Cover image: Jeroen Zondag
PensioenLab was launched in 2012 with the aim to engage young people in pension issues on the one hand, and to make their voices heard in the pension world on the other. This year, consultants from ProjectiveGroup’s Pensions & Insurance (P&I) practice, joined as well. On Thursday, May 11, 2023, PensioenLab's final event took place. After months of delving into the pension sector, it was time to complete an educational journey together with a group of enthusiastic young professionals.
Throughout the past months, a group of passionated participants focused on various pension sector issues, including sustainability and communication. During the final event, we had the privilege of presenting potential ideas and enhancements for the Dutch pension sector under vigilant observation of experienced experts in the sector.
PensioenLab organised monthly sessions, inviting young professionals to actively engage in the pursuit of a future-proof Dutch pension system. PensioenLab’s mission is to involve young people in pension matters and ensure that their voices are heard in the Dutch pension sector. This obviously provides an opportunity for our Pensions & Insurance (P&I) consultants to learn more about the Dutch pension sector and to participate.
It is time for pension funds to take responsibility in leading the transition to a more sustainable investment portfolio.
Babs Kerkhoven and Loek Egbers have spent the past few months studying an issue related to sustainability in the pension sector. During their research into the pension sector, it became clear that sustainable investment is crucial for a better future. It is time for pension funds to take responsibility in leading the transition to a more sustainable investment portfolio. The first step we have taken in this is to define exactly what sustainable investing (SRI) is. SRI means that investors invest in organisations and projects that prioritise, in addition to financial returns, investments that contribute to the United Nations' sustainable development goals (SDGs).
We promptly realised that the existing legislation provides insufficient incentives for pension funds to drive change. Moreover, concerns arise regarding the profitability of SRI and the potential lack of diversification in pension funds' investment portfolios if sustainability is prioritised extensively. Currently, pension funds' assets are primarily invested in high-yield stocks rather than sustainable (long-term) investments. With the recent improvement in the financial position of pension funds, there is now an opportunity to embrace sustainable investments with a long-term investment horizon.
Our final advice revolves around the central question: "How can pension funds effectively respond to the increasing pressure from legislation and society to invest more sustainably?" We offer a twofold recommendation that can be integrated into the current revised “Gedragscode voor Pensioenfondsen”.
Recommendation #1: Investment Quota
Our first recommendation for the entire Dutch pension market is to establish a quota for sustainable investments in their portfolios. By making use of the existing SDI-Asset Owner Platform framework, pension funds can determine whether an investment aligns with one (or more) of the United Nations Sustainable Development Goals for 2030, thus ensuring compliance with the defined minimum quota.
Recommendation #2: Sustainable Investments
In addition to a quota, pension funds should include conditions in their investment policies that require engagement with non-sustainable organisations and projects. It is essential for pension funds to make concrete agreements with investment parties on how they can encourage these non-sustainable entities to adopt more sustainable business operations, to the extent possible. Long-term success relies on transforming non-sustainable investments into sustainable ones, and pension funds must take a clear stance and communicate this approach. For example, a pension fund may continue to invest in a fossil fuel company, but simultaneously, the investment company engages in discussions with that company to reduce emissions and make appropriate agreements.
It is essential for pension funds to make concrete agreements with investment parties on how they can encourage non-sustainable entities to adopt more sustainable business operations.
Our consultants’ take aways
Babs Kerkhoven, Business Consultant from P&I reflects on her experience at PensioenLab, expressing how enriching it was. The program provided her with valuable insights into the Dutch pension market and its associated challenges. Meeting other young professionals who shared a keen interest in understanding the complexities of pensions was a unique opportunity. The interactive nature of PensioenLab fostered engaging discussions and knowledge-sharing among participants from diverse backgrounds. The highlight of her experience was the final event, where she and Loek had the chance to present the results from their group to industry experts.
Meeting other young professionals who shared a keen interest in understanding the complexities of pensions was a unique opportunity.
Loek Egbers has been working as a Management Trainee Consultant, specialising in implementing projects within the Dutch pension sector. With a growing interest in this field, Loek has devoted the past few months to gaining familiarity with its complexities. Participating in the PensionLab course has proven to be an invaluable experience for him, providing deep insights into the workings of the Dutch Pension Sector.
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