Over 1,300 billion euros. That is the total pension reserve available in the Netherlands. “That amount represents a hugely powerful ‘change enabler'. Because if you were to invest that money in sustainable development, you would give the world a big push in the right direction,” says Jacco Minnaar, chairman of the Management Board of Triodos Investment Management.
Collaboration for change
Minnaar: “In actual fact, however, we see that a large part of those pension reserves is invested in grey areas. They are not deployed with the express aim of realising positive impact. Risk and return are the main drivers. This applies not only to the Netherlands, but occurs worldwide. We have recently joined forces with BeFrank in order to change this.”
185,000 members, 900 companies
BeFrank is a rapidly growing online pension administrator that currently handles the pensions of 185,000 employees of around 900 large and medium-sized companies. The company manages around EUR 3 billion in assets. “For many employees, their pension is the biggest financial product that they will take out during their entire life. Nevertheless, for many people pensions feel like a very remote concern,” says BeFrank's commercial director Jan Hein Rhebergen.
“We make pensions understandable and personal,” explains Rhebergen. “We do this by putting people in charge of their own pensions. Our app shows them the state of their pensions 24/7 and allows them to make a number of choices themselves, for instance about the investment approach.”
Rhebergen believes that the collaboration with Triodos Investment Management fits in well with BeFrank's personal approach. “Companies that have their employees’ pensions administered by us, can make a deliberate choice to invest these pensions in a sustainable manner via the Triodos investment funds. And that also applies to all individual employees of those companies: if their employer does not opt for sustainable investing, they can make that choice themselves.”
Sustainable is becoming the standard
Since the start of the collaboration with Triodos Investment Management, a growing number of companies have started offering sustainable investment as the standard option to their employees, says Rhebergen. “We hope and expect that more and more companies will choose to do so.”
“And also that other institutions will follow the example that BeFrank and Triodos Investment Management have set with their collaboration,” adds Minnaar. “It allows us to unleash the potential of pension assets as change enablers. Pension is literally money for later. That is why it is important to consider not only the risk and return that investments generate today, but also the question of what tomorrow's world will look like. Through our collaboration, we ensure that in due course, you will be able to spend your pension in a healthy and livable world.”
Sustainable Impact Dashboard
In order to provide the members with more insight into the sustainable impact of their pension investments, BeFrank and Triodos Investment Management have developed the Sustainable Impact Dashboard.Rhebergen: “The dashboard provides a clear overview of the sustainable impact of your investments. Or what the impact could be if you were to choose to invest in a sustainable manner. We express this as the amount of CO2 emissions avoided, the amount of water saved and the reduction in waste production.”
“What makes the dashboard very user friendly is that it does not just state the figures, but also presents them in a visual manner,” says Rhebergen. “The amount of water saved is displayed as the number of times that it would allow you to have a shower, while CO2 emissions avoided are shown as the number of kilometres driven by a car. This allows you to see in one glance what contribution you are making to making the world more sustainable through your pension assets.”
Fifty shades of green
Whether we are talking about pension assets or other forms of capital: the market for sustainable investments is growing rapidly on a worldwide basis. “That is good news of course, but there are big differences between investment funds that call themselves sustainable. If you compare the various funds, you see fifty shades of green. Many funds use exclusion criteria and, for instance, do not invest in the tobacco sector or in arms manufacturers", explains Minnaar. "Other impact funds use a so-called best-in-class approach. This implies that such a fund may, for instance, invest in the oil and gas industry, but only in companies with a relatively strong focus on sustainability."
Positive investment choices
The investment funds offered by Triodos Investment Management use a different approach, says Minnaar. “We make positive choices. This means that we invest only in sustainable frontrunners, that is, companies that bring a sustainable world a step closer.”
Minnaar: “We believe that best-in-class is not good enough. Because that can result in choosing ‘the least bad’ option. Our funds only focus on companies that are genuinely sustainable, such as Danish wind turbine manufacturer Vestas and musical instruments maker Yamaha from Japan. These are companies that help to create tomorrow’s sustainable world. So companies in which we invest pension assets and other capital with conviction.”
Text: Tobias Reijngoud