SPF considers sustainability to be a major aspect of the investment philosophy and an integral component of its investment principles. With the sustainability policy, the fund aims to contribute to the world’s sustainable development. At the same time, SPF is convinced that this does not need to put pressure on the portfolio’s risk and return profile. A member survey was conducted in 2022 into members’ views and requirements regarding socially responsible investing. The Board further detailed the sustainability policy, partly as a result of the outcomes of this survey. The Board further developed the fund’s sustainability policy in 2024. The complete sustainability report (PDF) is also included in the SPF 2024 annual report.
SPF reviewed its sustainability ambition and starting points and expanded the investment belief relating to sustainability. A gap analysis was then conducted on the existing sustainability policy and a schedule was established to produce a policy to address these gaps.
The exclusion policy forms part of the Sustainability Policy. Companies that conduct themselves in a way that is incompatible with SPF’s values are excluded from investment. The member survey in 2024 also prompted an evaluation of the exclusion policy. Based on the results of the survey, the Board decided to include the gambling industry (depending on a certain turnover limit) in the pension fund’s exclusion policy.
In 2023, SPF decided to aim for a carbon reduction of 55% by 2030 compared with the benchmark and scope 1 and 2 carbon data as at 2016. This goal applies to the share, investment grade credit, and high yield US investment categories. SPF also aims to achieve net zero (100% reduction) in carbon emissions by 2050. This was further adjusted in 2024 by including a carbon reduction target of -40% by 2030 compared with the investment category level benchmarks and scope 1 and scope 2 carbon data in 2020 for the listed real estate investment category as well as including a net zero target (100% reduction) by 2050 in the sustainability policy document.
A so-called PAI statement, including scores, was formulated for the first time in 2024 in the context of the SFDR legislation and was then added to the pension fund’s website. A PAI statement is a statement that reflects the most important unfavourable effects of investment decisions on sustainability factors. The formulation of a PAI statement is a result of the Board’s decision to choose to ‘opt in’ in the context of SFDR article 4.
As legislation and regulations in this area are increasing, this reinforces the need to manage sustainability risks. SPF started formulating a framework of ESG-related risks in 2024. This will be further detailed in 2025.
We explain the various pillars of the sustainability policy briefly below
SPF endorses the OECD guidelines for multinational companies and the UN’s Guiding Principles on Business and Human Rights. The fund focuses on specific social developments that are important to members and that form a high risk for the investment portfolio. Against this background, SPF aims to work particularly on the sustainability theme of climate change, focusing on two so-called Sustainable Development Goals (SDGs), namely: SDG 7 (affordable and clean energy) and SDG 13 (climate action). The ‘Circularity’ theme is focused on two SDGs, namely: SDG 6 (clean water and sanitation) and SDG 12 (responsible consumption and production). The ‘Circularity’ theme will first be set out in more detail before being implemented in the portfolio.
Where possible, SPF manages and evaluates investments according to ESG factors. ESG stands for Environmental, Social and Governance. The fund integrates ESG aspects in the various investment categories in which SPF invests and includes them in investment decision-making.
SPF has an active engagement programme. The fund aims to encourage companies to take steps with respect to social and sustainability issues. This is done in two ways: proactively and reactively.
The objective of proactive engagement is to simultaneously encourage multiple companies – often sector-wide – to make further improvements. Reactive engagement focuses on influencing one company. For companies that do not respond satisfactorily within predetermined period, SPF has established an escalation policy which may lead to divestment in the company concerned.
SPF has outsourced engagement to Columbia Threadneedle Investments (CTI), which acts as an engagement party on behalf of several institutional investors. The SPF engagement programme focuses on holdings in real estate and other shares and holdings in the company bond portfolios investment grades and high yield.
In 2024, CTI held discussions with companies from SPF’s portfolio in 25 countries. This led to positive changes (achieved milestones) 51 times. CTI achieved these milestones on topics including climate change, working conditions, company governance and health.
SPF uses a specific voting approach to monitor material affairs of all listed companies and real estate companies in which the fund invests. Material affairs are affairs that will probably have a considerable effect on the company’s capacity to create long-term value. SPF’s policy for good governance focuses on protecting interests as a shareholder while at the same time living up to its responsibility in that role. As with the engagement policy, CTI also implements SPF’s voting policy.
In total, SPF voted at 872 meetings in 2024. The fund voted some 60 times on climate-related proposals, 15 of which were proposals regarding the transition as a consequence of climate change.
SPF does not invest in companies that fail to act in accordance with the United Nations’ Ten Global Compact principles. The fund also excludes producers of controversial weapons such as nuclear, biological and chemical weapons, depleted uranium munitions and white phosphorus munitions. SPF also excludes companies that are involved in tobacco production (turnover limit >0%), companies involved in coal and oil extraction from tar sands (turnover limit >5%) and companies working within the gambling industry (turnover limit >50%). SPF also excludes companies and countries that conduct activities that the United Nations, the European Union or the Dutch government deem unacceptable. These are mainly issues concerning human rights and weapons. To identify companies and countries for exclusion, Morningstar Sustainalytics carries out screening on behalf of the fund to establish the companies and countries in which the fund should not invest. Morningstar Sustainalytics screens both developed and emerging markets based on the above criteria for SPF.
At end 2024, SPF excluded 217 companies and 14 countries from its investment universe. At end 2023, 174 companies and 14 countries were excluded. The increase in the number of excluded companies was a result of the expansion of the exclusion policy, as explained above.
SPF publishes an Annual Report to ensure transparency about its sustainability policy and how it is implemented. The report sets out how SPF handled sustainability that year and the fund’s achieved results in this area. SPF also publishes an annual overview of the outcomes of the total investment portfolio on its website as well as the results of votes at shareholder meetings and the engagement policy. The SPF sustainability policy can also be found there. Finally, the SPF Newsletter and the website regularly feature items on the sustainability policy.