Dutch Pension Develops First SDG Index

    Stockholm (NordSIP) – The Dutch pension fund for retail workers, Pensioenfonds Detailhandel, announced it had invested € 5.8 billion benchmarked against the first SDG-aligned index, an amount equivalent to 27.6% of its total assets.

    The FTSE Custom Developed Ex Korea SDG Aligned Net Tax (DSDG) Index – or FTSE Russell SDG Aligned index, for short – is the first equity benchmark to focus on the UN SDGs and was developed in cooperation with FTSE Russel and BlackRock. According to FTSE Russel, the index is a custom FTSE Russell ESG benchmark that emphasises SDG 8 (Decent work and economic growth), SDG12 (Responsible consumption and production), SDG13 (Climate action) and SDG 16 (Peace, justice and strong institutions). “Tracking the custom index is expected to reduce exposure to CO2 emissions and fossil fuel reserves by approximately 50%, while exposure to green revenue will increase by around 10%,” says the FTSE Russel press release.

    “Pensioenfonds Detailhandel wants to minimise risk in its investments while pursuing
    the highest possible returns in a sustainable manner. The creation of this unique SDG-aligned index is an important first step to make the entire portfolio sustainable in a way
    that aligns with the ESG themes and SDGs our participants find important,” says Henk
    van der Kolk, Chairman of Pensioenfonds Detailhandel.

    The pension fund is a signatory of the UN PRI and has an exclusion list focused on the arms industry and blacklisted countries. The SDGs were already an important part of the Dutch pension fund’s SRI policy, but this index takes its commitment a step further.

    Pensioenfonds Detailhandel is one of the largest pension funds in the Netherlands, with € 21 billion of assets and includes 300,000 participants, 113,000 pensioners, 32,000 employers. Its coverage ratio and policy coverage ratio at the end of March 2019 were 108.1% and 109.8%, respectively.

    “We are very proud that we have developed this sustainability index,” says Henk Groot, responsible for the investments at Pensioenfonds Detailhandel, who worked with FTSE Russel and BlackRock to develop the new index. “Pensioenfonds Detailhandel wants to encourage the companies in which it invests to use the money in the right way,” he adds. “The pension fund will invest more money in companies that perform well within the new index on themes that the pension fund prioritises. We are reducing the investments in companies that perform less on these themes.” Discussing the risk-sustainability trade-off of the index, Groot explained that it “has been developed in such a way that the sustainable scores increase while the risk profile remains the same or even improves.”

    “FTSE Russell is delighted to support Pensioenfonds Detailhandel’s efforts to implement its ESG strategy by partnering with them and BlackRock to develop a unique equity benchmark that is aligned to the UN Sustainable Development Goals,” commented Waqas Samad, CEO of FTSE Russell.

    “Many of our clients are reviewing how their portfolios are built and seek solutions that express their sustainability objectives. We are thrilled to have been able to initiate and implement this new benchmark with Pensioenfonds Detailhandel, which will ensure that the pension fund can realise its sustainability objectives via this new investment solution,” said Monique Donders, country manager for the Netherlands at BlackRock.

    Filipe Albuquerque
    Filipe Albuquerque
    Filipe is an economist with 8 years of experience in macroeconomic and financial analysis for the Economist Intelligence Unit, the UN World Institute for Development Economic Research, the Stockholm School of Economics and the School of Oriental and African Studies. Filipe holds a MSc in European Political Economy from the LSE and a MSc in Economics from the University of London, where he currently is a PhD candidate.

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