"How a relatively small pension fund can make headway in its ESG policy"

Sustainability, an inclusive society, climate, energy transition... More than ever, these phrases dominate the pension fund boardrooms. Merely a decade ago, the most important thing was how much return you made on your investments. Currently, this isn’t enough. How do you invest successfully and keep responsible investment high on the agenda? An issue for Nicole van der Toorn, board member and ESG focal point at SNPS.

“The subject is very much alive, and there is broad support for our targeted approach. So, we checked whether the decision to introduce more focus was supported. One way to do so is by focusing on 4 of the 17 Sustainable Development Goals (SDGs) of the United Nations.”

“Climate action, affordable and sustainable energy, gender equality and sustainable cities and communities. Sustainable Development Goals that suit the participants, the fund and Shell very well.”

“Gender equality has been a key theme in our organisation for many years and the other SDGs are perfectly in line with the nature of the business and the global social and economic challenges.”

“Yes, absolutely. Socially responsible investment is very important to our participants, but it cannot come at the price of the returns.”

“Following the results of the survey in September, the four SDGs were included by Hermes EOS in their engagement plan.”

“We believe in engaged shareholdership. This encourages responsible business practices and good governance. For that reason, we are seeking dialogue with companies we invest in.”

“The subject is very alive and there is broad support for our goal-oriented approach”

“SNPS does not engage in discussions itself, but since last year has been using the services of Hermes EOS to that end. They go into discussions on behalf of SNPS. Hermes EOS chooses which companies they wish to talk to on the basis of the engagement plan and any controversial situations identified. This happens with almost 1,000 companies.”

“It varies by company, sector and subject. Up until 2020, Hermes EOS already made a link to the SDGs for almost 75 per cent of the interactions with companies in our portfolio. The chosen SNPS themes - gender equality, affordable and clean energy and climate action - are given an important position in the Hermes EOS engagement plan for 2021-2023 as well. In addition, sustainable cities and communities are included in the objectives that Hermes EOS name. That way, the four themes are firmly anchored in the engagement plan, and we are able to show more and more what sustainability means in our investment portfolio. A concrete and great step.”

“Up until 2020, a lot had already been happening in the field of ESG, but not much was being communicated about it. We changed that, also as a result of signing the Dutch Pension Funds Agreement on Responsible Investment. We have mapped out the policy in detail, and we publish much more about what we do and achieve. For example, on our website, www.shellpensioenmvb.nl, we have created a new ESG environment with videos and podcasts to introduce you to our policy. The engagement processes have also been made more transparent. All in all, big steps forward. A line that we will continue to pursue in 2021 with a great deal of positive energy!”

“When the results of the survey became available in September 2020, Hermes EOS included the four themes in the engagement plan. In addition, we started talks with our asset manager AIM to look at more possibilities in the investment portfolios. Because the measurability of the four SDGs within the investment portfolios is difficult, we decided to align with the implementation of the new European legislation, which will become effective early 2021: the Sustainable Finance Disclosure Regulation (SFDR). These measures require pension funds to report on so-called adverse impact indicators. This will reveal data and calculation methods more quickly in order to use SDGs as a guide for integrating sustainability risks and to make the impact of investment decisions more measurable. The adverse impact indicators, for example, include CO2 emission standards and thus make the fulfilment of ambitions on the theme of climate action (SDG 13) measurable.”