PGGM intends to apply ESG factors (Environment, Social, Governance) to all its investment processes. Private Equity is precisely the sort of investment category which offers investors a pre-eminent opportunity to stimulate sustainability. This is because, in Private Equity, the distance between companies and investors is relatively small and investments are generally long term (5-10 years). Consequently, investors are in a position to urge companies to introduce ESG improvements.
PGGM’s initial aim is to ensure that, when considering investment options, all the private equity parties in which they invest take structural account of environmental, social and governance factors. Given that PGGM mainly invests in private equity indirectly, an important part of the new policy is to investigate what ESG policies private equity funds have in place and how they ensure compliance. In all the phases of the investment process, PGGM plans to assess the level of ESG within each fund. Moreover, PGGM particularly wants to encourage companies and funds to look beyond the impact of local legislation and reputation risks on their ESG policies.
PGGM expects companies to strive for operational efficiency, which will, for example, reduce the volume of waste and energy consumption. In this way, companies will improve both the environment and their own return. In addition, PGGM intends to encourage private equity parties and companies to work on innovative and sustainable products and services, whereby both economic growth and societal progress are central.
By publishing this policy PGGM hopes, moreover, to take the lead in promoting further discussion and integrating ESG into the entire Private Equity sector.
PGGM is a leading Dutch pension fund service provider. PGGM offers its institutional clients: pension fund management, comprehensive asset management, policy advice and management support. Currently – on behalf of six pension funds –PGGM manages slightly in excess of EUR 125 billion for 2.5 million people. As a co-operation with more than 570,000 members, PGGM is helping to achieve a valuable future. Either alone or with strategic partners, PGGM is developing innovative future provisions by linking together pensions, care, housing and work.