Pensioenfonds Hoogovens, the pension fund for Tata Steel workers in the Netherlands, recently announced that it aims to achieve “real world change” by focusing on reducing CO2 emissions through improvements in production processes and policies of the companies it invests in. In addition, it also follows an exclusion policy, which excludes some oil and coal producers, although not coking coal producers.
The engagement approach demonstrates a commitment to stewardship and driving change, rather than simply excluding stocks altogether. However, achieving such targets will require significant efforts from the companies in its portfolio, as well as from the plan and its intermediary, Columbia Threadneedle. While the fund plans to engage intensively with these companies, there may be concerns about the feasibility and effectiveness of this approach.
In combining both an engagement strategy and exclusion strategy, the fund is utilising a tailored approach. It will be interesting to see how the fund intends to implement it and monitor the impact of the combined approaches across the various return, risk, impact and cost dimensions. And to see whether there are tangible benefits of this tailored approach over potentially easier to implement exclusion strategies.
We’re keen to hear your thoughts. How can asset owners have the most impact? Exclusion strategies? Engagement strategies? An integrated ESG factor approach? Impact investing? Policy advocacy? Or do different organizations have different roles to play and is there no one size fits all?