The president of Dutch financial regulator AFM, Laura van Geest, has urged pension funds to consult their members about their ESG preferences. Funds should be required to base their investment policies on their wishes, she said.
In a column published on the AFM website and in financial daily Het Financieele Dagblad (which shares its parent company with IPE), Van Geest said it is “a missed opportunity” that pension funds are not required to take their members’ views on ESG and sustainability into account when designing their investment strategies.
“Some pension funds do ask their members occasionally about their preferences, but that’s entirely voluntary and with no strings attached,” she added.
It’s peculiar, she noted, because the new Dutch pension law introduces a requirement for pension funds to base their investment policies on the risk preferences of their members. To this end, every few years pension funds have to conduct a risk preference survey.
“So why pension fund trustees are not obliged to take note of the sustainability preferences of their members too?,” asked Van Geest.
Activist investing
Such a requirement would silence politicians who claim pension funds excessively focus on sustainability. Before the summer recess in July, member of parliament Thierry Aartsen filed a parliamentary motion asking pension funds to stop investing in “an idealistic or activist way,” which was supported by a large majority.
If pension funds were required to ask their members about their sustainability preferences and integrate the outcomes in their investment policies, there would be no need for such motions to be filed anymore, according to Van Geest.
“We don’t need to import the US debate about activist investing to the Netherlands. Pension money does not belong to politicians and it has only been temporarily entrusted to pension fund trustees. Why is there no requirement to ask members what they want? After all, it’s them who will eventually enjoy their pension, hopefully in a world where there’s something left to enjoy,” she concluded.
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