Active ownership

PGGM Investments actively uses its influence as a shareholder to achieve improvements in the ESG field, thereby contributing to the quality, sustainability and continuity of companies and markets.

We do this stemming from the belief that this ultimately contributes to a better financial and social return on investments for our clients. This is also called Stewardship and is an important part of the way in which we execute the Dutch Stewardship Code and the implementation of the European Shareholder Directive (SRD II). Please see our Active ownership implementation framework for more details.

Engagement

As an asset manager, PGGM Investments acts as a representative of its clients and calls companies and market parties to account for their policy and activities to make improvements in relation to ESG. Committed equity ownership requires perseverance and calls for the use of high-quality knowledge to be able to conduct fruitful dialogue with a company’s management and exert maximum influence. We have invested in that for years. As a result, we have now become a trusted conversation partner for many companies, also regarding strategic sustainability issues such as creating positive impact. Companies benefit from critical, active shareholders who encourage better management decisions regarding sustainability subjects. In this context, we also work to form engagement coalitions with other institutional investors. This increases our impact because our total share is greater.

Our engagement activities are focused on (i) People & Health and (ii) Climate which are tied to seven corresponding SDGs. Our Active Ownership activities are largely aimed at creating positive impact on these SDGs. Also we engage with companies when major issues occur. This reactive engagement has been expanded as a result of the new OECD-Screening which we have implemented as of this year. This screening is used to identify significant ESG risks within our portfolios and as a result part of the high-risk companies will be engaged with by us.

During 2021 we engaged with 154 companies. 15 results were achieved.

Examples of the engagement results achieved in 2021 are the inclusion of living wage as an indicator for a sugar certification scheme as well as the introduction of rigorous anti-money laundering procedures at a large Swedish financial institution.

The engagements that PGGM Investments conducted are tracked in a purpose-built database. In this database, we document our projects and discussions, we set our goals upfront, and we monitor our progress. If progress is too limited, PGGM Investments may decide to divest . We are prudent in this respect, however, because this means that we will reduce our influence on those companies.

A few examples of companies with which engagement was conducted or results were achieved in 2021 are shown below. For an overview of all our engagements please click here.

Voting

By voting at shareholder meetings, we exert our influence as shareholder on the companies in which we invest on behalf of our clients. Voting allows us to influence the direction the company takes on several fronts: strategic, financial and societal. For each company, we publish a voting record via this website. In cases that arise, PGGM Investments also addresses shareholder meetings (AGMs) to reinforce our vote and publicly engage in a debate with the companies in which we have invested. This is especially the case for Dutch companies. We also submit shareholder proposals ourselves or in cooperation with other investors when we want to spur a company to take action.

In 2021 we voted at 5,903 shareholder meetings of listed companies in which assets of our clients are invested. Based on our clients’ voting policy, votes were cast on over 60,900 proposals.

The COVID-19 pandemic once again had a great influence on the AGMs in 2021. Not only in the Netherlands adapted forms of the AGMs were necessary. Many AGMs were held virtually in 2021, due to the COVID-19 measures, permitted by an enacted temporary emergency law.

Say-on-Climate proposals have become increasingly popular in 2021, and are expected to be on the agenda of AGMs even more often in 2022. These proposals, that are put on the agenda by the company itself, set out the climate strategy of the company in question to ensure they are fit for the climate change challenges ahead. It allows for shareholders to determine whether the climate strategy of the company in question meets their expectations.

The figure below shows in what regions and on what topics we voted in 2021. 

Legal proceedings

PGGM Investments conducts legal proceedings on behalf of its clients when necessary; f.i. in a situation where this is required to recover investment losses and enforce good corporate conduct. We do this as a shareholder in listed companies, both in the Netherlands and abroad, where we make a distinction between ‘active’ and ‘passive' proceedings. 

Active
An active role in legal proceedings is sometimes opted for when a company has acted improperly and our funds and/or clients have suffered substantial financial losses as a result. In those cases, our aim is to recover as much as possible, limiting the entire loss as much as possible for our funds and/or clients. By actively conducting proceedings, we also send a signal to the market that the company’s behaviour is unacceptable. These active proceedings can last a long time and can be very costly. However, since our advisors provide support on a ‘no cure no pay’ basis, we face no risk of legal costs.

Passive
In some proceedings, we suffice with passively registering our claim. This is a primarily administrative process in which we can recover part of the damage suffered by our clients for minimum input and costs, yet mostly also with a much lower claim recovery rate. 

In 2021, PGGM Investments has been involved in 11 active legal proceedings on behalf of our clients. As an example , we have been participating in collective actions against Volkswagen (in Germany) and BHP Billiton (in Australia). In the Volkswagen-case we are part of a group of shareholders that seeks compensation for losses incurred as a result of the “Dieselgate scandal”, where the company has already been found guilty having purposefully misled regulators and other authorities in relation to emission levels. The case against BHP Billiton evolves around the collapse of a dam in Brazil, that is co-owned by BHP Billiton and that was (knowingly) maintained poorly– ultimately leading to its collapse. Apart from the ecological and human tragedy surrounding this collapse, BHP Billiton’s shareholders also suffered losses for which investors are seeking compensation. One of the actively litigated cases that led to a settlement in 2021 – and a payment to one of our funds - was against pharmaceutical company Valeant in Canada.
In 2021 we recovered over € 943,000 in class actions. 

Tax behaviour in the portfolio

Taxes play an important role in the finance of society's collective expenditure such as healthcare, education and infrastructure. In this regard taxpayers also have a responsibility, and therefore in its operations PGGM Investments wants to deal with taxes in a sustainable way. The tax environment has changed and will continue to change. In recent years, for example, several international initiatives, such as those by the OECD and the EU, have been undertaken that emphasize greater tax transparency and the prevention of aggressive tax planning. Moreover, tax planning keeps emerging in the social debate. PGGM Investments shall always be mindful of such developments when it invests on behalf of its clients.

Investment structures can be used to avoid (economic) double taxation for the pension fund clients and their beneficiaries. In doing so, PGGM Investments respects both the letter and spirit of the applicable (international) tax laws and regulations considering its tax principles and tax viewpoints that are published in a Sustainable Tax Position Paper. The Executive Board of PGGM is responsible for the design, operation and evaluation of this tax policy.

We see that the tax policy requirements can be met particularly in investment structures where PGGM Investments has decisive or substantial control. However, this is much more difficult for investments in externally managed funds, because our clients or funds are often one of the many investors with small interests. For example, the use of tax haven jurisdictions still occurs for these funds or their underlying structures. Traditionally, external managers often chose such jurisdictions, because these have built up an entire infrastructure around the fund practice and offer a great deal of flexibility legally and supervisory, including "tax neutrality". Principal Tax Counsel Niels Krook notes that we are trying to move away from the use of tax havens. He explains: ‘Because we do not have a casting vote in many external funds, it is difficult for us to enforce that an external fund manager does not use entities in tax havens or certain aggressive structures. The market tends to be opportunistic on this issue. Many institutional investors still seem reluctant to adapt. Without binding legislation this is unlikely to change.’ However, there are bright spots, Krook notes. ‘Sometimes PGGM Investments can achieve a positive result in this area on the basis of its relationship or persuasiveness.’