Annual Report 2019
The baseline assessment
– results and recommendations
During the first year, the Monitoring Committee carried out a baseline assessment so as to determine the situation at the start of the Agreement regarding international responsible investment by pension funds. Based on the results, the Committee issued thirteen recommendations in November 2019, to which the Steering Committee responded immediately. Here are the key points.
Almost all the participating pension funds and the other parties involved filled in the baseline assessment, the results of which can be found in the monitoring report on the Agreement website. The baseline assessment formed the basis for determining the target percentages for the KPIs. Follow-up assessments will take place in the coming years.
Here are some important findings and recommendations by the Monitoring Committee, with the response of the Steering Committee:
Most of the participating pension funds have a responsible investment policy and actually apply it. However, the Monitoring Committee does see significant differences in the degree of completeness and specificity. Many investors focus on reducing the potential adverse impact on the financial value of their investments. The OECD Guidelines require, however, that pension funds also reduce, and if possible remediate, the potential adverse impact of investments on stakeholders, for example employees or local communities.
The Steering Committee recognises this picture. Participating pension funds have until the end of 2020 to coordinate their policies with the provisions of the Agreement. The Steering Committee expects that the Toolbox that has since been developed will help them to do so.
There is confusion about fundamental concepts such as due diligence and long-term value creation. The Monitoring Committee considers that the participating pension funds, executive agencies, members, and other stakeholders need to know more about the OECD Guidelines and UNGPs. The steering Committee appreciates the importance of this and is committed to ensuring that sufficient attention is paid to it in the coming years.
The Monitoring Committee notes that many participating pension funds have not set out how they deal with the application of ESG policy (environmental, social, and governance aspects) within outsourcing relationships. The Steering Committee is not surprised by this finding, given the stage at which the Agreement finds itself. In practice, pension funds work with a wide range of administrators. Further development of policy will be a focus of attention in the coming years.
Pension funds need to make the decisions that they take on the basis of their ESG policy more transparent for their participants. The Monitoring Committee considers this important so as to gain members’ support for the funds’ ESG policies. The Steering Committee endorses this recommendation.
Nienke van der Veen,
programme manager World Animal Protection
“The working group on baseline assessment/monitoring worked very hard over the past year to make an accurate initial assessment possible. The challenge of turning the KPIs into effective monitoring questions was actually a lot of fun. The results of the baseline assessment speak for themselves and show that a lot of work still needs to be done.