About this agreement
Pension funds invest in all sectors and in a large number of countries, including emerging markets. They invest in thousands of enterprises. Unfortunately, abuses regularly occur in the supply chains of these enterprises. With this agreement, the pension funds are joining forces with the other parties to exert influence worldwide and to prevent or tackle problems in the chains of these enterprises in the areas of human rights and the environment.
The Dutch pension funds are entering into cooperation with non-governmental organisations (NGOs), trade unions and the Dutch government. Together, they have signed the Dutch Pension Funds Agreement on Responsible Investment. Under this agreement, the parties aim to prevent or tackle negative consequences for society and the environment of investments by pension funds. The parties contribute their knowledge and expertise to this end. The agreement was arrived at with guidance from the Social and Economic Council of the Netherlands (SER).
Integrating international standards
With this agreement, the pension funds that are signatories have chosen an approach based on the OECD Guidelines for Multinational Enterprises and the UN Guiding Principles on Business and Human Rights (UNGPs) to identify, prioritise and address such ESG risks. In this agreement, ESG risks refer to risks for society and the environment.
Funds increase understanding of risks
By identifying risks relating to investments made by the pension funds, the funds gain a better understanding of where risks of, for example, human rights abuses or environmental damage occur. On this basis, they can exert their influence to solve problems and reduce risks, with the help of the knowledge and experience of the other parties to the agreement and their local partners. Pension funds are expected to make a sound assessment of risks and to adjust their policies and practices where necessary in the light of these risks. In addition, the pension funds that specifically sign up work together with the other stakeholders on cases in order to develop solutions to abuses that occur in the investment chain of pension funds.
Impact of the agreement
The Agreement has been structured in such a way that frontrunners can make further progress in the areas where they are currently at the limits of their capabilities by integrating the OECD guidelines and the UNGPs into their policy and practice, and by working together on cases. In addition, participating pension funds with more limited resources and possibilities will be able to take a significant step forward with the help of the cooperation enshrined in the agreement and, among other things, the instruments (a toolkit) that will be developed in year 1. This will allow them to reduce negative impacts in their investment portfolio and enhance positive impacts. The Parties are convinced that this approach will serve to achieve the objectives of the OECD Guidelines and UNGPs and that the agreement will allow them to guide the way in which pension funds implement the same.
