Dutch fiduciary manager PGGM has standardized a way to measure — and, therefore, manage — the social added value for targeted environmental, social and governance investments, according to Marcel Jeucken, managing director of responsible investments.
While there have been efforts to account for the ESG impact in portfolio investments before, the systems differ vastly in the factors being measured and the level of transparency. In collaboration with Erasmus University, Rotterdam, Netherlands, PGGM is attempting to consistently “measure the societal impact, and not just the financial impact” of investment decisions using a methodology “specifically tailored to pension funds and asset managers,” said Mr. Jeucken, who is based in Zeist, Netherlands. PGGM manages about e120 billion ($160 billion) in assets for six pension funds, including the e116.2 billion Pensioenfonds Zorg en Welzijn, Zeist.
The methodology, which was detailed in the fund manager's annual responsible investment report in April, weighs eight different ESG factors: employment, local development, capacity building, empowerment, health and safety, material use, ecosystems, and waste and emissions.
“We see this as a first step in a long journey to do something that wasn't available in the industry before,” Mr. Jeucken said.