Sustainable investment
We see it as our task to invest sustainably. Sustainable investment is therefore an integral part of our investment policy. We assess all investments in terms of return, risk, sustainability and costs.
The key objectives of our sustainable investment policy
We are very aware of our societal role, but at the same time we want to ensure our participants have a good and inflation-proof pension. This is an immense responsibility, even more so in times when the financial situation of the pension fund is under pressure. We also believe it is vital that our members can enjoy their retirement in a world that is worth living in. It is with this awareness in mind that we work towards sustainability goals in our investments. Our most important goals in sustainable investment are:
1. Achieving a better investment result (better risk-return profile)
2. Contributing to a better – more sustainable – world by:
- stimulating and investing with a positive sustainable impact on the world
- preventing and mitigating the negative impact of our investments on the world.
We comply with laws and regulations and support initiatives
Various laws and regulations relating to sustainability apply to APF Pension Fund. APF Pension Fund ensures that it complies with these laws and regulations.
Moreover, APF Pension Fund endorses a number of important initiatives, such as the PRI (Principles for Responsible Investment) and ISRI (International Socially Responsible Investment) and task forces that identify and address major environmental, social and governance (ESG) risks. Partly thanks to these initiatives, we are able to stay abreast of developments in the field of sustainable investment. We assess new initiatives and developments in terms of their relevance to sustainability and socially responsible investment. This enables us to identify whether they can contribute to our objectives and, if so, how.
APF Pension Fund does not take into account the main unfavourable effects within the meaning of Article 4 of the Sustainable Finance Disclosure Regulation (SFDR) and the secondary legislation still to be published. An important reason for opting out of this regulation, due to enter into force in March 2021, is that the RTS (Regulatory Technical Standards) have not yet been published. The further detailing of the term ‘adverse effects’ in the SFDR is therefore not yet clear. Furthermore, the reporting requirements on this point for level II and the related costs are as yet unknown. Therefore, the fund currently has no basis on which to decide whether and when the new SFDR regulation can be complied with. It is possible that the opt-out for this SFDR reporting will be reviewed later when there is more clarity.
Improving the risk-return profile of the portfolio
It is important to have insight into the impact of sustainability risks in the world on the investment portfolio. And to take advantage of positive opportunities where possible. As a pension investor, we deal with all kinds of sustainability risks.
The main risks are:
- risks that are related to and that lead to climate change, loss of biodiversity, use of natural resource, waste, pollution and deforestation.
- social risks, particularly in relation to working conditions, human rights and social inequality.
- risks related to the way in which a company is managed. These are risks that are linked to diversity, board structure and remuneration.
- risks related to impairment of assets as a result of changing regulations.
- reputational risks.
We emphasise to portfolio managers the need to understand sustainability trends and risks. This data is analysed with the aim of making adjustments to the investment portfolio. When it comes to policy, we do not lay down any preference themes. The portfolio is actively managed on environmental, social and governance factors. For each investment category, we then consider what is relevant and appropriate and how this can be implemented. This may change over time.
Added focus can be applied on the prevention or mitigation of negative impact on the world. We periodically consult with the (representatives of the) participants of the pension fund in order to determine the focus. The section ‘How can we, as investors, exercise influence’ explains what we do to encourage companies to adopt socially responsible business practices.
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