The first large pension fund in the Netherlands will stop investing in fossil fuels. The metals and technology workers’ fund, PME, announced that yesterday morning on. PME is not the only pension fund struggling with its involvement in that sector. Why? And does that affect pension income?
Tim van Werkhoven works at chip machine manufacturer ASML and is building up his pension at PME. “It’s not just about money. If I have a good future financially, but we’re dealing with heat waves and floods, that doesn’t work. A good pension is that I can enjoy it.”
That is why Van Werkhoven, together with colleagues from Green ASML and Young NXP, handed over a petition to PME this summer, on behalf of 600 co-signatories. In it, they advocated, among other things, to stop investing in fossil fuels.
That sentiment of Van Werkhoven is widely shared in the Netherlands. A large majority of participants in pension funds want sustainable investments. And more than half of the group of 50 to 65-year-olds is willing to be satisfied with a 1 percent lower return, provided that they invest sustainably.
Efficiency also important
Pension funds pay attention to what participants want. Marike Knoef, Professor of Pensions and Economics at Leiden University: “People who build up pension with a fund cannot choose for themselves where their pension money is invested and they can get angry about that. So pension funds are increasingly listening to that.”
ASML’er Van Werkhoven is happy with PME’s move. “We are proud that our fund is the first, but they are not ready yet.” For example, he wants PME to also invest the rest of its assets in responsible companies and to be transparent about the contacts they have with companies to go green.
And to respond to such calls, the funds are adjusting their strategy. Knoef: “Many funds are really concerned with sustainable investment, everyone pays attention to it. But returns are also important. We all want a good pension.” The fossil fuel industry has yielded good returns for pensions for decades.
No crystal ball
PME says that stopping investing in ‘fossil’ will not come at the expense of returns. But according to Mathijs van Dijk, professor of Finance at Rotterdam School of Management, we don’t know. “It is sometimes said that sustainable investments are good for the wallet, but research is inconclusive. And past results are no guarantee for the future.”
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