ABP defends responsible investment decisions following report

Dutch pension fund, ABP, has defended its responsible investment decisions following a report that concluded it had missed out on 'billions of dollars' in returns by not selling its fossil fuel investments and investing in renewable energy sooner.

The report, drawn up on behalf of Fossielvrij, said that if ABP had divested from fossil fuels in 2016 and put the money into green investments, the invested capital would have been worth USD 25bn more.

However, ABP described the report as “short-sighted”, noting that the fund assesses companies in which it invests on four criteria (return, risk, costs and sustainability), rather than just yield and sustainability, as the researchers seemed to argue.

Furthermore, ABP stated that it “does not have a crystal ball” and, in order to manage risks, it spreads its investments across sectors.

The fund also pointed to the study looking at the composition of the investment portfolio of 2020, rather than 2016, which meant that only the successful ‘green’ companies were included.

“For example, if a company went bankrupt between 2016 and 2020, that share is no longer in the portfolio,” ABP stated. 

“This leads to an overestimation of the return that ABP could have made on green investments, because only the 'survivors' were still in the portfolio in 2020.”

ABP added that it was “questionable” as to whether the fund could have invested in renewable energy on such a large scale in 2016, as renewable energy firms were smaller and returns less favourable, which presented investment risks.

“There is as yet insufficient scientific evidence that selling fossil investments brings the energy transition closer,” ABP continued. 

“If we sell our fossil investments, we send out a one-off signal, but then we lose our influence. Scale is also important for the success of the energy transition: the transition must be shaped by the emergence of new sustainable companies and by the transformation of the existing 'grey' companies. 

“We encourage oil and gas companies to do so and are making progress in doing so.

“ABP wants the world economy to switch to a low-carbon energy supply, as agreed in Paris and in the Dutch Climate Agreement. We are committed to this, both by using our influence with the companies in which we invest and by making investment choices that are in line with the goal of a climate-neutral world by 2050.”

    Share Story:

Recent Stories


Podcast: The benefits of private equity in pension fund portfolios
The outbreak of the Covid-19 pandemic, in which stock markets have seen increased volatility, combined with global low interest rates has led to alternative asset classes rising in popularity. Private equity is one of the top runners in this category, and for good reason.

In this podcast, Munich Private Equity Partners Managing Director, Christopher Bär, chats to European Pensions Editor, Natalie Tuck, about the benefits private equity investments can bring to pension fund portfolios and the best approach to take.

Podcast - The power of three: Using Common Contractual Funds to improve tax outcomes for investors
Large asset owners are still investing in equities in a way where they are taxed on their income. The implication is that they get a poorer return. They need to, and can, improve this, but how?

In this podcast, AMX Head of Client and Manager Development, Aaron Overy, and AMX Product Tax Specialist, Kevin Duggan, discuss with European Pensions Editor, Natalie Tuck, about three options to help ensure good withholding tax outcomes for institutional investors.
Mitigating risk
BNP Paribas Asset Management’s head of pension solutions, Julien Halfon, discusses equity hedging with Laura Blows

Europe’s pensions challenges
Francesca Fabrizi meets Matti Leppälä, Secretary General and CEO of PensionsEurope, to discuss the key aims and objectives of the association today.