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Home Pension fund Investing for your pension Responsible investing SFDR: regels voor informatie over duurzaamheid

SFDR: rules for sustainability information

SFDR is new European legislation that requires financial organizations to disclose how they deal with sustainability. The abbreviation stands for Sustainable Finance Disclosure Regulation. SFDR must make transparent how sustainable the investments are. Then customers, such as pension funds, can more easily compare investment products and make more conscious choices. The IFF Pension Fund must share information about the sustainability of its investments, including through its website. The pension fund board supports the goal of increased sustainability.

Behaviors regarding sustainability risks

In recent years, the emphasis on producing sustainably, caring for the climate and treating people equally has become increasingly important (also known as Environment, Social and Governance (ESG)). The IFF Pension Fund believes that companies and asset managers that do not take this into account are at a longer-term existence risk. The objective of the pension fund's ESG policy is therefore to invest in sustainable companies wherever possible.

As part of this policy, investments are made in companies that also take this risk into account. These are expected to provide better returns (returns) in the long term.

IFF pension fund takes sustainability seriously and in doing so we look at two perspectives.

  • The first angle is the social side. Here we want our investments to take the principles from ESG into account as much as possible.
  • The second perspective is the financial side. This side looks at the positive impact of sustainability on the longer term risk/return characteristics of the pension assets.

The pension fund applies sustainability policy in its investment policy. In all major investment decisions, sustainability criteria are considered along with other criteria.

However, due to the size of the IFF Pension Fund and the choice of plan assets, it is not always cost-effective. 
This is explicitly considered in the selection process of our investment products.Against the standards and criteria of the IFF Pension Fund, asset managers are tested.

In addition to the general outsourcing criteria, the IFF Pension Fund includes the following criteria in the selection, monitoring and evaluation of asset managers:

  • The asset manager has signed the United Nations Principles for Responsible Investment (PRI).
  • The asset manager must comply with all relevant laws and regulations in its investment choices. The asset manager does not invest in companies involved in the production, storage or trading of cluster munitions and landmines. In addition, the pension fund does not want to invest in companies and/or individuals against whom international sanctions have been declared.
  • The investment manager must be able to provide insight according to relevant ESG laws and regulations.

For part of the invested assets (equities), the pension fund can indirectly take a more active position. This means that it expects the fund manager to actively use voting rights on ESG relevant topics at shareholders' meetings.

 

Adverse effects of investment decisions on sustainability factors not considered

Although the IFF Pension Fund deliberately includes sustainability criteria in its investment decisions, adverse effects of investment decisions on sustainability factors are not considered.Adverse sustainability factors refers to the risk that the value of an investment decreases due to an environmental, social or governance (good governance) event or circumstance, or ESG.
Under SFDR legislation, pension funds must classify the pension plan as either:

  • A product that has SRI as its objective (Article 9)
  • A product that promotes environmental or social characteristics (article 8)
  • Other

IFF chooses to provisionally classify the pension product as “other.” IFF includes sustainability as an additional criterion in its investment decision-making, but does not focus on a specific sustainability goal (Article 9 SFDR) nor does it promote ecological or social characteristics (Article 8 SFDR).

Therefore, the underlying investments of the pension scheme do not take into account the EU criteria for environmentally sustainable economic activities (Article 6 SFDR).

The IFF Pension Fund has outsourced its asset management and does take this into account when selecting, monitoring and evaluating its asset managers. We ask how they fulfill the requirements under the SFDR.
The IFF pension fund expects its asset managers to comply with these requirements and periodically monitors how they do so.
Remuneration policy related to sustainability risk taking. The remuneration of the directors/employees of the IFF Pension Fund does not depend on the extent to which the IFF Pension Fund includes sustainability risks in its investment policy.

Sustainability policy (SFDR II) classification IFF pension fund

The IFF Pension Fund takes both sustainability and sustainability risks seriously and has made policies on them.

It sees this as part of its responsibility as a pension fund. The Dutch regulator (AFM and-De Nederlandsche Bank) expects Dutch pension funds to comply with regulations on this subject. Under these regulations, the IFF pension fund further does not portray itself as a “green” product as described in Sustainable Finance Disclosure Regulation II (SFDRII). Freely translated: regulations for disclosure on sustainability in the financial sector. As a result, the IFF pension fund qualifies as an “other product.”