APG has said it is introducing a new human rights policy and a grievance mechanism for its asset management activities in an attempt to improve its social performance.
The Dutch pension giant was awarded just 1.5 points out of 20 in an assessment by the World Benchmarking Alliance (WBA) published this week, which focuses on how the world’s 2,000 most influential firms aligned with “societal expectations”.
An evaluation of APG’s publicly-disclosed policies, commitments and actions concluded that it fell short of many expectations around promoting decent working conditions, respecting human rights and behaving ethically.
WBA said there was “no evidence” that APG conducts due diligence to identify human rights-related risks and impacts in specific locations or activities for its own operations, or that it identified which human rights could be impacted by its operations, supply chain and financing activities.
The non-profit also raised questions about the firm’s approach to stakeholder engagement, whistleblowing, health and safety, and ensuring its workers are paid a living wage.
The only elements on which APG passed the assessment’s thresholds were around transparency on collective bargaining agreements and female representation among its workforce and on its board.
Although the findings were published this week, they are based on an assessment conducted as part of a 2022 benchmarking project focused exclusively on the finance sector.
In a statement, APG said WBA’s work on promoting a sustainable financial system “highly aligns with the vision of APG and the work we do for our pension fund clients”.
It added that the NGO’s financial system benchmark, in which APG ranked 30th, was “probably the best available tool” to measure its progress.
“We have identified possibilities for improvement and are in the midst of implementing them”
APG
“We realised we scored low on the social criteria of this benchmark,” a spokesperson told IPE. “We have identified possibilities for improvement and are in the midst of implementing them.”
The improvements include a forthcoming update to APG’s human rights policy, and the introduction of a grievance mechanism for the firm’s asset management activities. It has already published a Stakeholder Dialogue Policy as part of its efforts.
“With these actions we aim to improve our scores on social aspects of the second Financial Systems Benchmark that WBA planned for later this year,” the spokesperson said.
Fellow Dutch pension fund PGGM was another low scorer in the assessment, bagging just 3 points out of 20.
While it has more explicit statements and policies about respecting human rights than APG did in the 2022 assessment, it failed to disclose details about how it identifies potential human rights risks and impacts across its financial activities.
PGGM declined to comment on the findings.
Norwegian asset owner KLP also scored 3 out of 20 in the evaluation.
The report’s lead author, Namit Agarwal, noted that the finance sector performed poorly overall in the analysis.
Banks and insurers scored an average of 24%, while the 116 global funds or other financial service providers that were assessed averaged 11%.
“Sectors like apparel and footwear and retail do better,” he told IPE. “And that’s probably because they’re more consumer-facing and more used to public scrutiny, so they potentially see the risks and impacts from these issues as being more material.”
Agarwal added: “We believe that asset owners and asset managers are one step further removed from consumer scrutiny, and that may be a reason why they don’t perform as well in the analysis.”
The findings are based exclusively on self-disclosed documents on each entity’s website, and do not take into consideration other sources of information, such as media coverage, legal activity or portfolio construction.
Each of the 2,000 companies were given a right to respond to the findings before publication.
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