Pensioenfonds Detailhandel, Utrecht, the Netherlands, selected the FTSE Russell index as the benchmark for its €1.5 billion ($1.8 billion) emerging-markets passive equity allocation run by BlackRock, confirmed Henk Groot, the fund's head of investments.
The customized index helps to reduce exposure to carbon dioxide and oil producers by about 60% and tilts toward green investments. The index selection resulted from the €21 billion pension fund's commitment to four of the United Nations' sustainable development goals, including employment and economic growth, responsible consumption and production, climate action, as well as peace, justice and strong institutions.
"Pensioenfonds Detailhandel wants to minimize the risk of its investments and at the same time in a sustainable way achieve the highest possible return," Henk van der Kolk, chairman of the fund for workers employed in the retail industry, said in a news release.
The move follows a decision in March 2019 to select the FTSE Russell index as the benchmark for developed markets passive equity allocation, which is also run by BlackRock. The fund's developed market portfolio is €7.5 billion.
"This is the next important step to the make the entire portfolio more sustainable in a way that is in line with the ESG themes and SDGs that our participants consider important," Mr. Van der Kolk added.
The fund's total equity exposure is €9 billion. The equity portfolio is about 30% of all assets.