PGGM calls for regulatory leeway to promote sustainable investment

PGGM has called for more regulatory leeway for pension funds and other institutional investors when it comes to sustainable investing.

The €200bn Dutch asset manager said pension funds would increase their sustainable allocations if the investments were deemed by the regulator (DNB) to pose less risk.

A spokesman for PGGM, asset manager for the €185bn healthcare pension fund PFZW, said: “At the moment, [as far as the regulator is concerned], a euro invested in a coal-fired power station counts the same as a euro invested in a wind farm, and we would like to discuss this.”

Speaking in Amsterdam at the recent GIIN Congress on impact investing, Peter Borgdorff, PFZW’s director, reiterated the pension fund’s belief that sustainable investments pose less risk over the longer term, although he conceded that this had yet to be proven. 

He argued that regulatory changes in support of sustainability stand to increase institutional investment in private equity, infrastructure and real estate.

Other industry experts, however, questioned whether sustainable investments were inherently less risky.

Corinne Wortmann-Kool, chair at the €381bn civil service scheme ABP, cited the pension fund’s recent investments in Spanish solar panels; the business case for the investments was lost, she said, after the local government reneged on promised subsidies for the project.

She said she expected, however, that sustainable investments were generally capable of delivering better returns over the longer term.

Karlijn van Lierop, head of sustainable investment at the €114bn asset manager MN, said: “Stating that sustainable investment or impact investing carries – per definition – lower risk is taking the corner too tightly.

“We believe in the principles of both, but we assess each individual investment [on its constituent parts] for risk and return.”

The Dutch regulator has said it is already addressing the issue with the sector in a working group exploring the barriers and incentives for sustainable investment, adding that the results of the discussion would be published later this year.