Sustainable pensions: 8 facts and fables

This is how Nationale-Nederlanden aims to offer maximum transparency about its sustainable investment performance and efforts. The web page Sustainable and responsible investment (Dutch only) (SRI) tells you all about the sustainability of your pension money. Here you can also find the annual SRI report, along with investment framework, key figures and facts. It tells you exactly how we implement sustainability in our pension investments, as well as which companies are excluded from investment.

Another common fable is that sustainability and returns cannot go together. In the short run, a focus on sustainability may not get you very far in terms of business performance, but in the long run it usually does.

Research shows that companies that care little about aspects such as environmental legislation run more risk in the long run. This could chip away at returns. Take, for example, companies that illegally dump waste and thus pollute surface waters or jeopardise air quality. Conversely, capitalising on sustainability developments in fact offers business opportunities, for example organisations that switch from coal-fired power generation to solar and wind energy.

Companies that pay due regard to people and planet, in addition to the environment, also generally perform better. Their choices usually pay off in the future. These companies are better capable of retaining staff and clients. In addition, they are better equipped to tackle future challenges.

Nationale-Nederlanden supports the energy transition. Even so, we are not yet divesting from oil and gas entirely, because we want to give companies the opportunity to transform to sustainable production. As long as we keep investing, we can keep the conversation going and drive transformation.

We are in discussion with the owners (Dutch only), as we believe we can achieve more through engagement. We have been fairly successful in convincing companies to accelerate the energy transition. In addition, we are trying to convince these companies to invest more money in renewable energy solutions. We also maintain close ties with companies that have already embraced the transition.

Nationale-Nederlanden applies an exclusion policy with regard to companies and industries that do not match our principles. Among those is the tobacco industry, as our support for raising a generation of non-smokers conflicts with investing in the tobacco industry.

Who else do we exclude? Companies that do not meet internationally recognised standards, such as UN and OECD guidelines. The entire list of excluded companies and the reasons for excluding them can be found on the NN Group website.

Sustainability is certainly on Nationale-Nederlanden’s agenda, and has been for a while. The issue has had our attention for many years.

Over 20 years ago, we included standards on people, the environment and society in our investment processes. These standards are also referred to as ESG criteria. ESG stands for Environmental, Social and Governance. Our biggest impacts are made through investment.

Over time, our role in society has become increasingly more active. We are the largest pension insurer in the Netherlands, which comes with great responsibility. Clients are increasingly inquiring into this as well.

We can invest your pension money actively or passively. Active investing means investing in funds with which we expect to outperform a particular index (independently determined basket of listed companies).

With the passive type of investment, we invest in index funds of reputable providers. We buy units in these index funds with the aim of achieving a return that more or less mirrors the return on a particular index.

Passive funds are often simpler and cheaper than active funds. The perception that a sustainable pension can only be achieved through active investment is quite persistent. This is not true. We can ensure a sustainable pension through both active and passive investment. Even with passive investing, we take account of sustainability criteria such as exclusions, voting rights at shareholder meetings and ESG criteria.

However, it is true that active investing gives our investment experts more scope to apply sustainability criteria in their investment policies, actively and directly. In the active life cycle, for example, we invest in fewer different companies. There, we perform better on ESG criteria.

We do our best to invest your pension sustainably. We exclude certain companies, engage with companies we invest in and vote in favour of sustainability initiatives at shareholder meetings. Still, we cannot guarantee completely that you will not be involved in controversial issues through indirect investment. But we do try hard every day to prevent this as much as possible and keep putting sustainability on our agenda. Will you join us?

There are several benchmarks (comparison surveys) that allow you to compare insurers (including pension insurers). Each yields different results. Sometimes we do well, other times not so well. You can read more about this in the following article.