Europe’s biggest public sector pension fund has disclosed plans to invest €1 billion in biodiversity by 2030, while tightening the environmental investment criteria of its portfolio.
Dutch-based ABP, with assets totalling €502 bln as of January, targeted having at least €30 bln in “impact investments” informed by climate and biodiversity risk assessments, including €10 bln in climate solutions, by 2030.
One-third of the €30 bln will be allocated within the Netherlands, while “at least €1 bln” will go towards biodiversity, the fund said on Monday.
“ABP identifies climate and biodiversity as the key themes influencing societal and economic changes, presenting risks and opportunities in the investment portfolio.”
The pension fund will proceed with its plan to divest assets with significant climate and biodiversity impacts, it confirmed.
ABP investment head Dominique Dijkhuis said in 2022 the total number of companies in the fund’s portfolio could halve as a result of its stricter environmental requirements.
“Companies where climate or biodiversity damage is inherently linked to their business activities, with no realistic prospect of improvement, do not fit within ABP’s equity portfolio,” the fund said this week.
“ABP expects companies with a significant impact on climate to present concrete plans for reducing emissions in the coming years. For other themes, such as biodiversity, ABP believes companies should also make efforts to manage risks.”
The fund – which signed up to the Finance for Biodiversity Pledge last year, committing to map its biodiversity impact by 2025 – will start reviewing its portfolio in developed markets, worth €102 bln, before moving to other assets.
“ABP will continue to evaluate and adjust its sustainable and responsible investment policy to anticipate new insights, information, and changes influencing its investment portfolio.”
CLIMBING THE AGENDA
Since nature loss has moved up the ESG agenda, several asset managers have taken steps to curb their exposure to biodiversity risks, and incorporate natural capital into their investment decision-making.
In February, for example, French-headquartered AXA Investment Manager pledged to target companies failing to disclose their impacts on biodiversity, emphasising that nature-related reputational and business risks are poised to affect its portfolio.
Yet, measuring impacts on biodiversity remains a challenge, pension fund representatives claimed at last year’s World Pension Summit in The Hague, calling for more accurate performance metrics.
A study carried out in October by the Dutch Association of Investors for Sustainable Development (VBDO), which surveyed 43 pension funds and 17 insurers in the Netherlands, found that most boards failed to prioritise biodiversity.
In 2023, research by the advisory firm Pensions for Purpose showed that pension funds in the UK fell short in integrating nature into investment decisions, mainly due to the lack of specialist knowledge.
By Sergio Colombo – sergio@carbon-pulse.com
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