From fossil to green: how would you do that?
TNO Pension Fund will be distributing a member survey this summer to hear what members think of the ESG policy, otherwise known as the Environment, Social and Governance policy. In anticipation of this, two TNO trainees – Camilla van Wirdum and Eline Westbeek – discussed sustainable investing with Hans Groenewegen of TNO Pension Fund and Nancy Westerlaken of the pension fund Board during an online session on an afternoon in December. The ultimate question is, from fossil to green: how would you do that? Read here what’s most important to Camilla and Eline.
Plan for a complete phase out of the entire fossil fuel industry
A plan to completely phase out the fossil fuel industry in our investments is important to Camilla. Our current energy network’s dependency on the fossil fuel industry may decrease with sustainable investment. Camilla also explained that ABP, the biggest pension fund in the Netherlands, has decided to totally exclude the fossil fuel industry. They based this decision on research by a committee of scientists. While it’s true that TNO Pension Fund recently excluded coal producers, to what extent can TNO Pension Fund's next step also be the total exclusion of the fossil fuel industry? Eline also finds it interesting to look at additional opportunities to contribute to the shift from fossil to renewable energy sources.
‘But what if members indicate that they don’t want a phase-out plan’, Nancy wondered. Camilla agreed that her pension discussion on TNO discussion platform Yammer also received mixed reactions, including concerns that sustainability policies would be at the expense of returns. ‘On the other hand, in addition to the people who are voicing their opinions, we have future generations who do not yet have a voice,’ stated Camilla.
‘That the pension fund is no longer investing in coal is a great start, but I hope that the ambition extends to being totally future-proof and fossil-free.’
Camilla van Wirdum
Communicate clearly that returns on sustainable investments are better in the long term
‘One of TNO employees’ biggest concerns is that sustainable investment will mean lower returns’, explained Eline. Hans indicated that the costs of sustainable investment are not higher than for other investments. If you look at the returns, meta studies show that sustainable investments are not at the expense of returns and that the risk is possibly even lower. However, longer periods are needed to measure this. I expect that sustainable investment is more likely to lead to an increase than a decrease in returns. TNO Pension Fund is convinced that the fund’s sustainable investment will not be at the expense of pension accrual.’
Sustainable investment and pension security are therefore not a trade-off, concluded Eline. ‘It is important to communicate properly to members that ESG investments are likely to be more profitable in the long run,’ Eline added. ‘As you can’t look into the future, it’s important to separate your fears from what is actually happening. You need to look at the facts.’
Nancy added that this is also the reason why the TNO Pension Fund wants to use a survey to discover members’ perception of sustainable investment. ‘We want to know what is going on and what members find important, so we can focus on this in our policy and communications. That’s why I’m so delighted with this interview.’
‘I can buy vegan meatballs, but I also want my money to be invested sustainably.’
Use the TNO Energy Transition unit’s expertise
Lastly, Camilla and Eline were asked what they would like to say to Pension Fund TNO in terms of ESG policy. Camilla indicated that she is not an investment expert and trusts the Pension Fund’s expertise. ‘I want to keep our planet liveable and would like to ask a scientific committee what will happen if you introduce a phase-out plan. I would also like to examine what we should invest in. I find the concept of impact investments appealing. How much expertise is there in the TNO energy transition unit to help with this?’ ‘This expertise is certainly being used, although in a different way’, explained Nancy. ‘When TNO Pension Fund no longer wanted to invest in thermal coal, this was discussed with the energy transition unit management. Camilla then wanted to know whether this expertise is used when looking at what we can actually invest in. Can TNO Pension Fund, for instance, invest in TNO spin-offs? Nancy explained that this had been explored in the past, but is rather complex and you may only invest in your own organization to a limited extent. With respect to from fossil to green, Eline indicated that pensions are not just about money. ‘I read an interview with a pension fund board member who said: “I want to enjoy a good pension, but that also means there still needs to be an earth on which to enjoy it”. I find that inspiring. For me, returns also mean social returns.'
We also had a brief chat at the end of the interview. It was great to see how everyone is involved in this topic. The critical points were also certainly addressed. Just how sustainable is the TNO Pension Fund direction right now, and shouldn’t we do much more? Perhaps we should, but the Pension Fund has indicated that it can’t do everything at once. This interview does, however, give an impression of what Camilla and Eline find important in making the step from fossil to green, which makes it a good preparation for the survey that will be taking place this summer. We’d also like to hear your opinion and what you think is important. According to Nancy, opinions can be extremely divided. ‘One person thinks electric vehicles are the best thing, while others are critical because of the battery’s environmental impact. That’s why we’re inviting everyone to take part in the member survey on our EST policy later this year.’
Would you like to know more?
You can find all the information about the ESG plan under ‘Documents’ on our website. Or read more about the TNO pension fund’s sustainability policy and the fund’s ten investment convictions. We’ll keep you informed of developments such as the fund’s ESG ambitions for 2022 via the news on our website.