Dutch pension fund discontinues partnership with BlackRock and L&G amidst push for sustainability
The Dutch pension fund PFZW, the 11th largest in the world, has made a significant move towards becoming a more conscious investor. The fund has withdrawn €15bn from Legal & General, €14.5bn from BlackRock, and €4bn from AQR Capital Management, as it places a bigger emphasis on sustainability.
This decision comes as the US is becoming an outlier in its political resistance to climate change adaptation. Meanwhile, other institutional investors are increasingly recognizing the financial and economic impacts of climate change and other ecological changes. Zaneta Sedilekova, lawyer and director of sustainability consultancy Planet Law Lab, stated that institutional investors owe a fiduciary duty to the people whose assets they manage.
Fossil Free Netherlands, an activist group, is putting pressure on other Dutch pension funds to follow PFZW's lead in divesting due to climate risk concerns. The group wants to persuade pension funds like the largest, ABP, to end their investments in US asset managers like BlackRock. Fossil Free Netherlands has already claimed a victory with PFZW's move, and they are encouraging fund members to call on other pension funds to withdraw from US asset firms like BlackRock.
PFZW will now rely on a number of other asset managers to oversee an equity portfolio worth some €50bn. These include Robeco, Man Numeric, Acadian, Lazard, Schroders, M&G, UBS, and PGGM.
The withdrawal of funds has not been met with universal approval. AQR Capital Management did not respond to a request for comment regarding PFZW's withdrawal. BlackRock, however, expressed pride in consistently delivering on the investment objectives set out in their mandate, and noted PFZW's redemption in the first half of 2025.
The move by PFZW is part of a broader trend towards sustainable investing. The People's Pension, one of the UK's largest pension funds, pulled more than $25bn of investments from State Street over sustainability and ESG concerns in March. Pressure is mounting on pension funds to take more account of climate risks, with campaigners calling for sustainable investment decisions and tighter regulation to force transparency.
Cynthia Hanawalt, director of the financial regulation practice at the Sabin Center for Climate Change Law, stated that global asset managers are in a difficult position due to jurisdictional differences in climate risk management regulations. This complexity adds to the challenge of making sustainable investment decisions.
Sander van Stijn, head of mandate management for PFZW's service provider PGGM, stated that PFZW aims to build an investment portfolio that delivers market-level returns, operates within acceptable risk, and achieves a relatively high level of sustainability. PFZW's aim is to contribute to robust pensions while supporting major societal transitions, such as the energy transition, the food transition, and other large-scale transformations.
Legal & General, despite losing €15bn from PFZW, remains committed to responsible investment. They incorporate it into their investment decisions and stewardship activities, making them a global leader in this area. L&G is still working with clients like PGGM, and their relationship remains strong across asset classes, including in other sustainable investment strategies.
As the world grapples with the challenges of climate change, it is clear that institutional investors like PFZW have a crucial role to play in shaping a more sustainable future. The decisions they make about where to invest their clients' pension funds can have far-reaching consequences, and the trend towards sustainable investing shows no signs of slowing down.
