THE HAGUE, The Netherlands - Dutch pension funds are setting up an organization to protect their interests as shareholders.
The new institute, which is expected to be operating by early 1998, will conduct research on shareholder issues and will represent members at shareholder meetings.
In a recent television program, Kees van Rees, managing director of Shell Pensioenfonds Beheer B.V., Rijswijk, and chairman of the association for Dutch company funds - Stichting van Ondernemingspensioenfondsen, The Hague, - said the new body would challenge public companies, mostly on their earnings performance.
Officials at the 260 billion guilder ($125 billion) Stichting Pensioenfonds ABP, Heerlen, want to take a broader tack.
In addition to pushing for greater shareholder value, they want to examine social aspects of how companies do business, including reviewing labor and environment policies.
ABP officials have drawn up corporate governance guidelines, which now are pending before their board.
"We see environmental issues as part of the total sustainability of a company," explained Jelle Mensonides, director of equities for ABP.
If a company is slapped with a fine for violating environmental laws, it's at the cost of profits, he explained. The supervisory board must be aware of the company's environmental practices.
Similarly, board members should be aware of the "social dimension" of corporate policies, including how they affect labor relations, he said.
Fund officials' focus remains on corporate viability, not social policy, he said. "We are not interested in labor negotiations," he said."
Return to shareholders remains "the most important target."
ABP officials started looking at corporate governance issues at Dutch companies last year, and are charting their course slowly. ABP officials are discussing with Dutch and overseas counterparts what actions they could take with errant companies, but the first move would be to discuss concerns with corporate boards.
"As a long-term investor, we invest in companies we trust," Mr. Mensonides said.
He recognizes that making disputes public if companies are recalcitrant is "a means to realize the goal," but ABP officials have not addressed that issue yet.
Implementation of the policy, he hopes, will take place this year or next year.
A spokesman for the employers association Vereninging van Nederlandse Ondernemingen-Nederlandse Christelijke Werkgeversverbond, The Hague, criticized ABP's initiative.
"Pension funds are executive bodies which should be concerned with investment and (should) not draw up standards themselves," he said, suggesting ABP officials should leave the task to others.
But Dutch trade union officials lauded the initiative. In a recent paper, officials of the Federatie Nederlandse Vakvereniging, the Dutch federation of trade unions, said pension funds should focus more on social policy and pay adequate attention to environmental conditions and long-term economic developments.