are many challenges, both financial and social. That is why we, together with our clients, are continuously working on improving responsible investment policy and execution. By working together, by making our voices heard and by exhibiting behavior that contributes to a sustainable financial system, we want to further increase our tangible impact as a responsible investor.

Read more about our activities, the results achieved, the dilemmas and the most important developments in the field of responsible investment in 2017 in the Responsible Investment Annual Report 2017.

Chief Investment Management

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