PDN's Sustainability Policy

In the 2022 Sustainability Report, PDN explained its sustainability policy and accounts for the most significant results over the reporting year 2022. The complete sustainability report (PDF) can be found on the PDN website under downloads and is included in the 2022 annual report.


We continued implementing the tightened sustainability policy in 2022. It is essential that this tightened policy is implemented so that we can offer our members a good pension now and in the future. A pension that enables them to enjoy their retirement in a livable world. For that reason, every time we make an investment decision, we consider the return, the risk, the costs, and the performance in terms of sustainability as well as continuously reviewing our policy.

In view of the specific war situation in Russia, PDN decided to reduce its existing investments in Russian companies and to make no new investments in Russian companies. PDN was already not investing in Russian government bonds due to EU sanctions legislation. However, the situation is creating a global negative impact, as well as impact close to home. Energy prices increased considerably and the cost of living has become more expensive for everyone. It is vital that we handle raw materials and resources responsibly. As a pension fund, we also take our social responsibility seriously.

To increase our positive influence as a fund, we have been focusing on three specific sustainability themes since 2021:

  1. Health and Well-being
  2. Climate and Energy
  3. Raw Materials and Circularity.

These themes are linked to the United Nation’s four sustainable development objectives: the Sustainable Development Goals (SDGs). We are focusing more specifically on:

  • SDG 3: Good health and well-being
  • SDG 7: Affordable and clean energy
  • SDG 12: Responsible consumption and production
  • SDG 13: Climate action
Six policy instruments defined in the sustainability policy are used to contribute to our objectives.

1. ESG-integration

ESG stands for Environment, Social, and Governance. PDN firmly believes that taking ESG criteria into account when making investment decisions leads to better results and/or better management of risks in the long term.

We also include our CO2 policy in the Environment factor. In addition to having a good understanding of the portfolio’s carbon emissions by measuring them, we also want to achieve a reduction in our investment portfolio’s carbon emissions by means of a carbon reduction target (in terms of carbon intensity). This means we are not only committed to helping combat global warming, but are also making the investment portfolio more resilient to certain risks, such as climate-related risks.

PDN actually aims to reduce carbon emissions in its investment portfolio and uses specific targets to do so. Two new reduction targets were determined in 2021. To align with the goals of the Paris Climate Agreement, we first set a long-term target:


‘PDN aims for a net zero (100% reduction) in carbon emissions by 2050 based on WACI scope 1 and scope 2 emission figures for the investment categories, investment grade credits, and high yield US.’


Setting ourselves a target also in the near future, enables us to take concrete steps towards the ultimate goal: net zero carbon emissions from our investment portfolio. This target, formulated below, was issued specifically on the investment categories for which good quality data are available. If this improves in the future for other investment categories, a target may also be set for these.


‘PDN aims for a reduction in carbon emissions of 55% by 2030 compared with the 2016 benchmark for the investment categories, investment grade credits, and high yield US.’


Whether this target is achieved can only be determined after 2030. We can, however, monitor our carbon reduction progress in the meantime.


Outcome of the objectives for CO2 Reduction

2. Impact Investing

Through our impact investments, in addition to achieving financial returns, we also want to contribute to solving various social and sustainability challenges. In doing so, we are in line with the vision of the United Nations, which states that, in order to achieve a livable, sustainable world by 2030, all 17 SDGs must be achieved. Therefore, we define an investment as an impact investment if it makes a positive contribution to at least one of the 17 SDGs.

Examples of impact Investments and sustainable investments in the portfolio

Since 2019, PDN has participated in Dutch green state bonds. In 2019, the Dutch state was the first debtor with AAA status to issue green bonds. With these bonds, the proceeds are allocated to climate-related expenditure and investment by the Dutch government. This initiative was also later rolled out by other European governments. PDN provided financing for these initiatives by purchasing various bonds in different countries.

PDN also provides loans to housing associations in the Netherlands to support such things as improving the sustainability of social rental homes. It does this indirectly via loans to Bank Nederlandse Gemeenten (BNG) and Nederlandse Waterschapsbank (NWB).

An example of a sustainable investment in the European share portfolio is the investment in Siemens Energy AG. This company offers energy-based products and solutions and, with Siemens Gamesa, is active globally in the sustainable wind industry.

Outcome of the objectives for Impact Investments

3. Engagement

We want our investments to have as much positive impact as possible and preferably as little negative impact on the world as possible. We believe that influencing companies to change their behavior through engagement combined with voting is the most effective way to achieve this. We have outsourced engagement to a company that specializes in this, Columbia Threadneedle Investments. Columbia Threadneedle Investments acts as an engagement party on behalf of a number of institutional investors. By working together, we increase our impact.

Engagement Process

An engagement process comprises four phases. It starts with determining a company specific objective. CTI then contacts the company concerned to raise the determined issues. CTI then monitors the extent to which the company commits to addressing the issue up to the point that the issues are resolved and the objectives are achieved. Unfortunately, the latter is not always the end of an engagement process. Sometimes companies do not ‘engage’ during these phases, resulting in the engagement process being aborted.

We expanded our engagement policy in 2021 to ensure a more precise focus on the companies that have a bearing on own focus themes. In doing so, we set ourselves a target for 2022 that a minimum of 25% of the total number of engagements prioritize focus SDGs 3, 7, 12, and 13.

In our opinion, engagement is less effective without clear targets and consequences. Engagement processes can take a long time. This isn’t a problem as long as sufficient progress is being made. But if that is not the case and companies do not listen to our call for change, there must be consequences. For this reason, we included in our engagement policy that companies will be excluded if the engagement process that targets our focus themes shows no progress for three years and there are no special circumstances that justify continuing investing in the company.

Climate Action 100+

PDN, through Columbia Threadneedle Investments (CTI), is a member of Climate Action 100+, along with other financial institutions. Climate Action 100+ is an initiative set up by a group of investors to ensure that the world’s largest emitters of greenhouse gases are taking the necessary action to address climate change. More than 700 investors worldwide, responsible for more than $65 trillion in assets under management, engage with companies in improving climate change policies, reducing emissions, and improving climate-related reporting. Climate Action 100+ also made considerable progress in 2022 with the companies with which it is in dialogue.


Responsible Production
CTI is also in dialogue with companies on behalf of PDN with respect to our focus theme ‘Raw materials and circularity’. An example of this is Mettler-Toledo, a multi-national manufacturer of scales and analytic instruments. It is the largest supplier of scales for use in laboratory, industrial, and food retailing.

CTI discussed strategies for responsible purchasing with this company. The company has various processes and methods to check suppliers and improve their performance, but when purchasing from China there is possibly more space for the company to reduce plastic in packaging materials. In 2022, Mettler-Toledo formulated new targets for sustainable packaging materials, including >80% from recycled or certified sustainable sources, and >95% easily recyclable or compostable by 2025.


Coal Phase-out
German company RWE is active in the generation, transmission, and distribution of electricity and gas. The company is one of the last European utilities that still has interests in coal mines and plants. RWE was affected by Russia’s invasion of Ukraine and the impact of this on energy and gas prices in the EU, which in turn impacted the carbon reduction strategy. The German government contracted RWE to reopen 1.3 GW in closed coal plants until March 2024.

CTI discussed the consequences of the European energy situation on net zero and on the biodiversity and climate risk approach several times with RWE in 2022. Expectations with respect to the phasing out of coal were shared. RWE’s plans to convert several plants to biomass were also discussed. Concerns were expressed particularly about the purchase of biomass from Eastern European countries that have poor forest management. RWE assured us that the short-term investment targets for sustainable energy will increase.


The air you breathe, the water you drink, and the food you eat all depend on biodiversity. The current biodiversity losses therefore form an existential threat to the ecosystems on which our economic and social well-being are based. This is why CTI started an engagement project on this topic two years ago, partly on behalf of PDN. This project has now resulted in dialogue with twenty-one companies in the transport, finance, non-sustainable consumer products, and raw material extraction sectors to stop activities that are harmful to global biodiversity.

Outcome of the objectives for Engagement

4. Voting Policy

In addition to engagement, PDN sees voting as the most effective way to influence companies to change their behavior and thereby contribute to curbing negative impacts, and increasing positive impacts. We therefore believe that exercising our right to vote is particularly important.

From 2022, voting will no longer be restricted to Dutch, but applicable to all global listed investments. This expansion resulted in more than 13,000 proposals being voted on in 1,095 shareholder meetings last year. CTI voted against or abstained on behalf of PDN on more than 20% of the proposals. This was not possible for seven meetings due to applicable liquidity constraints. This means that the KPI was not strictly achieved; however, PDN is satisfied with the result that votes were cast at every shareholder meeting where possible.

When voting, long-term value creation and the pension fund’s focus SDGs come first. This means that the pension fund places additional emphasis on the topics associated with the focus SDGs. For example, for companies in high-risk sectors (utilities, materials, energy, transport), CTI votes on behalf of PDN against the appointment of Board members who do not provide information about their own carbon emissions and carbon reduction targets, and do not provide information about risk management. CTI also votes on behalf of PDN against companies that score poorly on the rankings of companies with the largest impact on deforestation.

Every quarter, we publish on our website the votes made on behalf of PDN in general meetings of the companies in which we invest. These are published per individual company and per voting point.

Outcome of the objectives for the Voting Policy

5. Exclusion

Unfortunately, it is not always possible to use engagement and voting to dramatically reduce our negative impact. Therefore, we exclude some companies and countries from our investments. This enables us to secure a clear bottom line in terms of sustainability, based on our standards and values. A minimum sustainability standard.

This minimum sustainability standard is shaped based on two characteristics: product and behavior. Product groups that we exclude include controversial weapons, cluster munitions, and tobacco. We exclude companies or countries based on their behavior with respect to the UN Global Compact’s Ten Principles and the UN Security Council, Dutch, or European international sanctions lists. Countries and companies are added to our exclusion list if there are serious and structural violations.

At the end of 2022, PDN’s list of exclusions comprised a total of 168 companies and fourteen countries in the investment universe. This represents 37 companies and one country more compared with the end of 2021.

Some examples of countries and companies excluded in 2022:

  • Afghanistan. After the withdrawal of American troops from Kabul in late 2021, the Taliban quickly returned to power;
  • British American Tobacco;
  • Gazprom. Russia’s biggest company and the largest natural gas company in the world, which is largely owned by the Russian state;
  • Teva. Teva Pharmaceutical Industries and its subsidiaries face allegations of anti-competitive practices, including price-fixing for generic drugs in the U.S., and were involved in cases of corruption in several countries.

Outcome of the objectives for Exclusion

6. Transparancy

We believe it is important that we are transparent about the actions we have taken and the achievements we have had in the field of sustainability. To this end, we publish a Sustainability Report every year. In this report, we indicate how we handled sustainability in that year and which results were achieved with respect to sustainability. In the interests of transparency, on our website we also publish an annual overview of our total investment portfolio, to provide the vote summary report of shareholders’ meetings, and report on the progress we have made through engagement. We also ensure that we comply with transparency requirements laid down in regulations and guidelines, such as the IMVB Covenant, the EU Sustainability Finance Disclosure Regulation (SFDR), and the Principles of Responsible Investment (PRI). The PDN Magazine and the PDN website also regularly feature items on PDN’s sustainability policy.

Outcome of the objectives for Transparency
In the area of transparency, we have formulated a number of KPIs with accompanying targets. These indicators relate to the publication of the Sustainability Report and the sustainability policy on PDN’s website, participation in the VBDO Benchmark on Responsible Investment and, lastly, the publication – by March 31 of the following year – of a list of holdings within the listed share portfolio, credit portfolio, and nominal state portfolio in which PDN has invested as of the end of the year. In 2021, PDN met all the transparency KPIs.


Implementation of Sustainability Legislation
and Covenants in 2022

Mandatory legislation and regulations with respect to sustainability have increased in recent years as a consequence of the European Action Plan ‘Financing Sustainable Growth’. The purpose of this Action Plan is to encourage the financial sector to contribute to the Paris Climate Agreement objectives.

IMVB Covenant

On December 20, 2018, we and 69 other pension funds signed the International Socially Responsible Investing (IMVB) Covenant. This Covenant is based on the OECD Guidelines and the UN Guiding Principles on Business and Human Rights (UNGPs). The OECD Guidelines clarify what can be expected of companies in terms of corporate social responsibility when doing business internationally. They contain standards on how to deal with issues such as supply chain responsibility, human rights, child labor, the environment, and corruption. From 2022 onwards, we will screen that part of the portfolio where this is possible based on the OECD Guidelines and the UNGPs and we will discuss this with the managers.

EU Sustainability Finance Disclosure Regulation (SFDR legislation)

In the context of the SFDR legislation, PDN has chosen an ‘article 8 classification’. This means that PDN implements sustainability characteristics within its investment portfolio and also reports on them transparently. PDN will further investigate in 2023 whether employing a minimum percentage of sustainable investments with respect to the SFDR legislation is desirable and implementable (also see the Taxonomy section below).


Through the Taxonomy Regulation, the European Union has established criteria for determining whether each economic activity is carried out in a sustainable way. Those are economic activities that contribute to an ecological goal and which do not cause significant damage to other ecological goals. A total of six different ecological objectives have been defined, only two of which have so far been written into law. In the years ahead, the criteria for the remaining four objectives will be determined. PDN believes it is important to also invest in economic activities that contribute to these ecological objectives. In the fourth quarter of each year, PDN will review the data of companies in the portfolio and assess the target percentage of Taxonomy-classified investments that PDN can set for the following year.


Looking ahead to 2023

We further developed and implemented our ambition and sustainability policy in 2022. In 2023, we will continue to move forward and, when new sustainability decisions are made, we will assess whether and how we can further tighten our ambition. In doing so, we will remain very conscious of our role in society, but also of our important objective of providing a good pension for our members. Looking ahead, here are a few examples of actions we have already identified for ourselves for 2023 in the area of sustainability.


  • Investigate the expansion of the exclusion policy based on a tightened country policy.
  • Evaluate the policy relating to impact investments and where necessary introduce refinements.
  • Investigate how climate risks can be integrated in the investment process.
  • Provide clarity on the positive and negative impact of the share and corporate bond portfolios in relation to the focus SDGs (3, 7, 12, and 13).
  • Evaluate whether targets for the percentage of impact bonds in the portfolio need to be increased.
  • Evaluate the engagement and voting policy and refine this, where necessary.
  • Continue to implement the requirements of the IMVB Covenant and the EU’s Taxonomy Regulation and Sustainable Finance Disclosure Regulation.
  • Commit to increasing support for sustainable and responsible investment among members by reporting more on our activities and results in the area of sustainability.