Dutch retail pension fund seeks greener exposure with new EM equity index
Utrecht-headquartered Pensioenfonds Detailhandel, with €28bn in assets under management, has joined forces with index provider FTSE Russell and asset manager BlackRock to develop and implement a new sustainable benchmark for its €1.5bn emerging markets equity portfolio.
In a statement, Pensioenfonds Detailhandel explained that implementing the index would enable it to trim its greenhouse gas emissions and fossil fuel reserves' exposure by around 60%. At the same time, the Dutch scheme expects its exposure to green revenue to grow around 30%.
“This marks the next step towards making our whole portfolio sustainable and aligned with the ESG-themes and SDGs which our participants consider important,” commented Henk van der Kolk, chairman of Pensioenfonds Detailhandel.
The new index unveiled by the scheme, BlackRock and FTSE Russell is aligning a broad market equity benchmark with features of four United Nations’s sustainable development goals (SDGs) included in the sustainable investment policy of Pensioenfonds Detailhandel. These are decent work and economic growth (SDG 8), responsible consumption and production (SDG 12), climate action (SDG 13), peace, justice and strong institutions (SDG 16).
Company weights within the index are adjusted using the British index provider’s ESG research on themes including Climate Change, Human Rights and Community & Labour Standards. The characteristics of a passively managed portfolio will be retained, the statement specified.
The Dutch scheme had already partnered with BlackRock and FTSE Russell back in March 2019 for the launch of a similar index for the funds’ developed markets equity portfolio, whose value now nears €7.5bn.
Arne Staal, global head of research and product management, FTSE Russell said: “The launch of this €1.5 billion fund demonstrates the Dutch pension funds’ ongoing commitment to applying globally recognised sustainable investing standards across developed and emerging equity markets.”