Responsible investing

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Responsible investing

Sustainable and socially responsible investing is of great importance to APG and the pension funds we work for. But why exactly? And what is that all about, socially responsible investing? What do we invest in? And what do we not invest in? What are the objectives that we and our pension funds have in mind? Read all about that - and more - here.

Sustainability, Long-term investment
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166 Publications

Will the concentration of power in large investors come at the expense of sustainability?

Published on: 30 June 2022

Current issues in the field of economics, (responsible) investing, pension and income: every week an expert from APG gives a clear answer to the question of the week. This time: Head of Responsible Investment Capital Markets & RI Communications Anna Pot on whether the increasing weight that asset managers are carrying comes at the expense of sustainability.

"The shareholder landscape is changing, slowly but revolutionary," wrote de Volkskrant columnist Peter de Waard a month ago. "At every step, shares end up in the hands of a smaller group of investors who are further away from the companies in which they put their money." In the past, shares were mainly owned by wealthy families, who voted annually at the shareholders' meeting, writes De Waard. From the 1970s onwards, a new type of major shareholder emerged, such as banks, insurers and later also pension funds. These major shareholders now partly outsource their investments to large asset managers such as BlackRock, State Street and Vanguard. And these mainly do index investing, he says. They therefore do not select shares themselves but instead follow a stock market index, and are therefore less involved as a shareholder. Doesn't this form of passive investing come at the expense of sustainability?


Responsible investing
According to Pot, that doesn't necessarily have to be the case. "These large parties are increasingly starting to invest sustainably. They are also investing more and more in their own teams that focus specifically on the responsible investing criteria of their investments. When making investments for their clients, such as pension funds, they increasingly do take sustainability considerations into account. It is a positive trend that these large asset managers are contributing to the sustainable investment of ever-increasing assets worldwide."


APG recently launched the index product iSTOXX APG World Responsible Investment Index, which is managed by BlackRock. “This index product is not actively managed in terms of return and risk, which keeps costs low. However, it does actively steer on sustainability by adding different filters, depending on the client's wishes. These filters can be the exclusion of certain products, investing only in ESG leaders, reducing the carbon footprint, and including Sustainable Development Investments. The market should therefore not classify this type of investment as a traditional index product. It is a whole new category in and of itself. You could call them 'responsible index products'."

We must remain vigilant that index investing does not become a weak deduction from sustainable investing

According to Pot, the fact that sustainability is also increasing in importance at the largest asset managers has several causes. "First of all, the customer asks for it. More and more institutional investors such as pension funds want to invest sustainably. And there is also more demand for sustainable investment products among the younger generation of private investors. Second, there is the role of legislation. In Europe, for example, the Sustainable Finance Disclosure Regulation has been introduced, which obliges large investors to report on the extent to which they invest sustainably. Third, the market has developed, offering more opportunities for sustainable investing. For example, more and more data are available about companies’ ESG performance. This makes it easier for the large asset managers to make the step towards sustainable investment."

What Pot does see as a worrying development is that index investing involves no or at least less dialogue with the companies in which investments are made. “And that is what is needed. If you, as an asset manager, want to contribute to the transition to more sustainability, you do so not only by buying shares but also by investing in dialogue, in order to encourage companies to take a more sustainable course.”

The fact that financial power might be concentrated in the largest asset managers does not have to be at the expense of sustainability, Pot concludes. "It is a positive trend that there is an increase in sustainable investments. And the fact that the index investors offer that cheaply through index investing helps with that. But we must remain vigilant that index investing does not become a weak deduction from sustainable investing. In our opinion, active shareholdership means that you delve into the sustainability performance of companies, enter into a dialogue where necessary and vote at shareholder meetings in an informed way. The active dialogue we have with companies to work together on a more sustainable course is and remains necessary. In order for this dialogue to continue, we need to remain critical of companies’ sustainability performance. In addition, it is important that we promote our approach to active long-term corporate engagement to other institutional investors. In this way, we can ensure together that sustainability remains high on the agenda."

Volgende publicatie:
Stop greenwashing and stop using that expression

Stop greenwashing and stop using that expression

Published on: 23 June 2022

My son is graduating in Madrid next month and is busy reading for the final exams. No distractions for him, as the Spanish capital hit 40 degrees this week and people simply must stay indoors. The temperature across Europe was 15 degrees higher than it should be last weekend, emphasizing what we have in front of us. To slow global warming, we need to act, and this is not a matter of regulation vs. the industry. We need to act as one to hand over the planet to coming generations to ensure they can build a prosperous future.

In an article last week, it was argued that the ESG-framework has fallen prey to greenwashing asset managers. Questions posed about the relevance of ESG (Environmental, Social & Governance) are outright unacceptable. If market participants are caught mis-selling, they need to change. Regardless if the reason is unrealistic promises about returns or false ESG ambitions. If you think back it is not the first time regulators are looking into how new regulation is being applied. And often they start at the top of the industry in each country to make a point. It was like this when the industry introduced active share as an indicator of active asset management more than 10 years ago and it will happen again this decade. Trust me. But folding ESG now is not an option, just because it gets difficult. Even though the framework might not be perfect, it's a one in a lifetime opportunity to make our industry truly relevant going forward. 

The issue here at stake is accountability and we need to be as transparent about ESG ambitions as possible. At APG, our responsibility toward the ultimate pensioners is a good pension (read good returns) yet also on a planet to spend it (read ESG in a broad sense). We consequently deliberately invest under a multi-objective -without pre-set order - of return, sustainability, cost and risk. Article 8 of the Sustainable Finance Disclosure Regulation (SFDR) fits this quadrant of objectives, as the dynamics between our objectives are interdependent and of different importance - case by case, investment by investment. Within this approach we often identify companies that with engagement are expected to execute meaningful change or impact to make the planet better for people and everyone else - hence why biodiversity is increasingly on the agenda as an important part of sustainability.

Where companies might feel tempted to falsely brag about ESG investing it should surely be exposed and corrected. It is however also a fact that the regulation is new and parts of the more detailed instructions on how to report is late and pending. Regulators should acknowledge this fact and work together with the industry to bring us all forward and allow some slippage or at least benefit of the doubt. The core issue with this kind of regulation is that it might actually not lead to a better world. At APG we have, together with other investors, created a system under which investors can translate Sustainable Development Goals (SDG) to actual investments (SDI). We believe the system is solid, transparent, and making it possible to report consistently, set targets and compare. But will it make the world a better place? Probably and we surely hope so. But can we guarantee it? Absolutely not. If you think back to the example of active management, it is again surprisingly similar. No active asset manager can guarantee outperformance. Likewise, no ESG manager can promise that the world will be better, greener, more equal, or less warm. But we are surely all working towards that as a strong ambition.

For long term investors we need to find meaningful ways to measure and demonstrate ESG success

The conviction that we as investors have a broader responsibility is a mission that we all need to share. In the same way we (mostly) share humanitarian ethics. I get sad when leading investors like Warren Buffet reject the industry responsibility and want to hide behind "clear regulation". It will never be clear. Just like investment returns differs depending on what you compare them to. Old school investors and most current adults have benefitted enormously from "free" nature in terms of access to natural resources and free carbon emissions. Most of our wealth is built on this fact. Asset managers need to come to terms with this uncomfortable reality and address it by transforming themselves into responsible investors. We can do that by making sure we understand and act on sustainability and governance issues. Active management doesn’t have to contradict ESG management. On the contrary, it is a robust part of being long term investors and being able to make informed investment decisions. Thinking carefully about it, all investors should do the same. For that reason it is paramount that the regulators facilitate the transition by clamping down on mis-selling. This is not a change. They have always done so.

For long term investors we need to find meaningful ways to measure and demonstrate ESG success. Those ways all come with important caveats and we need to be humble towards the fact that achieving KPIs is not equal to real impact. Carbon emission is an obvious KPI, yet the calculations are still inaccurate, and we need to be careful not to over engineer target setting on dubious data. Also, tackling climate change requires more than only reducing carbon emissions in our investee companies. This is a different kind of potential mis-selling but far more tragic as we - in a wish to serve the public request for clarity - might end up missing the better transition investments that are so evident in our shared mission to save the planet. It will require strong leadership from the industry to steer through the energy transition and at the same time serve all stakeholders and doing it while securing good pensions for the old age to everybody. This comes with a big responsibility that APG, on behalf and together with its pension fund clients, as leading long term responsible investor is willing to take.

Peter Branner is Chief Investment Officer at APG.

Volgende publicatie:
The Student Hotel secures additional APG investment to accelerate international expansion

The Student Hotel secures additional APG investment to accelerate international expansion

Published on: 21 June 2022

The Student Hotel (TSH), APG, Aermont Capital, Charlie MacGregor and GIC have reached an agreement as part of which GIC and APG will acquire a substantial stake in TSH and commit to invest to fuel further expansion for the hybrid hospitality leader, subject to customary regulatory approvals. The transaction values The Student Hotel, including assets currently under development, at €2.1 billion.

The deal sees APG and founder Charlie MacGregor increase their current stake in TSH. APG first invested in TSH in 2015. MacGregor and Aermont Capital entered into business in 2014 after MacGregor opened the first The Student Hotel in 2012. GIC now joins as a new investor.

TSH’s distinctive hybrid hospitality model, combining student accommodation, hotel rooms, co-working and meeting spaces, bars and restaurants, has proven highly successful. During the pandemic the hybrid model proved resilient as TSH was able to substantially increase room allocation towards students when leisure and corporate travel dramatically reduced, thereby achieving strong occupancy rates and remaining cash-positive. With the hotel and travel market rebounding strongly, TSH is set to benefit from a strong summer while its student bookings for the 22/23 academic year already stand at record levels.

With APG and GIC’s commitments, TSH is able to accelerate its growth strategy to expand into key European cities and grow its presence to 50 hotels from 25 hotels under ownership today, of which 15 are currently operational and 3 are opening in 2022, in Madrid, Barcelona and Toulouse.

TSH is well-positioned towards Millennial and Gen-Z audiences, with its focus on community building through its well-designed, mixed-use facilities and blended spaces, offering co-working and meeting spaces that also attract local start-ups, corporates and neighbourhood communities. The connection with the local communities is especially important as TSH collaborates with local municipalities to revitalise these areas by improving the quality of hospitality services so as to attract talent to cities.

To better address guest needs and increase flexibility across its offering, TSH is investing in technology to implement the first space/time booking platform across its hotels, meaning that guests will be able to book any space in TSH buildings for a defined period of time – from meeting rooms and co-working desks to gym and pool access and ping pong tables.

Charlie Macgregor, Founder & CEO of The Student Hotel, said: “We are very excited to welcome GIC on board, and together with APG, we look forward to bringing The Student Hotel experience to more cities across Europe. We have bold plans and the additional committed capital will allow us to be even more ambitious. I’m very grateful for Aermont being alongside us since 2014, for what has been an amazing journey to where we are today. With our hybrid hospitality model, we have become a game-changer for the hospitality industry and have a major growth platform to welcome more guests to our hotels.”

Lee Kok Sun, Chief Investment Officer of Real Estate, GIC, said: “We are pleased to invest in The Student Hotel as its assets are well-located, enjoy good connectivity to city centres and transportation networks, and are in close proximity to universities and other amenities. We are confident that this investment will generate resilient long-term returns.”

Tracy Stroh, Region Head of Europe, Real Estate, GIC, said, “The Student Hotel’s hybrid hospitality model is unique. Anchored by purpose-built student accommodation that appeals to the student demographic, yet still catering to both business and leisure uses, this flexibility enables TSH to capture opportunities as demand patterns fluctuate throughout the year. We look forward to partnering with TSH and APG to generate more value-add over the long term.”

Robert-Jan Foortse, Head of European Property Investments, APG, said: “We are excited about the opportunity to increase our exposure to TSH, and to support the further growth of the platform. We want to thank Aermont for all of its efforts over the past years, and for being a great partner. Together with GIC, Charlie McGregor and the rest of the TSH team we are looking forward to further expand TSH’s unique hybrid and exciting concept across Europe. We are convinced that TSH will provide an attractive long term, stable investment return for our pension fund client ABP, and its participants.”

Vincent Rouget, Partner at Aermont Capital, said: “Since 2014, we have been the proud partners of Charlie MacGregor, The Student Hotel and its management team, and APG. This great journey which started with one promising project in Amsterdam turned into an unrivalled portfolio of 25 prime assets and projects across 8 countries in Europe. The Student Hotel investment underscores well Aermont Capital’s expertise and experience at supporting operational real estate platforms to fulfil their potential through real estate led strategies. Charlie’s vision of building a truly hybrid hospitality operating model has positioned The Student Hotel at the forefront of both hospitality and real estate trends, and TSH’s future is bright under its new shareholders’ stewardship.”

The transaction is subject to approval from the relevant regulatory authorities.

Volgende publicatie:
“Good ratings are nice, but we’re never satisfied”

“Good ratings are nice, but we’re never satisfied”

Published on: 2 June 2022

APG has been named a market leader in engagement by EY. This is evident from the consultancy’s Engagement Maturity Matrix. A good reason to ask Anna Pot, Head of Responsible Investment Capital Markets & RI Communications at APG, some questions about engagement.


According to EY (formerly Ernst & Young), characteristics of a market leader are actively driving positive change and setting the market standard for institutional investors. A good result for APG and its pension fund clients. At the same time, public opinion seems to be increasingly critical. For example, some pension fund participants want their funds to invest as sustainably as possible.


How can this be reconciled?

“I think two things are important here. The first is that participants and the media in the Netherlands are critical.  When it comes to sustainable investment, the expectations and ambitions among participants and our stakeholders in the Netherlands are high. And that’s actually very good, because fifteen years ago, when we were developing awareness around responsible investment on behalf of our fund clients, it was not such a big topic yet. Today, it is a very important consideration and people have high expectations around it. Pension fund participants are learning more and more about this subject. In that sense, you could say that the pension funds have succeeded in propagating the importance of SRI. And the critical part of the constituency is growing. That means we are offering something that the pension fund participants want from us. In fact, they want us to do even more in this respect.


Another important point is that we were compared to institutional investors abroad in this study. There are also many developments in sustainable investment among the other big players but in the Netherlands, we are in the lead. As APG, we are seen as a leader that other parties are happy to work with and support. That leading position also helps us to align other parties with our goal of investing as sustainably as possible. That cooperation with other parties is essential to our success and to achieving our sustainability ambitions as well as those of our fund clients. It is therefore important that we are also seen as a leader in the international field. So, I am very pleased with this result.”


When does APG see itself as the leader in responsible investing, when experts like EY think so or when the public thinks so?

“We are never satisfied. We are very ambitious and critical of ourselves and always want better results in responsible investing. After all, our goal is to make the world more sustainable. In any case, it’s nice to see that our efforts are being recognized. And not just by EY. Another example is the Principles for Responsible Investment (PRI), an organization supported by the United Nations. The PRI assesses us annually and it’s always nice when we see growth in that. And then there is the Association of Investors for Sustainable Development (VBDO), which assesses the fifty largest pension funds in the Netherlands in terms of sustainability. Our fund clients are in the top echelons there. Last year, for example, ABP was ranked number one for the fourth consecutive time. In that sense, external assessments are nice, but are they a yardstick? No, they are indications that we are doing well and that we are seen as a leader. Of course, what really matters is the impact of our efforts. For example, a company following up on our engagement requests. Or the fact that we are making our investment portfolio more sustainable. Another example is that more companies are attaching green goals to the issuance of their loans (bonds), or that our real estate companies are operating in an increasingly energy-efficient manner.” 

If a company becomes more sustainable, it is a better investment in our portfolio.

There are many forms of engagement. What is an example of a form in which APG is particularly strong?

“EY specifically mentioned our so-called inclusion policy. This means that we can only invest in a company that lags behind in terms of sustainability if we expect that engagement can lead to improvement. It is a very systematic way of setting priorities in the engagement policy we pursue for our funds. We ask ourselves the question with which important companies in our investment portfolio we can still make gains in terms of engagement. Is it worth our time and energy? Or should we decide to stop engaging with a company if we feel it is not producing enough results? We also take into account that if a company becomes more sustainable, it is a better investment in our portfolio. We score high on this form of engagement, which is very closely related to our investment choices and portfolio. It also earns us a lot of appreciation. It is something in which we are unique, compared to other institutional investors.


We also have thematic engagement processes that we perform on behalf of our pension fund clients and that are seen as leading the way in the market. One example is an engagement path on the transition in the automotive industry. We are asking car companies to become more sustainable and to switch to a carbon-neutral business model. That means they have to manufacture electric cars instead of diesel cars. In this sense, sustainability is about climate targets, but in our commitment we also focus on these companies’ personnel policies. Because whereas manufacturing an internal combustion engine car requires five employees, an electric car requires only one. It also requires different skills. As a company, you can do two things. You can say: we’ll lay off our current employees and look for new ones. Or you can try to use your staff differently so that they can keep their jobs. And that’s what our engagement is all about: make sure that as a car company you also have a strategic personnel policy that focuses on training and retaining staff where possible.”


There’s probably still room for improvement.

“I think we can make the outcomes of our engagement more visible. Conversations with a company we invest in, for example, can lead to a new policy or committee. But how can you concretely reflect the impact of that? If you take the example of the car industry, it’s about how many people still have a job in the end. It is difficult to communicate that in an effective and honest way. Reporting on the impact of our engagement is therefore an important area for improvement. Making the results of our engagement more visible also touches on the point where we started this discussion: the critical note in the Netherlands. We must continue to bring our efforts into the limelight. Also because we think it is extremely important that participants know how we invest their pension money.”


Volgende publicatie:
“I do see companies we invest in that are starting to make a difference”

“I do see companies we invest in that are starting to make a difference”

Published on: 1 June 2022

Despite climate commitments and progress in sustainability reporting, recent research suggests that up to 40% of sustainability claims could be misleading. In an expert panel on greenwashing, Ronald Wuijster, CEO of APG Asset Management, acknowledges the threat posed by greenwashing. At the same time, he does warn against paralyzing cynicism.


Ronald Wuijster participated in a panel called ‘Turning up the Heat on Greenwashing’ at the World Economic Forum in Davos. Chaired by Somini Sengupta of The New York Times, the panel also included former US vice-president Al Gore, Danish environment minister Lea Wermelin and Andrew Forrest, chairman and founder of Fortescue Metals Group.


“Greenwashing is a major obstacle to solving the climate crisis”

Vice-president Gore kicked off the discussions with a list of alarming statistics. “According to an S&P report on more than 5,000 companies, only 37% have any emissions target at all. Only 24% have net zero targets. Of the companies that have set emissions targets, less than half are aligned with the science-based approach to even 2 degrees, much less 1.5 degrees.”


“Greenwashing is a major obstacle to solving the climate crisis,” vice-president Gore stated. He argued that lobbying, campaign contributions, the capture of policy making, and the control of politicians with money and lobbyists have made it impossible to pass climate legislation in the United States. “Our democracy has been paralyzed, bought, captured – it has to stop.”


Vice-president Gore does not expect oil and gas companies to drive the energy transition. “Last year, the largest oil and gas companies announced that they are tripling their investments in renewable energy and carbon capture. But they have tripled it all the way up to 4% of their spending. So 96% remains invested in the development of more and more oil & gas deposits. The only company that has truly transformed to a renewable energy company is Danish company Ørsted. And when it did, its value increased five times.”


What about hydrogen?
Andrew Forrest, whose Fortescue Metals Group wants to fully decarbonize by 2030, brought up another form of greenwashing. “Oil and gas companies are selling hydrogen as the clean fuel of the future. However, if it’s not produced from green electricity, it will create a lot of emissions in the production stage,” Forrest pointed out. Only one fuel will stop global warming and that is hydrogen made of green electricity.”


Investors need to do their own analysis to filter out greenwashing

As a long-term pension investor, Ronald Wuijster also comes across a great deal of greenwashing when analyzing companies. “However, we should not lose hope either,” he argued. “We see a lot of green, social and sustainable bonds and we analyze those bonds ourselves. Roughly a quarter of those would not qualify according to our own standards, but I really do see companies we invest in that are starting to make a difference.“


“Companies that are doing well are usually modest about what they’re doing. Companies that sell great stories you should be careful about. Maybe they do the odd project, but if you look at the company as a whole, it’s a different story.”


As uniform standards and integral solutions are still lacking, Wuijster sees an important role for investors. ”We need to talk to various stakeholders of a company to check whether its claims are consistent. At APG we combine various data sources to verify companies’ data and then do our own analysis. We follow the value chain to make sure that claims, for example on CO2 emissions reduction, are consistent. We do not simply copy ESG ratings but do use the data as input for our own analysis. And we don’t know everything as investors. On biodiversity, for example, we use the knowledge of Cambridge University and indigenous communities.”


Does regulation help?

In Europe, there have been some notable examples of companies being called out for misleading the public. Minister Lea Wermelin sees the population in a lot of countries wanting to do the right thing.  As a result, many companies are making green claims. “That is a good development but what we need to do, is hold them accountable. In the European Union, with the EU Taxonomy we want to make sure people trust the labeling of sustainable products.”


Regulation does help, said Ronald Wuijster, but it is not the only answer. “I’m happy with the European Union coming up with strong rules, and at the same time we know that many pages of rules are not necessarily changing companies’ behavior.” As a long-term investor, APG is actively engaging with companies to create awareness and propose solutions, increasingly joining forces with other investors. “The pressure is increasing and that adds to the regulation. It is needed but it should not become a box-ticking exercise. It’s the combination that’s most effective.”



Watch a recording of the livestreamed session here.


Volgende publicatie:
“Investors should act together to protect biodiversity”

“Investors should act together to protect biodiversity”

Published on: 20 May 2022

Investors have an important role to play in conserving biodiversity. Instead of waiting for regulations, investors should develop standards together and put pressure on companies. This is what Ronald Wuijster, CEO Asset Management at APG and chairman of the World Economic Forum's Biodiversity Finance Steering Committee, is advocating.


This week, nearly 2,500 international politicians, CEOs, journalists and intellectuals are gathering in Davos, Switzerland, for the annual meeting of the World Economic Forum. Their common goal is to address the world’s economic and social problems.


Long term

I am attending for the first time this year. The World Economic Forum’s risk reports are widely circulated and show, year after year, that climate and biodiversity risks are increasing. For me, this is a great opportunity to get an inside look at the organization behind those reports. It is also a great opportunity to get a feel for the changing geopolitical relationships. Global developments such as deglobalization, rearmament and inflation can have important consequences for our investments. In Davos I will have the opportunity to discuss these developments with colleagues, for example, in the meetings with Focusing Capital on the Long Term (FCLT) and the Global Investors for Sustainable Development (GISD) Alliance. As a board member of these organizations, I am committed to investing in long-term sustainable development.


As a long-term investor, our investment horizon is infinite. Our clients are Dutch pension funds, and we want to ensure good pensions in a livable world. That world is increasingly threatened by a decline in biodiversity. That was also one of the motivations for me to accept the role as chair of the World Economic Forum’s Biodiversity Finance Steering Committee. Not necessarily because I am a biodiversity expert, but because I want to mobilize investors and companies to jointly address the problem of biodiversity loss. Because it is precisely this joint effort that is needed.


Biodiversity: what can investors do? 4 steps

A lot has been written about the urgency and complexity of biodiversity loss. The question is: what can we do about it? International agreements and regulations by governments and regulators can help, in the sense that they can act as a big stick. But a plethora of new rules and regulations also encourages box-ticking. Regulations do not bring about the kind of fundamental change that is needed to ensure that companies have a “nature-positive impact”. That change has to come from within the financial sector.


Step 1: Developing common standards together

To achieve this change, I see four concrete steps. The first, crucial step is to develop common standards to assess how our investments contribute positively or negatively to biodiversity. How they are exposed to biodiversity risks. And how we get the data to measure it.  At APG, we are already involved in the development of a number of such standards. For example, we are affiliated with the Taskforce on Nature-related Financial Disclosures (TNFD) and we collaborate with the Partnership for Biodiversity Accounting Financials (PBAF). In addition, we recently signed the Finance for Biodiversity Pledge, in which we agreed to protect and restore biodiversity.


Step 2: Identifying risks

Once the standards are in place, it will be easier to clearly identify the biodiversity risks in our investment portfolios, set targets and report on them. That is the second step. Based on the work that is already in place, we have already made a biodiversity footprint of our investments at APG.


Step 3: Achieving positive change through engagement

To reduce risks and bring about positive change, we put pressure on companies through engagement - step 3. We are tightening our criteria for companies with respect to biodiversity. The transformation of the food chain will largely have to come from the companies that are currently active in it. This makes engagement with these companies even more important.  Given the complexity of the issue, it is important not only to use our own influence, but also to collaborate with other investors.


Step 4: Investing in solutions

Finally, we want to actively invest in solutions that contribute to the protection of biodiversity. For example, we have invested in a large production forest in Chile. This forest is being managed sustainably and has the FSC (Forest Stewardship Council) label. We hope to see more of these kinds of investment opportunities. Public-private partnerships can play an important role in this. The government and pension investors then pull together to make important and substantial investments. We already do this internationally, but in the Netherlands, the opportunities are limited. For several years, ABP and APG have therefore been taking the initiative to talk to government bodies and other pension administrators about more opportunities for public-private partnerships.


If we, as long-term investors, take up our roles and join forces, I am convinced that we can make a significant contribution to the preservation of biodiversity. My proposal for a four-step plan is a first step, which I am happy to discuss with fellow investors. Let’s get started.

In addition to his chairmanship of the World Economic Forum's Biodiversity Finance Steering Committee, Ronald Wuijster is participating in a plenary panel on greenwashing in Davos. Other panelists include former Vice President of the United States Al Gore, Danish Environment Minister Lea Wermelin and Andrew Forrest, chairman and founder of Australian iron ore producer Fortescue Metals Group. The panel can be followed here: World Economic Forum Annual Meeting | World Economic Forum (, May 25, 5:30 p.m.

Volgende publicatie:
APG is Real Assets & Infrastructure Investor of the Year

APG is Real Assets & Infrastructure Investor of the Year

Published on: 20 May 2022

APG was elected Real Assets & Infrastructure Investor of the Year during the IPE Real Estate 2022 in Amsterdam. The pension provider also took home awards for Investment in the Netherlands, Portfolio Construction, Environmental Sustainability and Technology & Innovation.

Katherine Kucherenko, investment specialist at APG Asset Management, accepted the award. “2022 is an important year for APG as this year, together with ABP, we are celebrating 100 years of serving society. APG was one of the first institutional investors to begin investing in Real Estate and Infrastructure and the investment strategy has evolved to withstand the turbulence of financial downturns, global pandemics, geo-political tensions and changing structures of our societies in order to continue to navigate the pension assets of our clients' participants into a safe and predictable financial future.”

Patrick Kanters, managing director of Global Private Investments at APG Asset Magagement, is also pleased with the recognition. “We’d like to extend our congratulations to all award winners and feel honored by the various awards we have received. It is a testimony to our industry contribution in various regards and the hard work of our global team. Furthermore, it underscores certain strategic focus areas of our firm, being responsible investing, innovation and digitalization.  We look forward to continue building on this success and servicing our clients and their participants in the years ahead.”

This year’s IPE Real Estate Global Awards attracted over 200 entries across all categories. From 16 countries around the world, the total market value of the institutional investors that took part was more than €3trn, while collectively their real estate and real assets under management exceeded €459bn. They competed in 36 categories split by theme, region and size.


Volgende publicatie:
BlackRock subscribes to SDI Asset Owner Platform data

BlackRock subscribes to SDI Asset Owner Platform data

Published on: 26 April 2022

BlackRock – one of the world’s largest assets managers – has subscribed to the SDI Asset Owner Platform (SDI AOP) dataset. APG is co-founder of the Platform, which assesses companies based on their contribution to the Sustainable Development Goals (SDGs). The commitment of a global player like BlackRock reflects the growing focus among investors on aligning their portfolios with the SDGs.


This step by BlackRock to subscribe to the dataset represents a major expansion of the SDI AOP’s user base in asset terms. Combined assets under management to which the data is applied now exceed US$ 10 trillion. The Platform’s SDI standard and dataset help investors imbed the SDGs into their investment processes and stewardship activities. It also enables them to report to clients and external stakeholders transparently and consistently.

Claudia Kruse, Chair of the SDI AOP says: “We are delighted that BlackRock has chosen the SDI standard and joined the SDI AOP community, which now represents over US$10 trillion. Together with the other SDI AOP members we will continue to advance the scope of the SDI standard and its applications.”   

The SDGs were set by the United Nations in 2015 and aim for a better and sustainable world by addressing a broad range of global issues ranging from climate change to access to healthcare. Investments in companies whose products or services contribute to the realization of the SDGs are called Sustainable Development Investments (SDIs). APG’s largest asset management clients – pension funds ABP and bpfBOUW – have set ambitious SDI targets for 2025. ABP aims to invest 20% of its pension assets in SDIs by 2025 and bpfBOUW targets 25%.

Launching partner

APG co-founded the SDI AOP together with PGGM, AustralianSuper and British Columbia Management Corporation (BCI) in 2020. The Platform provides a common taxonomy and dataset for investments that contribute to the SDGs. Powered by artificial intelligence technology, data science partner Entis has generated SDI classifications for some 8,700 companies to date. The taxonomy and methodology are maintained by the SDI AOP Design Authority, which consists of the four investors which launched the Platform. Qontigo is the standard’s global distributor.

In 2021, APG together with BlackRock and index provider Qontigo launched the iSTOXX APG World Responsible Investment Indices. This initiative taps into the growing demand for customized, sustainable index products. The indices follow multiple sustainability objectives, including SDIs. These are combined in a step-by-step approach that introduces one sustainability element at a time in order to achieve a final balanced portfolio that invests using all the criteria.

Future research agenda

The SDI AOP is working with its growing community of asset owners to increase the platform’s value by continuously refining and extending its product in various dimensions: wider company coverage, product refinements in specific sectors and the addition of negative impact metrics, forward-looking metrics (such as patents) and outcome-oriented metrics.


Volgende publicatie:
“Green government bonds show countries’ true climate ambitions”

“Green government bonds show countries’ true climate ambitions”

Published on: 7 April 2022

Canada recently issued its first green government bond. It was one of the last major developed countries to use this instrument to finance the greening of the economy. APG invested over 150 million euros. “To us, the issuance of green government bonds is a clear signal that countries have the ambition to address climate risks,” says Chris Lam, senior portfolio manager of developed markets government bonds at APG.


Green government bonds are issued by governments to finance “green” projects. They usually offer the same interest rate as their non-green counterparts and also provide an opportunity to contribute to a country’s climate efforts.


Preventing greenwashing

The Canadian bond is accompanied by a clearly defined list of green initiatives for which the proceeds may be used. In addition to projects that invest in renewable energy or provide protection from the effects of climate change, there is also an important role for conserving biodiversity in water and on land. This use of proceeds is important for preventing greenwashing.


Chris Lam: “APG has been strongly committed to the growth of green, social and sustainable (a combination of green and social, ed.) bonds from the beginning. But we do set requirements for their sustainable content. To make potential issuers aware of our expectations and to encourage healthy market growth, we are in constant dialogue with them. In 2019, we also published our Guidelines for Green, Social, and Sustainable Bonds.”


Big take-off

Investing in bonds with a sustainability focus has really taken off. More and more governments are now also issuing green government bonds. At the end of 2021, APG invested 7.3 billion euros in green government bonds on behalf of ABP, bpfBOUW, SPW and PPF APG. The vast majority of these, 7.25 billion euros, are bonds from developed countries, such as France, Belgium and the Netherlands. Just under EUR 50 million is invested in government bonds of emerging countries, namely Guatemala and Egypt. Add to this the investments in corporate bonds and, at EUR 17.6 billion, APG is one of the world’s biggest investors in bonds with a sustainability focus.


European Union

Lam does expect the trend in developed economies to level off after years of tremendous growth. “On the other hand, the European Union will become a major issuer of green bonds.”

Green bond investments are part of a broader approach to assessing climate risks in the fixed income portfolio. “Green bond issuance is a signal to us that countries have the ambition to mitigate climate change or take measures to guard against its effects. It gives us insight into the concrete steps governments are taking to combat climate change and to prepare the country for its physical impact.”


Green, social and sustainable government bond issuance (in billion dollars):



Climate risk in investments

APG is identifying which part of the government bond portfolio is invested in countries with a high climate risk. Lam: “These risks can be the result of physical effects of climate change, such as changing weather patterns, severe weather conditions or rising sea levels. We call this physical climate risk. In addition, countries also face transition risks: in a world where policy measures are being taken, regulations are being tightened, and the economy is shifting to a low-carbon economy, not all countries can keep up to the same degree. And some countries are better equipped than others to cope with climate-related events and changes.”


APG Climate Dashboard:

To determine a country’s physical climate risk, APG uses indicators from ND-GAIN. These show a country’s vulnerability to the effects of climate change, and the extent to which it is prepared for them. For the transition risk, APG looks at how dependent a country is on fossil fuels, how much carbon it emits (carbon intensity) and to what extent it is capable of switching to a low-carbon economy.


High credit worthiness

Lam: “Currently, APG invests mainly in government bonds of countries with a high credit rating for its pension fund clients. Our research shows that such countries are generally less vulnerable to the consequences of climate change. Thus, they have more means to arm themselves against the consequences of climate change. The market for green government bonds from emerging countries is still in its infancy. If it grows, we can also invest more in this, and we can contribute to sustainable developments in these countries and help reduce climate risks.”


As one of the first major investors, APG is also calculating the carbon footprint of the developed and emerging market government bonds in its portfolio as of this year. “With over 160 billion euros’ worth of investments, government bonds are an important category in our pension funds’ portfolios. For us, measuring the carbon footprint is an important next step in our climate approach to contribute to the increasingly ambitious sustainability goals of our pension funds.”

Volgende publicatie:
“We are going to look even more selectively at the companies in which we invest”

“We are going to look even more selectively at the companies in which we invest”

Published on: 31 March 2022

Despite the ongoing Covid-19 crisis, 2021 was a year of excellent investment returns. “Good for our funds, good for the participant”, says Ronald Wuijster, member of the Executive Board of APG and responsible for Asset Management. And how does the CEO view 2022? “Investing is always uncertain. It's just a matter of keeping your professional calm.”

​​​​​​​Looking back on 2021, Ronald Wuijster says: “It was a rather crazy year. At least in the context of Corona. When it comes to investments, we can look back on a very good year with excellent returns. Both in absolute and relative terms. The absolute return is obviously mainly used to pay the pensions. Eighty percent of the pension payment is realized by the returns we achieve. But thanks to the good relative returns, we were also able to add additional value. Moreover, we managed to make a number of truly great investments, such as the large investment on behalf of ABP in the accelerated rollout of fiberglass.”

Did those good results not come as a surprise given the ongoing Covid-19 pandemic?“We had a fear for a while in the previous year: will Covid-19 have a major impact on the economy and the companies in which we invest? In 2020 we witnessed that the impact was less than expected, if not absent. Sectors were affected that remained below the investment horizon, such as the SMEs, the somewhat smaller companies. And furthermore, a number of specific sectors were hit, such as the entertainment industry and tourism. But a larger number of sectors, such as tech, service provision, luxury consumer goods and the construction industry actually benefited. This because people transitioned to a different way of working, because the spending patterns changed. The money had to go somewhere as people couldn't go to festivals or on holidays.”

According to Wuijster, the investment markets prospered as a result of both monetary and fiscal measures.
“Monetary speaking, we were already in an environment with very low interest rates and asset purchases by the central banks that were continued for a longer period of time due to COVID-19 as the central banks wanted to prevent the economy from deteriorating. And those measures were reflected in the investments. We saw much needed asset purchases, but some of these were somewhat unfocused. The American government, for example, transferred more than 3,000 dollars to virtually all citizens. Many people really needed that money but there were also plenty of people thinking: Hey, I am going to invest that money. Both monetary and fiscally driven there appeared to be more support for the investment markets. And that's an important incentive for good investment results.”

The inflation rate is meanwhile skyrocketing. What is the effect of those figures on the returns?
“That depends. Inflation is not really a bad thing for a number of investment categories. Shares, commodities have elements incorporated that offer protection against inflation. But it does have an impact on the economy. The big question is whether or not we will end up in a recession. The opinions are mixed in that respect, almost fifty-fifty you might say. The logic is: the purchasing power decreases; the world is a little less global than it was before. That is of course also caused by the war in Ukraine and by Corona, which are both not stimulating a worldwide economy. The overall picture is that the recovery after COVID-19 is fading a bit. People will enjoy it for a while. But some economists expect this to subside. It's possible, I think it's a bit of touch and go.”

What does that insecurity mean to the investments?
Investing always entails a factor of insecurity. I would almost say: it is business as usual. We have a well-diversified, widely spread portfolio. Some investments benefit, others suffer, but on balance you are trying to achieve reasonable returns. And we are doing quite well so far. The returns are obviously less than last year. We have suffered some losses in absolute amounts. But it's really not that bad when you look at it in percentages. It sometimes involves large amounts but it's not very shocking given the events. In  short: keep the professional calm and continue to do your job. What are the things that might change following these developments and are we able to anticipate? So, we could be partly positioning ourselves for the future already.”

But how? Can you give some examples?
“In general terms: you look at the global regional circumstances in the current context. Has Europe not become a bit more vulnerable? What is the role of China in this conflict? Is China benefiting or is it not?  You can also look at certain sectors, like commodities for instance. Those were ignored for a long time because the energy prices declined over a longer period of time. But now you can obviously see these generating returns.”

Europe has become more vulnerable in more ways than one. Investing in weapons suddenly seems to be socially acceptable.
“You could say beforehand that this is not a good investment if sustainability is highly prioritized. At the same time we have always said that the defensive use of weapons is relevant. This has now proven to be true. We have always excluded a certain type of weapons from our investment policy, like cluster weapons and chemical weapons. But it is possible to invest in regular weapons. Some peers are saying that it is sustainable. Those views are currently emerging in Scandinavia. There people say it could be considered a positive social value. I believe that's nonsense. But as a result of the recent developments, the position of certain weapons manufacturers has changed given the countries’ intention to invest.”


A noteworthy news item in 2021 was ABP's announcement to withdraw from producers of fossil fuels. Did that lead to a different view of APG on the engagement policy?“That is a legitimate question. It just seems weird to me that the public opinion is often only targeting Shell. Because ABP didn't announce its withdrawal from just Shell, but from producers of fossil fuels. That involves a lot more companies.”
But that link with the engagement policy is correct, says Wuijster. “The question was: shouldn't you draw conclusions from the fact that all of those discussions are yielding less than actually desired? It has resulted in us looking once again at the consequence management of our policy. ABP believed too little was accomplished in our conversations with companies about fossil fuels in the past years. They said: we don't think there is enough time to reach the climate goals this way. So, we withdraw and refrain from continuing the conversations.
We have supported that decision. We agreed that time was running out. Engagement on the demand side is more effective than engagement on the supply side. The user is able to change quicker and easier than the producer.”

And does this also mean that the full width of the portfolio has to be looked at in a stricter manner?
“Yes, we must be stricter and more rigorous. Even stricter and more rigorous than we are now. We are rethinking the inclusion policy: what companies are to be included? And we also look at the criteria. There are frontrunners, promises and laggards. You don't want to invest in laggards unless they are willing to change. Then these companies become the promises in which you could invest if there's a chance of engagement success. We have done so for a long time, but we have to be more selective. It shouldn't be an excuse to keep investing in something, knowing beforehand that nothing will change. And we also look at the frontrunners again: shouldn't the criteria be stricter? However, we are still scoring very well in terms of our sustainability policy, the professional world especially considers us a leader.”

I am more concerned about non-nuance than about impatience

To what extent is such process guided by societal impatience?
“I am more concerned about non-nuance than about impatience. Mainly when it comes to biodiversity and climate you cannot say we have plenty of time and that society just has to wait. We simply don't have that time. What I do have something of a problem with sometimes is non-nuance. Objectifying an opinion by means of metrics, taxonomies and reasonable analysis is very important to me. The societal debate doesn't always offer room to do so. If one party picks one element and calls it ‘bad, bad, bad’, the room for objective assessment is sometimes lacking. Indicate why something is bad, why an alternative is better. I care a lot about continuing to be able to practice the investment trade in a professional manner. And it sometimes concerns me that this voice is not always heard.”

The costs of the investments are criticized every year. Do you understand that?
“I can imagine that people are looking at the costs. If large amounts are invested, it also entails high costs. But people shouldn't just focus on an absolute number. And the costs should be compared with the - luckily even higher – amounts we realized in terms of net returns. On average between 7 and 8 percent annually in the past twenty years. And that's with the costs deducted. Those are huge amounts in euros as well, compared to which the costs are far outweighed. I understand people are concerned. But are the costs excessive? No, because we outperform the market. We make investment returns in a relatively cheap way. So yes, it involves huge amounts, yes, we handle the costs carefully and yes, we are a relatively low-cost producer.”

APG achieves good returns year in, year out. Nevertheless, the participant hasn't witnessed an indexation in years. It continues to be difficult to explain.
“I can very well understand that call of seeing such high investment results and no change in the payments. And it actually is quite difficult to explain. It is one of the reasons why the pressure became so much greater to build that new system. The link in the new system is way more direct. That is an advantage. The downside of the new system of course is that the consequences are visible immediately should the results be disappointing. People were not indexed in the old system, but at least their entitlements stayed on course.
And another thing to consider in a pension system is that it involves different age groups whose interests are slightly different. Indexation relevant for a certain group - the pensioners - should be balanced against the fact that this money also could have been used to gain returns for people who are still accruing pension. The management of a pension fund always stands for that balanced weighing up of interests. Indexation is only one component, so a one-sided fixation on that element is not desired. But I do understand that people are disappointed when the many years of good investment results - which is sometimes bragged about, justifiably or not - are not reflected in their payments.”

You recently wrote a column about investing in infrastructure. You would like to see more possibilities in this field in the Netherlands for a large pension investor. Can you explain that some more?
It was an appeal to the government to take another look at the objections around public-private collaboration in the field of infrastructure. I wonder if those objections are justified. I believe that, in general, the guidance of investments becomes better in a public-private collaboration. That's because you shift from thinking in budgets to return in the longer term. The statement made by the Netherlands Bureau for Economic Policy Analysis was whether all of that money the government lends free of charge is actually a responsible thing to do. According to economists of the Rabobank, it depends on whether or not it is profitable. That's how I see it as well. If it is considered an investment for future generations, it isn't so wrong. The objection that, as a government, you don't want to give up control of crucial infrastructural projects can be properly safeguarded. There are constructions in place to make that happen. That can be witnessed regularly in countries such as Canada and Australia. There are different ways to ensure a casting vote around the social relevance of the infrastructure, while fully sharing the economic benefits. It is my opinion that this should be done more often. It is not happening enough in the Netherlands.”

Finally. You have signed up for another four years. What is the most important reason for you to do so?
​​​​​​​“Apart from the fact that I am working in one or actually in two very nice teams, I find it an enormous challenge to transfer our clients to the new system. That has to be done in the next four years and I consider that a major responsibility. In addition: being able to invest on a global scale like we do in all asset classes, is just amazing. Moreover, it's extremely relevant socially speaking. It involves people whose pension is depending on our returns. And that's all that matters.” 

Volgende publicatie:
"With only shares and bonds you would now be at a loss"

"With only shares and bonds you would now be at a loss"

Published on: 22 March 2022

"It's a time of volatile markets, which means we do a lot of trades at APG. If only to balance the portfolio over and over again." That is what APG's Thijs Knaap says in the program Zakendoen on BNR Nieuwsradio in a conversation about investments. "I wanted to highlight a transaction that we did in the context of ANET, the ABP Dutch Energy Transition Fund." ANET has taken an interest in the Groningen company, which sells and rents solar panels. "Anyone who can calculate knows that the electricity price has become much higher. As a result, the payback period has become much shorter. That has not escaped most people, so there is a lot of demand for solar panels. can now expand with the money they get from ANET. This is good for the returns and good for the energy transition."

Knaap, chief economist at APG, regularly joins the investor panel of Zakendoen. In today's broadcast, he also discusses how APG had for a number of years taken into account an economic shock in which prices of raw materials would rise rapidly and a subsequent growth shock due to economic uncertainty. "We had put in place an investment policy to prepare us for that shock, but for years it was only one percent inflation and commodity prices fell. So basically it was the reverse of such a shock for a long time. But due to the current high commodity prices and the inflation that is skyrocketing, what we have set up is now doing great. Examples are investments in commodities, hedge funds and infrastructure. While with a portfolio with only shares and bonds you would have certainly be at a loss," says Knaap in conversation with presenter Thomas van Zijl and panel member Mary Pieterse-Bloem.

Listen to the entire broadcast here.


Volgende publicatie:
“The situation in Ukraine makes the inflation hedge of commodity investments extra relevant”

“The situation in Ukraine makes the inflation hedge of commodity investments extra relevant”

Published on: 22 March 2022

For the past year and a half to two years, our economy has been showing rising inflation rates. But the war in Ukraine has kicked that monetary devaluation into high gear. There are, however, investment types that offer a counterbalance, and investments in commodities are a good example. Peter Verbaken, Head of APG’s Commodities Team, explains the characteristics of commodity markets, and how an investor can use them as protection against inflation. “Prices can fluctuate a lot, but experience has shown that commodities do well during periods when inflation is rising.”   

Oil, gasoline, gold, silver, aluminum, copper, nickel. That’s what you should think of when it comes to the commodities that APG invests in for clients. But also agricultural commodities like wheat, corn, sugar, coffee, cocoa and soybeans. Important to emphasize: APG does not invest in the commodities themselves, but in derivatives. Futures in this case; contracts to buy or sell a certain commodity at a predetermined price, on a predetermined date, in the form of a futures contract.

In the extreme

A key reason why commodities are so suitable as an investment for pension funds and their participants is that they provide some protection (hedge, or risk coverage) against inflation.

Verbaken: “Our economy has shown low inflation rates for years, throughout the decade. A year and a half to two years ago, that came to an end and a whole new dynamic emerged. So, there was already accelerated monetary depreciation, but the conflict in Ukraine pulled it to the extreme. Mainly because the prices for fuel and energy have shot through the roof, but grain prices have also exploded. With some delay, this in turn leads to higher animal feed prices and thus higher prices for meat and eggs. And that has a negative impact, including on pension fund participants. It helps if your fund has investments whose return grows along with that inflation. The war in Ukraine has made this protection effect even more relevant.”   

Huge investments

Commodity investments offer such a return, Verbaken says. “Experience has shown that commodities do well in periods when inflation is rising. Within those periods, prices may fluctuate significantly, but the trend is upward. The demand for commodities moves with the economic cycles, while supply often cannot move because production capacity cannot be increased overnight. The lead time required to create new production capacity is very long for most commodities - sometimes five to ten years. And during that time, huge investments are made. This makes the supply relatively inflexible. So, the increased demand that accompanies a boom soon results in price increases.”

One example where we have seen such price increases is in the production of oil. “In the early 2010s, the market for U.S. shale oil was booming. But when the price of oil went down, a number of producers went bankrupt and these companies became much more cautious about investing in production. The focus shifted to profitability rather than production capacity expansion. That capacity is not going to come back immediately. And then the production capacity for shale oil can be expanded relatively quickly. Conventional oil producers take much longer. And they have become more cautious about new investments related to the energy transition.” 

Dōjima Rice Exchange

In 1710, the very first futures contracts were traded at the Dōjima Rice Exchange in Osaka, Japan. It is easy to guess why the first futures had agricultural commodities as their underlying assets. Producers of rice or other commodities could thus hedge their price risk. By establishing in advance when and at what price he would sell his rice later, a producer was no longer exposed to the vagaries of the market - for example, rock-bottom prices as a result of overproduction in the sector. The buyer of such a future also gets a certain degree of security. By fixing the price and delivery date now, the buyer will not have to pay the highest price in the event of a disappointing harvest. The buyer of a future contract goes “long” and when someone sells such a contract, this is called “going short”.

Further into the future
In addition to the protection that commodity investments offer against inflation, there is another important feature that makes this asset class especially interesting for a large investor of pension money. This is because commodity investments behave differently from other classes, such as stocks and bonds. In this way, they bring diversification to the overall investment portfolio. Verbaken: “Compared to shares and bonds, commodities offer returns at slightly different points in the economic cycle. At the top of an economic cycle, equities start to perform less well. After all, share prices are based on investors’ expectations of companies’ future cash flows. The value of a company and therefore the price of a share are determined by looking further into the future than is the case with commodities. The market for commodities is a spot market, in which the price is determined based on supply and demand at the time.”

Those who want to get a concrete idea of that “different behavior” of commodities need only take a look at recent return figures. “Our commodity investments yielded 40 percent last year. And the return for this year is already at 30 percent. APG has a widely diversified portfolio. With equities and bonds actually doing worse, you can put the return on commodity investments to good use. It is very good to have it in your portfolio, because it offers risk diversification and a certain degree of security.”

Right to buy

Given the impact of fossil fuels on the climate, is it still responsible to invest in a commodity like oil? Verbaken: “That is certainly a valid question, but you have to realize that APG does not invest in the commodities themselves. We don’t buy oil, we buy the right to buy oil at a certain price, on a certain date. By being active in the oil futures market, we are not providing financing to producers, nor are we causing additional carbon footprint. If no one were active in that derivatives market anymore, producers could hedge their price risk a little less easily, but it has no effect whatsoever on the amount of oil produced. That’s one point. The second point is: today’s inflation is largely caused by increased oil and gas prices. If you want to generate a return for pension fund members that compensates for this inflation as much as possible, then you must ensure that a portion of your investments moves along with oil and gas prices. If you do that through derivatives, such an investment is not only financially defensible for the participants, but you can also justify it in social terms.”

Metals dominant

But, Verbaken says, there will be a time in the future when a raw material like oil will play an increasingly smaller role in the economy. And that has everything to do with the energy transition. “The energy transition is a process that will take decades. But as soon as oil and gas become less attractive as a result of this transition to more sustainable forms of energy, you will also see this reflected in the mix of a commodities portfolio. The share of oil and gas will decline, while the share of metals will become more dominant.”

Why metals in particular? Verbaken: “To make that transition, we need a lot more copper, aluminum and smaller metals including nickel - for example, for the infrastructure needed for electrification and for batteries. These are absolutely crucial elements for the energy transition.”

Volgende publicatie:
“After you’ve recouped the purchase cost, you’ll have free electricity”

“After you’ve recouped the purchase cost, you’ll have free electricity”

Published on: 15 March 2022

APG has acquired a share in solar energy provider The investment is part of ABP’s Netherlands Energy Transition Fund (ANET). Jeroen Schreur, responsible for ANET at APG, explains the importance of the investment. “We share’s ambition to continue to grow the company and thus make a significant contribution to the energy transition.”

The high energy prices have led to a greater demand for solar panels, Schreur says. “People now feel the urgency even more than before, so there is more interest in solar panels but also, for example, in heat networks, in order to get rid of natural gas. The war in Ukraine and Russia’s energy dependence once again emphasize the importance of the energy transition and the ANET mandate. Of course, we would have preferred that people had been convinced of the need for the energy transition by all the scientific findings on climate change and the news about hurricanes and floods and other impacts of climate change. But in general, it seems like people only take action when it hits them directly in the wallet. That’s understandable, too. The important thing is that at least now people feel even more urgency about the energy transition.”

What makes so suitable to invest in?
“What makes them good compared to their competitors is their client journey. They have made sure that on potential customers can arrange the whole process quite easily, from the purchase of a solar panel to the installation. The company has already achieved good results with this.”

What does the investment look like?
“We are financing the growth of They want to scale up further, and with sufficient capital there is room to enlarge the sales department, for example. The company is based in the north of the country. They have name recognition there, but they want to spread their wings to the rest of the Netherlands, so they can sell and install more solar panels. And if they continue to grow and another capital injection is needed, then we are certainly willing to look into that.”

APG has considerable knowledge and a large network. In what ways can that contribute to’s success?
“We are a financial investor, so we basically have no technical knowledge of solar panels. What we do have is a huge network and a large portfolio. For example, APG can contribute to the name recognition of Through our real estate portfolio we have good connections with housing associations, for example. There is an opportunity there to install solar panels. But we also have a lot of real estate outside the Netherlands whose roofs could be covered with solar panels. Our aim is ultimately to contribute to the energy transition as well as to a good pension for the participant. If we manage to create a win-win situation, we will have achieved our goal.”

Perhaps solar panels might even last longer than thirty years wants to work towards becoming the energy company of the future thanks to the investment. What does that look like?
“What it boils down to is that they want to start offering more products than just solar panels. Yesterday the sun shone all day, but not today. Chances are that yesterday, your panels generated much more than you need, after which the residual energy disappears into the energy network. But suppose you could store the excess energy in a battery in the garage or meter box. Then on a sunless day like today you could use that residual energy to run the washing machine. That’s an example of how wants to link multiple products together. For us as investors, this is attractive because it enables the company to sell more products, which in turn is good for the company’s profit and its value.”

Purchasing a solar panel can be a hefty investment. On average, how long does it take before the buyer recovers the costs?
“It does require an investment and it has a payback period of about six to seven years. Of course, that does depend on how often the sun shines. After you have recouped the purchase costs, you will have free electricity. Exactly how long solar panels last is not yet entirely clear. Previously we thought they would last 20 years, but these days people are already taking 25 years into account. Initially it was also said that after seven years the battery of electric cars would no longer be suitable for driving. However, there are stories from California of Tesla cars with a million kilometers on the clock. So those batteries just keep on going. Perhaps this also applies to solar panels and they might even last longer than thirty years.”

Through ANET, ABP wants to contribute to financing the energy transition in the Netherlands. Are there already enough opportunities to invest in the energy transition?
“There are a huge number of opportunities, but not every investment is right for us. And sometimes another investor wants to pay more for shares than we do. Another factor is how the management of a company views APG as an investor. If we provide financing and the company subsequently does well, we can often make another investment. That’s different with a venture capital fund. They generally invest once, hope for a good profit and then move on to the next opportunity. At, the first priority is growth. If’s pie gets bigger, so does our pie slice. We don’t want to trade that slice of the pie for money right away, because we share’s ambition to continue to grow the company and thus make a significant contribution to the energy transition.”

Volgende publicatie:
“Sustainability should not be used as an excuse for mediocre returns”

“Sustainability should not be used as an excuse for mediocre returns”

Published on: 23 February 2022

634 billion euros. That is APG’s total invested assets worldwide (position as of the end of December 2021). The goal: a good pension in a livable world for the funds' participants. The portfolio is diversified, of course. From investments in wind farms in Zeeland to Australian listed shares in stores. And from safe bonds to the somewhat more fluctuating trade in gold or soy. Who are the people behind these investments? What drives them? What choices do they make? And why?

In this episode of the series The Investors: Ton van Ooijen, whose responsibility at APG is to invest in consumer goods in the developed markets.

It was big news recently: Unilever’s takeover bid for GSK’s consumer division. This came as a surprise to many, including APG. In a response, the pension administrator wrote that it did see many strategic advantages to entering the field of consumer health on a large scale. So why was APG not overly happy about Unilever’s bid?

Van Ooijen: “In and of itself, there was not much to criticize about the acquisition. But Unilever is currently in transition and is working to increase its turnover to a higher level. They would therefore be better off focusing on putting their own house in order and showing that there are enough consumers for their own products. So the offer was a bit unfortunate in its timing and also probably a bit on the high side. But the fact that they want to expand into vitamins and toothpaste doesn’t strike me as odd. They already sell toothpaste, so they can use their own distribution network in emerging markets for that. In addition, about two years ago, Unilever bought GSK’s Horlicks brand of nutritional drinks, and it is doing very well. These are interesting things that are part of the bigger picture. So, in the longer term, I am not too worried about Unilever.”

First, about your work: you focus on developed markets. Isn’t a portfolio that focuses on emerging markets much more exciting?
“The emerging markets are very exciting. But many companies that fall into my portfolio get most of their growth from those emerging markets. So, there have been discussions at times about whether a company belonged in my portfolio or in the emerging markets portfolio. So, we agreed that the main listing of a company would determine which portfolio it fell into. For Heineken, for example, more than half of their sales now come from emerging markets. Nigeria used to be important to them, now it’s Vietnam, Brazil and Mexico. For Heineken, those countries are more important than America. But because the company is listed on the AEX, it is included in my portfolio. For beauty companies like L’Oréal and Estée Lauder, China is now the biggest growth market, but they are included in my portfolio as well. And in the name of the world's largest brewing chain, AB InBev, ‘AB’ stands for American Anheuser Busch, ‘In’ for Belgian Interbrew and ‘Bev’ for Brazilian AmBev. Most of the companies in my portfolio are really global companies. So, it's not as boring as you might think; in fact, it’s quite fascinating.” 

Back to Unilever. In addition to criticism of the takeover bid, the company is under fire from activist investors for a more fundamental point. The company is said to be too concerned with sustainability at the expense of profitability. APG is convinced that performance does not have to come at the expense of sustainability. Do you understand the concern of the activist investors?
“Yes and no. Sustainability by itself is not a good reason to invest in something. But we do think that sustainability can lead to innovation and the creation of additional demand. And that, in turn, can lead to higher returns over a longer period of time. At Danone, for example, the emphasis on sustainability seemed to come at the expense of a focus on revenue and profit growth. But a company like Nestlé is also at the forefront of sustainability and they do manage to come up with innovative products that they can charge a higher price for and therefore also achieve greater profits. So, we don’t agree with investors who think that sustainability only costs money and is bad for investors. But sustainability should also not be used as an excuse for mediocre returns for a portfolio that could do better, as with Danone.”

It is important to APG that the companies it invests in have sustainability as a top priority. What does APG do to prevent activist investors who have little to do with sustainability from hijacking a company’s share price?
“We make it clear to them that we think sustainability is very important and that you can also show superior profit growth with it. But you do have to combine it with innovation and marketing, so that you come up with a product that is not only good for the planet but also for the consumer. Unilever was criticized by British fund manager Terry Smith for putting too much focus on sustainability. But I think he is fine with Unilever developing innovative products and linking that to sustainability. A company has to make products that the consumer wants, and sustainability is a trend in society too.”

Everything is accelerating more and more. But as a long-term investor, we don’t have to go along with the frenzy of the day.

You have been working at APG for quite a few years. What do you see as the added value of working for this institutional investor?
“As APG, you are somebody and companies are therefore often interested in how we look at things. We are currently looking at investment opportunities in sustainable food. If we then want to ask a company about their ESG policy (Environmental, Social and Governance; the three central factors for measuring the sustainability of an investment, ed.), we get to speak to their specialists instead of just a spokesperson. Through these conversations you notice that they consider APG to be an important discussion partner. That really is an added value of working at APG. Another big advantage is that we have so-called 'sticky money'. That means that if a company performs a bit less during a quarter, we don’t immediately pull our money out. We therefore have a longer time horizon than many other investors and that is also an advantage. Because it means that you can also invest in companies that initially seem expensive, but in the longer term can show growth that is greater than the average economic growth.”

As Portfolio Manager for Developed Markets Equities, you are on top of developed markets. In which sectors do you expect the most growth in the coming years?
“Most of the growth is still in the more expensive products. When it comes to consumer goods, you have to think of the high-end cognacs, malt whiskies and premium beers, for example. These are different in every market, incidentally. For example, Budweiser is a premium beer in China but not in its homeland, America. People are getting wealthier and are not so much buying more food as they are eating better. As investors, we are mainly interested in price increases because a product has improved, not because of inflation. The sectors in which companies are able to develop products that people are willing to pay more for, through innovation or marketing, are the most interesting to us. We expect greater growth in the longer term from investments in these sectors. This also applies to the more expensive skin care and dermatological products. For example, the MAC and Clinique brands of Estée Lauder and La Roche-Posay and Vichy of L’Oréal. Those products fit into the health and wellness trend.”

There is currently a shift taking place in terms of consumption, from ownership to access and e-commerce. What consequences does this have for the way we invest?
“Digitalization is important because there is now a lot more data known about consumers and their behavior. You can therefore serve consumers much better. A lot of information about you and me is known, and the brands that are furthest along in this, such as L’Oréal, really benefit from this and also show higher sales growth than other companies. That’s an important development. You also see the generation that wants everything now, like the Gorillas and other flash delivery companies of this world. These are the digital and innovative competitors for the supermarkets. That’s why they need to invest in e-commerce even more quickly. Due to the pandemic, the supermarkets showed a nice growth in profits, but now their competitive position is deteriorating. As investors, we do take this into account.”

It sounds like digitalization is definitely going to affect your portfolio. What other developments do you see happening in the coming years?
“Everything is accelerating more and more. But as a long-term investor, we don’t have to go along with the frenzy of the day. That’s our big advantage. We have to ask ourselves what the structural trend is. Plant-based meat was a hype for a while and some producers got astronomical valuations on the stock market. Fortunately, we did not go along with that hype, because now you can see that that strong growth has faded, especially in America. But now large companies such as Nestlé and Unilever are entering the market for plant-based meat. However, they have much more capital at their disposal than the small companies and, as far as I am concerned, are therefore more interesting to invest in than the small companies that started the hype.”

Who is Ton van Ooijen?

Studied macro and business economics at the Free University. He also obtained a propaedeutic diploma in history. And he took courses to become a Certified Financial Analyst.

Interest in investments
“My interest in investments goes back a long way. It has to do with the fact that I like history. I think the past is important and provides a foundation for the future. And I like numbers. If you combine that, you soon end up with economics. At the Fundamental Stock Selection department, we mainly invest bottom-up. This means that we look at the fundamental developments in companies. But macro-economic aspects also play a role: what will countries do, and what will happen to interest rates? The core remains: what does a company do and is it an attractive investment?”

Working at APG
“I first worked for various brokers, advising individual clients. At one point I got the opportunity to work for APG. The great thing is that here I get to invest myself instead of just giving advice. It really is a profession where you learn every day, and you are responsible, which I think is a great advantage of working here. I also see what the result of my work is, at least in the longer term. Another positive point is that many of my family members are participants in the pension funds that APG serves. For example, my father was a teacher and my sister still is. So, I work for my family, as it were. I see that as an added value. You’re doing something good, you’re learning and what you do has an impact. Those are things that everyone would like to have in their job.”

The fast-moving consumer goods in the developed markets, namely: Europe, the US, Australia, Japan, Hong Kong and Singapore. “The portfolio I am directly responsible for is worth 1.8 billion euros. But what I do is copied by an umbrella portfolio, which has about 2 billion euros in the same funds as I have, but sometimes with a slightly different weighting. That is related to risk management. If I were to overweight growth stocks, we would get a style drift and we don’t want that. The portfolio manager of the coordinating portfolio then rectifies this. He not only looks at my portfolio, but also at other portfolios.”

Volgende publicatie:
APG urges Korean companies to take strong climate action

APG urges Korean companies to take strong climate action

Published on: 16 February 2022

In a letter to CEOs and chairs, APG is calling on large South Korean companies and major carbon emitters to step up their efforts to combat climate change. On behalf of its pension fund clients, APG urges ambitious climate and carbon reduction strategies and commitments.


The letter has been sent to ten large South Korean companies in which APG invests, including Samsung Electronics, Hyundai Steel and LG Chem, a large (petro)chemical company. Despite being large carbon emitters, none of these companies is in scope of Climate Action 100+. This investor-led initiative aims to ensure the world’s largest corporate greenhouse gas emitters take necessary action on climate change.


‘Demonstrate ambition and leadership’

“Climate change is the single biggest challenge the world is facing,” says Yoo-Kyung (YK) Park, Head of Responsible Investment & Governance Asia Pacific. “These companies are important to the Korean economy and the global supply chain. Transforming them into low carbon businesses is critical to the goal of climate crisis mitigation.”


APG calls on the selected companies to evaluate their existing climate change strategies and carbon reduction targets and make sure these are ‘sufficiently ambitious’. The companies are also urged to communicate on their challenges related to climate change and the energy transition with long-term investors and to take their suggestions into careful consideration. The letter states it is important for companies to demonstrate ‘consistent and decisive leadership’ in addressing climate change.


Focus on bulk users of fossil fuels

APG’s largest client ABP announced in October 2021 it will stop investing in fossil fuel producers. The civil service pension fund wants to focus its engagement efforts on bulk users of fossil fuels, such as utility companies and car manufacturers. APG’s engagement with these ten large Korean companies – none of which is a fossil fuel producer - fits in with this approach.

Volgende publicatie:
APG announces investment into Taronga Ventures’ built environment technology Fund

APG announces investment into Taronga Ventures’ built environment technology Fund

Published on: 10 February 2022

APG, on behalf of its pension fund clients, has made it’s first investment into the built environment technology (“Proptech”) in Asia Pacific through an investment in a Taronga Ventures built environment technology fund.  The technologies aim to improve ESG, operation efficiency and quality of the real estate. The fund’s strong focus on ESG related-tech also perfectly aligns with APG’s vision to drive longer term sustainability within real estate.


Click here for pressrelease

Volgende publicatie:
The importance of good corporate responsibility rules

The importance of good corporate responsibility rules

Published on: 8 February 2022

The EU is currently considering making the standards set out in the OECD guidelines mandatory for multinational companies. This means that companies must pay attention to human rights and the environment when producing or purchasing goods and services worldwide, in order to prevent abuses. Johan Barnard (Head of International Public Affairs) and Anna Pot (Head of Global Responsible Investment Capital Markets & RI Communications) on why APG encourages this, but also what to look out for.

What do these guidelines mean?
Barnard: “The Organization for Economic Cooperation and Development (OECD) guidelines define what is expected from companies in OECD member countries in terms of corporate social responsibility (CSR) in international business. These are based on, for example, the UN Guiding Principles on Business and Human Rights and other international standards. They offer companies guidance on how to deal with various issues. These include a company's responsibility for its suppliers, human rights, child labor, the environment and corruption. These OECD guidelines, to which the Netherlands as OECD member has also committed itself, play a prominent role in Dutch international CSR policy. They are also a key focus APG’s responsible investment policy.”

And these are still optional?
Barnard: “I would not call it optional. Think of it as a standard that the OECD member states have agreed on together, without it being legally binding. Many Dutch companies subscribe to the guidelines. In addition, a series of covenants have been concluded with the government and NGOs in which sectors agree on how to implement the OECD guidelines. The pension sector, for example, has concluded the covenant on International Socially Responsible Investment (IMVB). A special feature of the OECD guidelines is that they include a complaints mechanism. Anyone can submit a complaint about a company that does not appear to be adhering to the guidelines to the National Contact Point (NCP) of the country concerned. At that point, a mediation process starts in which all parties get together. If mediation is successful, the parties then agree on how to proceed with the issue. The NCP facilitates the process, but does not decide on the outcome; that decision is made by the parties themselves.”

Why does APG want a European mandate?
Pot: “We want to invest in sustainable companies that respect human rights, care for the environment and have a sound governance. Because we invest globally, that expectation also applies to companies worldwide. We want a clear standard that does not only apply in the Netherlands. What also helps us as a sustainable investor is if companies report on how they operate sustainably and that they are also encouraged by the regulator to operate in a sustainable manner.”
Barnard: “The European Parliament believes that companies do not take enough responsibility for working abroad in a decent way. That is why it has asked for a binding regulation. Some Member States, such as France and Germany, have introduced national laws to establish mandates regarding the supervision of chain partners. The Dutch Ministry of Foreign Affairs concludes that despite the covenants, things are not yet going well enough in the Netherlands. A discussion is therefore underway with the Dutch House of Representatives about the question of whether a Dutch law should be introduced to make the OECD guidelines mandatory. In addition, judges are also starting to take the OECD guidelines into account when determining what companies are required to do. A recent example is the Shell affair.”

On February 23, the EU will present a proposal, the so-called Sustainable Corporate Governance Directive. What are you hoping for?
Barnard: “First of all, it is important for a European standard to be established in this way. That is much better than running the risk of this matter being regulated in different ways in different Member States.”

Pot: “To capture the OECD guidelines in legislation, we do see some areas of concern. The direct contact between stakeholders such as civil society organizations and companies or investors is important to us. We are in constant dialogue and cherish this dialogue because it provides us with new information and insights. Stakeholders can always contact us directly. Where they prefer to use the unique, good mechanism of the NCP, and/or cannot find us directly, we will certainly cooperate. We must ensure that the NCP approach is not too easily duplicated or replaced by formal proceedings in court.

Finally, clear definitions are needed to delineate responsibility: what is the role of companies versus investors? In a recent case on McDonalds, you saw that these are quite often mixed up.”

During that McDonalds issue, APG sat down with the NCP as one of the defendants. What was this issue about?
Pot: “Four international trade unions had filed a complaint against fast-food chain McDonalds for allegedly failing to take sufficient action against allegedly systemic sexual harassment in the workplace in a number of Latin American countries. And against two investors. APG was accused of not doing enough to prevent 'gender-based violence and harassment' (GBVH). And according to the unions, that is a violation of the OECD Guidelines for Multinational Enterprises.

For the second time, NCP recognizes that APG is acting in accordance with the guidelines and is leading the way in doing so

APG holds less than one percent of the shares at McDonalds. Remarkable then that this investor is being sued and not one of the much larger shareholders.

Barnard: “This is certainly striking. Many larger shareholders who also subscribe to the OECD guidelines, but are based in other OECD member states, are not addressed. Perhaps because the rules are better in the Netherlands, the complainants thought they could win their case more quickly. In that respect, too, a European regulation is better, because there will not be such a big difference between member states. Of course, that is still possible with countries outside the EU, but a regulation for the entire OECD or even the entire world is very difficult to achieve. You want to prevent complainants from shopping around where the most favorable judgment can be expected, instead of having a conversation with the most responsible parties.”


Is that one of the areas of concern in mandating that you are referring to?
Barnard: “Exactly. APG wants to be responsible for things we can actually influence. That is first and foremost our own investment policy, including our own engagement activities. With and without NCP we will be discussing this with stakeholders.”
Pot: “We do due diligence, or careful research, in the investment choices we make and we have discussions with companies we invest in, such as McDonalds, about responsible business practices. In that respect, the responsibility of an investor is really different from that of the company about its business practices. A second area of concern is the complaint procedure at NCP that is primarily aimed at mediation. The parties must come to an agreement together before there is a solution. That fits in with very open standards, which can be fleshed out by the parties together in a case-by-case procedure. With a binding arrangement, you have a procedure before a judge who ultimately decides for the parties, and also makes jurisprudence. In that model, much more clarity is needed in advance.”

And not enough clarity can lead to unpleasant consequences?
Barnard: “In the most serious cases, the OECD guidelines ask companies to pay compensation to injured parties. Incidentally, this is not for the NCP to determine. The NCP only acts as a mediator. But in the event that a judge could indeed decide on compensation in the future, it is extra important for companies to know in advance where they stand.

It then becomes crucial to have clarity about the difference in responsibilities between companies on the one hand and the investors in those companies on the other. Fortunately, the OECD does endorse this in its guidelines for institutional investors, but these are sometimes interpreted differently by, for example, NGOs than by us.”

The outcome of the McDonalds investigation by the NCP has now been published. How will APG emerge from the battle?
Pot: “For the second time, we are being complimented by the NCP on the way in which we, as a shareholder, take responsibility and act in accordance with the OECD guidelines. The unions that brought the case also acknowledged this, based on our discussions. The NCP concludes in its final statement that 'pension administrator APG, which manages pension funds for ABP among others, has fulfilled its responsibility as a minority shareholder and acted in accordance with the OECD guidelines'. APG thus uses its influence within the frameworks of our investment policy to avoid or reduce negative impact. In 2015, the NCP also ruled regarding APG and stated that we act in line with the OECD guidelines and use our influence to make our portfolio investments/companies more sustainable.”


Volgende publicatie:
Political jousting about gas and nuclear energy as renewable energy sources

Political jousting about gas and nuclear energy as renewable energy sources

Published on: 26 January 2022

What's the color of energy? That is the question now that the European Commission has proposed to temporarily label natural gas and nuclear energy as sustainable. Johan Barnard (Head International Public Affairs) and Claudia Kruse (Managing Director Global Responsible Investment & Governance) talk about the importance of a taxonomy on a scientific basis.

What exactly is this taxonomy?
"The taxonomy is an EU tool that defines which economic activities can and can't be classified as climate sustainable," says Barnard. "Brussels is trying to combat greenwashing with this. Big investors such as APG can use this classification to show their stakeholders how many sustainable investments they make. It is the explicit intention that the list of sustainable economic activities has a scientific basis."

And gas and nuclear power are not on this list now?
Barnard: "When drawing up the list, the European Commission deliberately left two subjects out of consideration: namely the generation of energy with natural gas and nuclear energy. There was a fear that a political joust would ensue over these subjects. On December 31, 2021, the Commission nevertheless made an additional proposal to put gas and nuclear energy on the green (sustainable) list, temporarily and subject to conditions. At the request of the Commission, two groups of experts looked into this: the independent Sustainable Finance Platform on the one hand and experts from the Member States on the other. The Sustainable Finance Platform issued a negative advice on Monday, January 24."

What are the arguments for and against the inclusion of gas and nuclear energy?
"Advocates of nuclear power, including France, want it on the green list," Barnard says. "This is because nuclear energy hardly leads to CO2 emissions. Opponents of nuclear energy point to environmental damage from discharging cooling water, the safety risks and the problem of nuclear waste. On the basis of the do no significant harm principle of the taxonomy, the Sustainable Finance platform concludes that nuclear energy has to be excluded from the green list. According to the Commission, the temporary labeling of gas as sustainable is necessary in order to be able to phase out energy sources in the short term that are even more CO2 intensive, such as lignite or coal. A less stringent limit for CO2 emissions would then apply to gas compared to renewable energy sources. The Sustainable Finance Platform believes there is no reason to deviate from the general CO2 limit and points out that the supply of renewable energy is already increasing strongly, so alternatives will indeed be available."

We must have a sound basis in the discussion about sustainability with our stakeholders

What is APG's position on this?
"APG is a strong believer in science determining which economic activities contribute to sustainability and which do not," Kruse says. "The Federation of the Dutch Pension Funds explained this position on behalf of the Dutch pension sector in an article in December. We must have a sound basis in the discussion about sustainability with our stakeholders, in particular the participants of the pension funds. We therefore follow the Federation of the Dutch Pension Funds in its appeal to the Commission to take the scientifically substantiated advice of the Sustainable Finance Platform to heart."

The Platform also proposes to include an additional category in the taxonomy. What is APG's position on this?
Barnard: "The Platform does indeed suggest introducing a so-called orange or amber category, just like the Federation of the Dutch Pension Funds did before. This would then contain a list of economic activities that are not fully sustainable, but that do play an important role in the transition to sustainable energy. We think that's a better solution than including gas and nuclear energy on the green list, which dilutes it."

Does the outcome of the discussion still have an impact on APG's investments?
Kruse: "Not in general. The discussion is about whether an economic activity in which an investment is made can be marked as sustainable or not. The taxonomy leaves investors free to invest in economic activities that are considered sustainable or non-sustainable. In making that choice, we use our investment criteria and those of our fund clients to assess whether an investment is sustainable and responsible and also performs adequately financially. It can get tricky with the green bonds issued by the European Commission itself. If gas is on the green list, then these green bonds could also include investments in a fossil fuel. In that case, there is a chance these no longer fit in with the investment policy of our fund clients."


Update: February 3, 2022

Final proposal
On 2 February, the European Commission presented its final proposal. This shows that it does not comply with the advice of the Sustainable Finance Platform. The Commission maintains its wish that energy generation with natural gas should be subject to a less stringent CO2 emission limit than other energy sources. The Commission also disregards the Platform's criticism that it’s not certain that nuclear energy complies with the so-called 'do no significant harm' principle. Barnard: "The Commission thus ignores the wish of many climate, environmental and nature conservation organisations, governments, banks and institutional investors - including APG - that when considering whether or not an economic activity is sustainable, a scientific basis is needed."


If this proposal enters into force unchanged, it will in any case have an important impact on the reporting of companies. "They must state whether their green-labeled activities include power generation with natural gas or nuclear power," Barnard said. "This will hopefully allow investors who wish to do so to avoid unintentionally investing in natural gas or nuclear energy."

APG will study the Commission's proposal in more detail in the coming period and discuss it with its fund clients. All in all, the proposal detracts from the benefit of taxonomy, Barnard argues. "That was that you can easily determine whether an economic activity is green or not. Unfortunately, that would now become unnecessarily more complicated if this proposal goes through."

Volgende publicatie:
“Whether things are going to go left or right, it’s going to be suspenseful”

“Whether things are going to go left or right, it’s going to be suspenseful”

Published on: 25 January 2022

What economic developments will we see this year? And what characterized the economy last year? Thijs Knaap, Chief Economist at APG, is keeping a close eye this year on central bank policies and on the political and economic developments in China.


As the hot topic of both last year and this year, Knaap still wants to have mentioned Covid. “It was simply the driving force behind a great many things in 2021, positive and negative. Lockdowns, the variants popping up everywhere, vaccines, government support measures, working from home, growing inequality and the dissatisfaction with this.” He is therefore curious what the impact of the omicron variant will be. “If we're lucky, the consequences will be limited to mandatory working from home and bankruptcies of cruise lines and corporate air travel providers. If we are unlucky, then we are on the eve of a long lockdown and the question of what all needs to close down to prevent the new variant from causing a lot of casualties again,” Knaap states.


Big companies
Knaap still marvels at the high earnings growth of companies in the MSCI World Global Index. “Those profits increased by 70% last year. The big companies that are in such an index, despite corona, are doing great. That’s really an unexpected turn of events that’s working out well for investors. It’s an important development, though, because if the big companies weren’t doing well, the economic concerns would be a lot bigger than they are now.”


Sherlock Holmes

What Knaap sees as characteristic for 2021, in addition to the profitability of the large companies, is that all hell has not broken loose, although there was every possibility for that to happen. “There is a Sherlock Holmes story in which he solves a crime thanks to a dog that did not bark when it was supposed to. The storming of the Capitol, the tensions in Ukraine, government debts jumping by dozens of percent; all events that everyone said would have enormous economic consequences but ended up only causing a ripple. Maybe that’s because everyone is preoccupied with Covid, but it’s striking.”  


The question of what China will do is becoming an increasingly important factor

Central banks
Knaap sees central bank policy as a major theme of 2022. “Only when the broad monetary policy is reversed will you find out who can’t manage without that financial support. That’s what we’re going to find out this year. You also never know how fast it’s going to go, that’s the critical thing about monetary policy. For example, they can raise interest rates twice without consequences. Then they do it for a third time and all of a sudden everything crashes. So, whether things are going to go left or right, it's going to be suspenseful.”



In this new year, Knaap is also keeping a close eye on China. “The question of what that country will do is becoming an increasingly important factor. At least that’s what we’re all saying, but we’re not really taking it into account yet. That’s partly because China has always been so incredibly reliable when it comes to economic growth. Always, when the world economy was doing badly, the Chinese started spending more money, acting as an anchor for the world economy. Now China has reversed its traditional policy and is no longer investing itself out of a period of lower economic growth. Indeed, Beijing is now shortchanging large companies like property developers and Internet companies. Then again, it’s a special year for China. Not just because next month is the Winter Olympics, where all sorts of political mishaps can happen, but especially because Xi Jinping’s term in office expires in October. He will probably stay anyway, but it is a tense moment in which the economy has to be in good shape. And in the background is the story of big companies like Evergrande; we don't know if they will go down, whether they are supported or not. That uncertainty around China is definitely going to play a role in the global economy this year.”

Volgende publicatie:
APG is anxiously awaiting Unilever’s major initiatives to enhance its performance

APG is anxiously awaiting Unilever’s major initiatives to enhance its performance

Published on: 24 January 2022

In reaction to Unilever’s recent bidding for GSK CH last week, APG has issued its view on this surprising move.

In general, APG is not concerned about Unilever’s current strategy. In fact, we support the company’s multi-stakeholder model. In our view, Unilever, with its focus on purposeful brands, is one of the front-runners in taking the necessary steps for the food industry to move towards a more sustainable world. This perfectly aligns with APG’s views and expectations as long term responsible investor. However, despite Unilever’s excellent sustainability credentials we are waiting for an improvement of the company’s underlying growth, which we expect is just a matter of time.


Unilever has been able to generate an attractive return on its capital over the years. This is an important performance metric to us, which is also part of Unilever’s management remuneration. This has been achieved primarily by organic development and small acquisitions. We support this strategy as it has proven itself in the past. The company’s plan to make a more transformational shift in the business by bidding on GSK CH surprised us. While we do like positive surprises, it is not clear to us that this is one.


We see a lot of strategic benefits of entering, on a large scale, the consumer health space. Particularly the possibility to use Unilever’s strong distribution network in emerging markets in a.o. India, Indonesia and Brazil. Large acquisition tend to have a bad reputation. However, Unilever seems to be successful with the integration of the acquired Horlicks brand (also from GSK) in India. It would have helped if management had shared more information about their confidence in being able to copy the Horlicks success on a large scale with GSK HC.


We are anxiously awaiting Unilever’s major initiatives to enhance its performance. Unilever should passionately focus on consumer needs to reignite revenue growth. We would like to see new innovative products which should increase market share but also enhance overall category growth. A likely change of the matrix structure will certainly shake-up the company but in the end the company has to increase its innovative power.


Short term issues as increase input costs and slowing down emerging markets are storms Unilever has proven to overcome decennia after decennia. Introducing innovative, sustainable products against a reasonable price, combined with the company’s strong distribution network, particularly in emerging markets, has been the company’s success in the past and will likely be in the future as well.

Volgende publicatie:
“It's still nice not to be called a money-grabber”

“It's still nice not to be called a money-grabber”

Published on: 24 January 2022

Who are those people choosing to work in the pension industry? What is it they do all day for your pension? And do they truly enjoy their work? We take you with us to have a look behind the scenes.

Julian Steenman (26) is quant portfolio manager at APG. “People wrongly assume that a quant is a numb machine who is programming all day sitting behind a monitor.”


What does the work of a quant portfolio manager entail?

“A portfolio manager manages an investment portfolio. I work within the real estate team and participate in managing a real estate portfolio of APG.”


OK, and what is a quant?

“Quant stands for quantitative. It is a rather broad and vague concept in the investment world but in general, a quant is someone who looks at potential investments in a model-based and mathematical way. We try to explain the things happening on the stock exchange by means of mathematical relations, and cause and effect. In addition, we try to make sensible statements on what the future will hold. The field I am involved in specifically, is systemizing the investment process within the real estate team.”


How does that work?

“What we do within the real estate team, simply put, is answering the question: Do we want to invest in this? with either Yes or No. And ‘this’ can be a hotel for instance. The answer is always based on substantiated arguments and convictions. A large part can be standardized. We are working on a type of decision tree which has the question whether or not to invest at the top and that works its way down to more detailed information on why we should or shouldn't. By systemizing the process that way, you make sure everyone has to go through the same steps when making decisions. It also makes it easier to compare those decisions with one and other.”


How does one become such quant?

“If you studied mathematics or econometrics, the label ‘quant’ is easily applied. I studied mathematics at the university and gradually found out my interest for the financial world.”


Yet, ‘the financial world’ sounds a bit flashier than ‘the pension industry’. How did you end up at APG?

“I never really thought about the pension industry to be honest, but accidently ended up at APG to write my graduation thesis. APG is the largest asset manager in the Netherlands; that scale and complexity cannot be found anywhere else. I enjoyed it here so much that I decided to stay. So, I did a two years’ traineeship and have been working in this new job since October.”



And, no regrets yet about the choice you made?

“Absolutely not, I have definitely made the right choice.”


What do you love so much about this job?

“Multiple things. I consider the investment process a challenging, interesting puzzle. I also very much enjoy concretely contributing to the process itself, in together making sure that it gets increasingly easier to compare why we invest in hotel A and not in hotel B. That makes the process better to explain and also more transparent. And it's a pleasing plus that we serve a public interest. Yes, we are busy making money and we want to realize that by means of investments, but there also is an idea behind the reason. We do this to make sure the people will be receiving sufficient pension payments. I enjoy contributing to that goal, although that wasn't the initial reason for me to choose the pension industry. It's still nice not to be called a money-grabber.”


What drives you in your work?

“The fact that we invest for the pension of millions of people. That is quite different at many other asset managers where you try to earn money for a small number of millionaires. When I chose to write my thesis at APG, that wasn't my main motivation but I started to identify more and more with the missions of APG throughout the years. APG is a leading company within the financial industry in terms of sustainability, for example. Sustainability is important to me as well. I became a vegetarian a couple of years ago for environmental reasons. What drives me specifically in my work is unravelling that extremely complicated process involved in making an investment decision. And then to come up with smart, quantitative solutions gives me great satisfaction.”

When I am with friends, we always talk about my work at least once. They believe it's very interesting

How do people react when you tell them what kind of work you do?

“Well, they believe it's very interesting! I notice that many people started investing privately in the past years. So, everyone in my inner circle is very interested in what I do. Every time my friends and I come together in the evening, we always talk about my work at least once. They ask me, for example, what I am currently doing and how the entire investment process at such large asset manager goes.”


Good question, how does that investment process go?

“Being a private person, you click on a button and you purchase a share. But there are many steps preceding such decision at an organization like APG. You conduct a due diligence investigation, as they call it within the real estate world: you gather as much information as possible. Just to stick to that hotel example: say we consider purchasing a certain hotel, we will first analyze such hotel entirely. How old is the building, what is the state of the rooms, does it require renovation, is the management reliable? We look at a company-specific level, but also at the location. What is our expectation of the development of rental prices of hotels at this location and of the inflation? We then put all of those pieces of information together in a valuation model. The goal is to use the outcomes to apply a valuation tag to that hotel, enabling us to assess whether or not it is an attractive investment. If the answer is Yes, we present it to an investment committee where all of our arguments are looked into once again. Is our expectation of the room prices realistic, for example? Only if we are able to properly substantiate why something is a good investment, we get the green light and are allowed to submit an offer.”


How much money are you actually managing?

“The total value of APG's real estate portfolio is somewhere between 50 and 60 billion. We manage those funds globally with a team of a little over fifty people. If you look at it that way, we manage 1 billion euros per person.”


Do you invest privately as well?

“Yes, but only within the spectrum allowed within APG. Because we are professionally involved in investing, we are not allowed to buy individual shares in private. If you invest privately in a certain company, such as Philips, that could affect your decisions at work, or the other way around. We are allowed to invest in funds and trackers (‘baskets’ of shares following the price of the entire AEX Index, ed.), so that is what I am doing.”


What does your workday look like?

“I often start my day reading the news related to the stock exchange and real estate, so I am aware of what is happening. Then I make a To-Do list of the two or three most important things I want to finish that day. Those priorities always involve that valuation model I was talking about earlier or systemizing the investment process. We have five to ten people in our team working on those matters.”


Are you tied to your monitor all day?

“Good heavens, no. That is the image many people have of quants, that they are numb machines programming and modelling little things all day at their computer. But that idea would be horrifying. I am fortunately also interacting with colleagues multiple times per day. That is very important to me. No, I don't recognize myself in the stereotypical image of a quant at all.”


What do you do in your spare time?

“I exercise a lot and like to run. I also enjoy reading, like to play chess and am a big fan of travelling – too bad the latter isn't possible at the moment.”

What are the character traits making you fit for the work you do?

“Apart from the fact that I truly understand quantitative matters and are able to think in an abstract way, I am good in creating the bridge with people with a lesser numerical background. Explaining complicated matters as simply as possible is something I am rather good at.”


What do APG customers specifically notice in terms of your work?

“That would eventually result in the amount of pension paid every month. If our investment results are good – even though real estate is only a small part of the whole – customers notice that in the fact that we don't have to cut down and that indexation takes place. And systemizing the process, what we are currently doing, leads to us eventually being able to make even better decisions and making those choices even better to explain.”

Volgende publicatie:
“There is still insufficient attention on issues around implementation”

“There is still insufficient attention on issues around implementation”

Published on: 20 January 2022

What developments will we see this year as far as the Dutch pension agreement is concerned? And what happened in this regard last year? Peter Gortzak, Director of the Implementation Policy at APG, is anxious to see whether the House of Representatives will be presenting sweeping changes to the pension agreement in the coming months.


2021 was an important year for the pension agreement in the Dutch polder. "There has been a lot of work behind the scenes by steering committees and others on legislative texts for the new pension system," Gortzak says. "Those legal texts were never intended for the public, so the Council of State (RvS) could issue an opinion on them without outside pressure. This has been achieved and the Council of State is now looking at the texts. If the schedule is met, the House of Representatives will be able to deliberate on them as of April.”


Whereas last year was marked by behind-the-scenes meetings on legislative texts, this year those texts are coming out into the open. This means that a number of issues are becoming quite suspenseful. For example, there is the question of whether the government will succeed in placing the final legislative text in the Staatsblad in January of 2023, after it has been discussed in parliament. In the coming period, the opinions of the Council of State and APG, among others, will become known and thus part of the public debate.

Gortzak: “There are still adjustments to be made to the legislative text, such as the way in which the survivor's pension will be entered and the calculation methodology to be applied. And also the wording of the lower regulations, without which the legislative proposals cannot be properly assessed. On the other hand, there is also the fear of proposals for amendment being too easy and populist-based. It is extremely complicated legislation and there are only a handful of people who have the full overview. As a result, a member of parliament may single out issues that seem easy and lose sight of the bigger picture. For example, one of the principles of the pension agreement was that pensions should be easier to explain. But the House of Representatives will soon see that the right of citizens to object to pensions has been scrapped. That is easy to explain, but it obviously feels like a right that is being taken away. All in all, it's going to be interesting to see whether MPs come up with far-reaching changes and whether the explainability of the subject of pensions will receive sufficient attention.”



Gortzak believes that another important topic this year will be the importance of the implementability of legislation. “The last two years there has been an awful lot of attention on implementing bodies such as the UWV, the SVB and especially the Tax Authority. According to the general opinion, politics has paid too little attention to the consequences of complex legislation. I hope that members of parliament have learned from previous excesses and, when assessing the new pension act, also take into account the feasibility of everything they think up. This is something we at APG would really like to warn against. Because even though a lot of hard work has been done on legislation behind the scenes, in my opinion the implementation problems have not yet been looked at properly. That is a particular concern. It is really important that members of parliament, in the event of any changes to the legislative text, ask themselves how it will affect the implementability of the new pension system.”  


Volgende publicatie:
"The winner takes all also applies to this year"

"The winner takes all also applies to this year"

Published on: 18 January 2022

What developments will we see this year in terms of investments? And what characterized stock markets last year? Peter Branner, Chief Investment Officer at APG, expects in this time of rising inflation stocks to continue to do very well, especially those of large companies.


“After the good investment year of 2020, we thought 2021 would be more modest because of the problems in the supply chain caused by the pandemic. Despite concerns about this, increasing concerns about inflation later in the year, 2021 turned out to be a terrific investment year,” Branner said. “This is evidenced by the fact that our pension fund clients achieved between 8 and 12 percent returns with a diversified portfolio and a healthy contribution from our active management. Whereas 2021 was a year where companies had to deal with the effects of Covid and supply issues, 2022 will be more about how the economy will adjust to high inflation and how we avoid overheating.”


In the second half of 2021, we saw a gradual increase in the focus on rising inflation. Initially, central banks asserted that this would be temporary. In the fourth quarter, however, the U.S. Fed concluded that inflation could last longer and announced that it would raise interest rates sooner. The European Central Bank - hesitant at first - is now also signaling that support measures will be phased out sooner. “In retrospect, I think the central banks reacted a bit late to rising inflation, but let’s not forget that the situation was fragile,” Branner argues. “Interest rate hikes could have derailed the economy if they had been introduced too soon. Maintaining balance required close attention. Overall, I still think central banks have acted appropriately since the 2008 financial crisis, to keep the economy running and protect us from major upsurges in unemployment.”


Central banks
“The question is what are they going to do this year, especially in terms of preventing the economy from overheating,” says Branner. “Because that’s a risk this year, with the very low unemployment rates and the tight real estate market. Although the economy is cooling down again a bit with the outbreak of the omicron variety and new lockdowns. I am counting on the central banks to implement their new policies gradually this year. Instead of raising interest rates all at once, they will choose to do so in small increments to allow the markets to adjust. That will be the central banks’ balancing act: rolling out new policies in a way that doesn’t cause shock waves in the markets.”

Stock markets
At least the stock markets are showing a positive start to this new year, Branner notes. “When people are worried about the economy, for example because of inflation, they often choose to sell their stocks. That’s not wise. In the case of inflation, equities are often a good medium- to long-term investment. And I expect high inflation to continue for some time and equities therefore continue to do well. In times of inflation, there are arguments against traditional growth stocks, but some of the larger companies like Tesla and Microsoft may be doing relatively well because they seem to have been able to address supply chain issues. So, the adage ‘the winner takes all’ will also apply to this year.”


Branner also expects a lot from venture capital for 2022. “I have often described this period with more focus on sustainability and green investments as our generation’s Industrial Revolution. That means you can make a lot of money as an investor in these transformational times, but also easily miss a technological disruption. Given this phenomenon, it could be a good year for large companies, but certainly for selective startups. In the last quarter, as an investor, we looked at how we could raise money for venture capital to support startups, and I foresee us continuing to do so this year and into the future. In 2022, we will also be focusing our international attention on Southeast Asia and monitor more investments in Australia, Southeast Asia and India. India will certainly be one of the places where economic growth can be expected because of demographic developments there.”


“At APG, we also want to be at the forefront of biodiversity investments. This is broadly linked to our continuing strong belief in sustainability. And green energy is a theme that is constantly in the spotlight, of course. This reflects the views of our pension fund clients, who continue to develop their sustainable investment policies.”


Volgende publicatie:
APG contributes to sustainable investment in emerging markets

APG contributes to sustainable investment in emerging markets

Published on: 17 January 2022

APG has made its first investment in ILX Management’s SDG-focused private credit fund, in a step that contributes to the further development of sustainable investments in emerging markets. The USD 750 million (€650 million) investment has been made on behalf of ABP and bpfBOUW, both of which aim to allocate an increasing share of their assets to investments that contribute to the Sustainable Development Goals (SDGs).

The investment is attractive from a diversification and risk-return perspective, as well as from a sustainability perspective, says Sjacco Schouten, head of Emerging Market Debt at APG. “By investing in this new fund, we gain access to a diversified portfolio of sustainable investment opportunities in emerging and developing economies. Although the SDGs focus to a large extent on those challenges that are most pressing in these countries – such as food security and access to finance – the availability of suitable investments that contribute to these goals is still limited. But we do expect this to change as the role that private initiatives can play in financing sustainability efforts in emerging markets will become increasingly important.”

Cornerstone investor

APG is the first investor in ILX Management’s new SDG-focused emerging market credit fund. The fund will build up an (initially) USD 1 billion portfolio of loan participations in emerging and developing markets. These loans are originated and structured by multilateral development finance institutions (DFIs), such as the Asian Development Bank, the African Development Bank, Dutch Development Bank FMO and the European Bank for Reconstruction and Development. Loans that involve high ESG (environmental, social and governance) risks will not be included in the fund.

“The loans provide medium and long-term finance to projects and companies with a focus on clean and renewable energy, sustainable industry and infrastructure, inclusive finance and food security,” says Schouten. “In the next three years, the fund aims to build up its portfolio, selecting loans that match its eligibility criteria, diversification strategy and risk-return profile. Potential investment examples include the development of port facilities, solar power farms, sustainable agriculture and loans to local businesses.” ILX has announced its ambition to become a multi-billion evergreen fund.

Building a broad and diversified portfolio

But why invest in a fund rather than via individual development finance institutions? “We do make direct investments in bonds issued by such institutions too,” Schouten explains. “However, this initiative allows us to invest in individual projects and to decide what we do and do not want to invest in. The ILX fund combines loans from various DFIs, allowing it to build a broad and diversified portfolio, whereas individual development finance institutions typically focus on a particular region or sector. Investing in the fund offers us more flexibility in terms of our clients’ sustainability requirements, while we still benefit from the underlying DFIs’ long-standing track records in originating and managing private sector projects in emerging markets.”

Equally important, the investment helps APG to diversify and improve the risk profile of its emerging market debt portfolio. “This is because private credit investments tend to have low volatility and a weak correlation with the more liquid credit investments that trade on public markets” Schouten explains. “So these investments help us to spread our risk.”

Furthering sustainable investment

The Sustainable Development Goals were established in 2015 by the United Nations and form a blueprint for a better and more sustainable world. APG and its clients refer to investments that contribute to the SDGs as Sustainable Development Investments (SDIs). Together with other global asset managers, APG has developed an SDI Taxonomy to assess companies’ product and service-related contributions to the SDGs.

In the current emerging market debt universe, there are few possibilities to invest in companies and projects that contribute to the SDGs, Schouten says. “We mainly invest in sovereign bonds and only a few quasi-sovereigns qualify as SDIs according to our own taxonomy. Also, in emerging markets there is still only a limited issuance of green bonds. By investing in the ILX fund, we unlock a new universe of sustainable investment opportunities in the private credit space.”


Read here the Press Release

Volgende publicatie:
Are the increasing energy costs caused by the energy transition?

Are the increasing energy costs caused by the energy transition?

Published on: 14 January 2022

Topical issues in the field of economy, (responsible) investment, pension and income: every week, one of APG's experts provides a clear answer to this week's question. This episode: equity investor Martijn Olthof on the increasing energy costs and the energy transition. “The transition is currently not carried out in an ideal way.”


The switch to and the supply of renewable energy is far from in line with the demand for energy. That has an upward effect on the price of fossil fuels and contributes to inflation. To what extent has the energy transition anything to do with that?

The current extreme increase in the costs of gas and electricity is largely caused by matters that don't have anything to do with the energy transition, Olthof says. “People are sometimes trying to attribute the acute problem we experience at the moment to the transition, but I believe that's way too easy and also unfair. Moreover, we don't have any other choice but to switch to renewable energy, that is to say if we want to limit global warning to a maximum of 1.5 degree. The energy transition will be costing a great deal of money in the long-term, that's a fact. But that's not the reason why gas is nearly four times as expensive now as it was prior to Corona. The high energy costs are caused, among other things, by a frosty winter last year in Asia, less investments in gas production, the rapidly increasing demand in periods with less Corona infections, a higher supplement on CO2 and because less gas is derived from Russia.


Demand and supply
Switching to clean energy is therefore not the underlying cause of the current peak in energy costs. However, it does lead to the question what the transition still has in store for us. “The tricky thing is that we are always looking for a solution that seems easy, but is not necessarily ideal,” Olthof says. “An example is that the blame for the climate change is easily imposed on the energy companies these days, as these companies are the ones producing those polluting fossil fuels. If society demands that those companies produce less, people believe the problem will resolve itself. And so energy companies are forced to produce less fossil fuels by referring the matter to the court, as we witnessed happening to Shell recently.”


According to the International Energy Agency (IEA), the decreasing investments in oil and gas currently are the only part of the energy transition that's going well. The supply of fossil fuels may be decreasing, but that is not the case for the demand for energy. That demand remains undiminished. And the current supply of clean energy cannot compensate for the lower supply of fossil fuels. “Too much demand and too little supply of energy creates scarcity which results in high energy costs. It is my opinion that, due to the major focus on the supply-side and too little attention for the demand-side, the transition is currently not carried out in an ideal way. Even though it is also more difficult to lower the demand for energy as that affects every citizen.” 


Olthof expects the energy transition is going to cost a great deal of money in any event. “Oil and gas are simply very efficient fuels, both in terms of transport costs and energy density. Switching to renewable energy is costly. In order to accelerate that transition, the polluting fossil fuels should become more expensive, for example by increasing the supplement on CO2 . “We already have a supplement on CO2 in Europe but that's not high enough yet to be the decisive factor. Moreover, that supplement does not apply to aviation and shipping. Without these types of measures we just have to wait until renewable energy naturally becomes cheaper than fossil energy. And that's the big problem. The IEA also clearly states that the current policy falls short. The EU may take the lead establishing plans to reduce the CO2 emissions, but those plans immediately face resistance. Because those plans affect citizens directly in their wallet. But if we continue to put off the energy transition, the consequences of climate change will only become bigger.” 


Hasty conclusion
The question remains how much the transition to renewable energy will be costing exactly. “If the transition is carried out properly, the costs will be lower than when we continue to follow the same path: with hasty conclusions,” Olthof says. “By that I mean solutions as the ones we see at the moment and that are mainly aimed at the supply-side. Think about pressuring companies to produce less or to invest in (currently) unprofitable alternatives. But I don't think that is the way to solve the problem. The solution lies in lowering the demand for fossil energy and in making investments in clean alternatives more attractive, meaning the supply of the latter will increase. And that will cost money. But if politicians don’t make those choices convincing enough, the problem will only get bigger over time. And with that, the resistance from society. Eventually, that may lead to us having to live with the catastrophic consequences of global warning exceeding 1.5 degrees.”


Olthof: “What has to happen in my opinion, is for politicians to take action and to implement unpopular measures that cost money. Not an easy message, but an important one. The question is how we are going to do this in such a way that the costs and the effects on inflation and economy stay as limited as possible and that the burden is divided as fairly as possible. If the policy remains the same, the impact will become so big that it will undermine the support for the energy transition. The current policy causes us to head towards global warming by roughly 2.6 degrees. The consequences thereof in the financial, social and civil field are vastly outweighing a high energy bill.”



Volgende publicatie:
APG delivers 31 sustainable battery trains for the Berlin metropolitan region

APG delivers 31 sustainable battery trains for the Berlin metropolitan region

Published on: 5 January 2022

Alpha Trains, a leasing company for passenger trains and locomotives in which both APG (for pension fund ABP) and PGGM (for, among others, Pensioenfonds Zorg en Welzijn) have an interest, has concluded a contract for the delivery of 31 battery electric trains. The project will directly improve the sustainability of train traffic on ten lines for the East Brandenburg concession between Berlin and the Polish border. The project includes a lease contract with Niederbarnimer Eisenbahn (NEB), which means that NEB can replace diesel trains for passenger transport on this route from 2024.


The shareholders of Alpha Trains see this as an important contribution to the sustainability of train traffic in Europe. APG owns half of Alpha Trains, PGGM Infrastructure Fund has a significant minority interest.


Utilisation of the 31 Siemens Mireo battery electric trains is expected to save 4.4 million litres of diesel annually. This translates into a CO2 reduction of 11,000 tonnes per year, equivalent to the annual consumption of more than 16,000 Dutch households.


In addition, the energy from braking is captured and re-used. On parts of the route where there is no overhead line, the train switches to the batteries. This allows the trains to cover a distance of approximately 90 kilometres.  On routes where the track is only partially electrified, battery trains are a direct alternative to diesel trains. The Siemens Mireo trains offer 128 seats, including standing room for approximately 180 passengers per train.


The battery trains have now been ordered from Siemens Mobility. The lease agreement with German Niederbarnimer Eisenbahn is valid for twenty-four years. The acquisition involves a significant investment, partly financed with equity and partly with debt provided by a banking group including the European Investment Bank.


Read the full press release here.

Volgende publicatie:
"There are way too many environmental standards for real estate"

"There are way too many environmental standards for real estate"

Published on: 30 December 2021

It was a good thing that the urgency of global CO2 reduction was placed high on the agenda again in ‘Glasgow'. But it is all by far not fast enough for Derk Welling. As a Senior Responsible Investment & Governance Specialist he and his colleagues verify every real estate investment made by APG on sustainable criteria. And that is a major challenge.


“Of course it's a good thing the world is forcing us again to face the facts of having to reduce the global CO2 emission really very quickly,” says Welling looking back on the international climate summit in Glasgow. But if you ask him point blank, things are going far too slowly. “APG is convinced that we shouldn't wait for new regulations to be implemented, but that we have to assume the challenge ourselves and take our corporate social responsibility. That is also what people expect from us. It is a pity that we meanwhile have such an enormous number of global environmental standards in the field of real estate, some two hundred all together. This means people do not see the wood for the trees anymore. Moreover, such a large number of standards gives rise to divergent interpretations and, as a result, in greenwashing. We really need unequivocalness. That is the reason why we partly initiated a standard such as the Carbon Real Estate Monitor. That standard shows the amount of CO2 and kWh a country is allowed to emit or consume annually per square meter per type of real estate up to 2050 in order to remain within the objectives of the Paris Climate Agreement. This CRREM aims at the establishment of a global standard used to measure to what extent a real estate object meets the Paris Climate Agreement.”


What is the contribution of real estate worldwide to the climate problem?

“It is definitely one of the most polluting industries. That is why it has our full attention. Buildings are globally responsible for approximately 30 percent of the overall CO2 emission. And account for 40 percent of the energy demand! Fortunately, the awareness of truly having to do something about it now is increasing. Also within APG. When I started working here four years ago, our Global Responsible Investment & Governance team had thirteen employees and has meanwhile expanded to 28. And that is highly necessary, as we verify all investment plans in different sustainable criteria. That is part of the policy of APG and its customers: we assess every investment based on risks, returns, costs and ESG. These factors are also mutually influencing. Some real estate investments also increase in value as sustainability increases.”


How does APG ensure that it continues to make progress when it comes to sustainability?

“We have been using the Global Real Estate Sustainability Benchmark (GRESB) since 2009, a commonly used standard for the assessment of real estate investments. That standard was developed by APG in 2009, together with a number of other organizations. GRESB is perfectly suited to measure the sustainability performance of real estate investments. More than 55 percent of our real estate investments are meanwhile scoring four or the maximum five stars. Maybe even more important is that we make participation in GRESB mandatory for any new investments. As of last year, we also commit to the CRREMM, the standard we developed in collaboration with PGGM and other investors. Through so-called pathways, or CO2 reduction pathways, it is possible to see how much energy a building is allowed to consume. This is a way to reverse-calculate if and when the insulation in a building should be improved.”


What are the benefits of the above for APG as an investor in concrete terms?

“Well, it allows us, for instance, to set requirements in advance for the real estate we are willing to invest in. For our investment VIA Outlets, among other things known for Batavia Stad, we have paid a lot of attention to the sustainability performance and imposed some requirements in that respect. VIA Outlets is now challenging the clothing stores in their outlets to make their business operations more sustainable. This is a way, as an investor, to contribute to the process of companies integrating sustainability into their processes. It should further be added that in practice we often work together with other investors which means we sometimes also have to convince those other parties. We are, in principle, never the sole investor in a fund.”


So, APG wants to see the sustainability performance of real estate in which an investment is made or not made. Are the building owners or the managers or tenants of all of those buildings cooperating adequately when it comes to providing the proper sustainability data?

“That is indeed a challenge. We often hear that parties have no insight into the energy consumption of buildings. That is way too easy for me. From own experience, I know it sometimes requires having to go to much greater lengths. In some countries data on energy consumption by private tenants and companies are considered too privacy sensitive. That to me is one of the reasons to make an increasing use of certified data in the future. Not just at portfolio level, but even at building level. A daunting task as APG is globally investing in about one hundred thousand buildings.” 


This means you strive for insight into all the climate effects of each of those buildings. Surely, that is an impossible task?

“Yet, we have already come a long way. We have created a database containing the geo-coordinates of all the buildings we invest in. Our asset managers provide a quarterly update on those data. We are able to zoom in up to street level. We then look locally into the influence of climate change. Think of tornadoes, floods and forest fires; disasters caused by climate change that can damage or destroy the properties.

In addition to these physical risks, we are now also expanding the database with the CO2 emission and the kWh energy consumption per square meter of the building. This provides us with a proper overview of the climate risks in our portfolio. We also use these data to engage in conversations with the local manager and the real estate companies to see whether they share our vision. This to understand to what extent they are working on making the portfolio Paris proof and whether they also take into account the physical consequences of climate change.” 


Isn't it true that real estate owners will also be able to trade CO2 rights soon?

“Yes, preparatory work is currently undertaken in European context. In such Emission Trading Scheme real estate owners, given a certain CO2 limit, will be able to purchase rights to emit more CO2 where needed. If one emits less than the rights obtained, it will be possible to sell those rights. This means the polluter will pay the bill. We obviously want to prevent us from ending up in that situation with regard to our real estate investments.”

“As an investor of pension funds, we can play a booster-role towards sustainability”

By what long-term megatrends is APG guided when selecting real estate investments?

“In addition to the climate developments, we are of course also looking at the trends in the field of demography and technology. People live longer, live at home for longer; that increases the demand for care homes and facilities for senior citizens. A migration into cities is witnessed in many countries. At the same time, Corona makes others look for the space available in rural areas. The question where people want to live, work and shop eventually determines the demand for buildings. Besides that, technological trends such as digitization and e-commerce are of major influence. The latter trends increase the demand for distribution centers and data centers for example, in which we also invest. We follow the trends in innovation, such as increasingly more efficient solar panels on building facades.”    


Do you already abstain from real estate in areas that are threatened first by the rising sea levels?

“We have identified the extent to which all buildings we have invested in are exposed to climate change. For that purpose, we look at nine different risks at building level. In the event of major risks, we want to know whether possible floods for instance have been considered. These risks are also taken into account for the anticipated returns. In addition, we are currently investigating how countries and cities are handling climate adaptation. We also want to start considering those country risks. The reason we invest is to offer a stable pension to the 4.7 million Dutch people who have their pension invested through us. We invest globally, so if there is a hurricane or flood in the United States can also have an impact on our investments.”

Do such climate actions also offer new investment opportunities?
“Absolutely. We invest, among other things, in a fund focusing on making older offices more sustainable. That is a good and sustainable investment as the CO2 emission is reduced and we generate a good return. In other words: the energy transition imposes a risk on the one hand, but also offers opportunities on the other hand.”

“We are happy to share our knowledge and experiences, because we accomplish a whole lot more together”

What does APG do to encourage the pension industry in making real estate investments more sustainable?
“Well, increasingly more is happening at the moment and as an investor of pension funds, we can play a booster-role towards sustainability. We are also regularly approached by other pension funds and administrators asking us about our strategy. These other parties like to learn from us, as we are considered a frontrunner in this area. We are happy to share our knowledge and experiences, because we accomplish a whole lot more together. Moreover, we sometimes bump into one another as joint investors in a certain real estate investment. The more time we spend together, the larger the flywheel effect. There is still a lot of work to be done in making real estate more sustainable, but we are definitely moving into the right direction.”

Volgende publicatie:
2021: the year of sustainable high yield

2021: the year of sustainable high yield

Published on: 28 December 2021

Up until very recently, the labeled bond market was the domain of larger issuers with better credit ratings. But now the market for sustainable high yield is really taking off. More high yield companies are looking to the labeled bond market to showcase their sustainability efforts. Is this an encouraging development or does it open the door to greenwashing? APG is enthusiastic but remains selective in its approach. “Our aim is to ensure there is transparency, accountability and true impact.”


As recently as a year ago, there were very few labeled high yield bonds outstanding. “But as the long-term performance benefits of incorporating ESG factors into business operations become clearer, more companies are now looking to the labeled bond market to showcase their sustainability efforts,” says US Credit analyst Joshua Linder. In 2021 to date, over 60 high yield labeled bonds were issued in Europe and the US. It is an indication that the high yield labeled bond market – including green, social and sustainable bonds as well as sustainability-linked bonds - is really taking off.


High yield companies increasingly issue bonds with a sustainable label 

In the low-yield environment of recent years, the high yield bond segment has offered attractive returns and important diversification benefits. High yield bonds pay investors a higher level of interest to compensate for a higher degree of risk. In 2021, an increasing number of high yield companies have sought to attach environmental, social or governance (ESG) ambitions to their financing by issuing bonds with a sustainable label, says Sven Smit, who manages a portfolio with euro-denominated high yield bonds. “The labeled bond market has ceased to be the almost exclusive domain of larger issuers with better credit ratings.”  


As an active investor in labeled bonds and major participant in the high yield bond market, APG is enthusiastic about these developments. “But we are also selective in our approach,” says Linder. “There are no short cuts. We thoroughly research every labeled bond deal and issuing company in order to avoid greenwashing.”


Sustainability-linked is the label of choice in high yield

Research published by Deutsche Bank suggests that labeled bonds now account for around €45 billion or around 9% of the European high yield market (including financials). While US dollar issuance so far this year is around $21 billion, a little over 4% of total 2021 issuance according to JP Morgan. Smit: “Diversity is also improving with healthcare, industrials and manufacturing, representing roughly 40% of outstanding labeled bonds in Europe.” About one third are green bonds and the rest are social, sustainability or sustainability-linked bonds (SLBs). “In the US high yield market, we see a nice mix of issuers across sectors with about 30% opting for the SLB structure,” says Linder.


But why the relatively high percentage of SLBs in high yield? “Basically, it is because the structure of an SLB is often a better choice for a smaller company and high yield issuers tend to be smaller,” explains Smit. Labeled bonds can be divided into two basic categories. There are those with a structure that earmark the funds raised by the bond issue for specific pre-determined projects. Green and social bonds, for example, fall into this category. The other structure, of which SLBs are the most popular form, enable companies to align issuance with their overall corporate sustainability strategy, by setting sustainability targets in the form of key performance indicators. “This is often a better fit for a high yield company with ambitions to improve on sustainability but too small to be able to raise funds via a bond to finance specific green projects,” Smit concludes.


Alert to greenwashing, but proactive in financing change

APG has strict internal guidelines for all labeled bond investments, but is there more risk of green washing with high yield issues? “We evaluate all labeled ESG bonds in the same way across different parts of the bond market. Our aim is to ensure there is transparency, accountability and true impact,” says Linder. “In that sense, for us the risks associated with high yield are not greater.” However, although the structure of SLBs ensures issuers are penalized with higher interest costs if they fail to deliver on their KPIs, having less oversight on what the money is actually being spent on does increase the potential for greenwashing in general. “It’s a sort of balancing act,” explains Linder “We have to remain extra vigilant around these SLB deals, but the flip side is that this gives us a golden opportunity to help companies make progress on their transition strategies. As a leader in responsible investing, we also have an important role to play in helping maintain the integrity of the market.”


In 2021 to date, in European high yield, APG has participated in 12 out of 16 SLBs and 9 out of 24 green bonds that were issued. In the US there have been around 23 developed market labeled bond deals so far this year and APG has participated in 8 of them (5 green, 2 SLB, and 1 social). “Although we passed on some of the bond issues for portfolio and valuation reasons, there were also a number that did not fulfill our requirements in terms of the issuer’s bond framework, the bond’s structure or the KPI targets,” explains Smit. “When this happens, we try to be clear to the issuer about why the bond doesn’t meet our standards and what our expectations are so that in future improvements can be made.”


Joining with other stakeholders to help companies raise the bar

There are various reasons why issues may not fulfill APG’s investment criteria from a sustainability perspective. Smit: “For example, we passed on a green bond issued by an industrial and energy company because the money being raised was earmarked to refinance an earlier ‘grey’ bond issue rather than for any green project purposes”. APG also chose not to invest in a SLB from a US telecom issuer because one of the KPI targets it set for the bond had already been achieved. “This undermines the intent and purpose of the SLB market which should be forward looking in nature and stimulate sustainability ambitions,” says Linder.


APG also invests time in helping companies work towards a credible sustainable issue often together with the banks who arrange the financing. “For a US company in the financial services industry, we engaged with the management team for over a year, helping the issuer develop a comprehensive social bond framework,” says Linder. “We were then delighted to be able to invest in the resulting bond issue, which targeted improving access to responsible financial products and services for vulnerable and/or underserved populations.”


Looking ahead – challenges and opportunities

 Although this market is rapidly gaining momentum, there are still challenges ahead. “Further fragmentation as a result of new ‘flavors’ or bond structures is a cause for concern,” explains Smit. “If new product types are not well regulated with rigorous reporting standards, they open the door to greenwashing. Having too many labels can also damage the credibility of the market as a whole.” Another issue to be wary of is the fact that high yield bond structures often offer the issuer an option to refinance early. If this call date occurs before the KPIs have to be achieved, it obviously defeats the object of having targets.


But overall, the prospects look bright. The combined benefits of attractive returns and an increasing focus on sustainability in high yield, will further boost investor demand. Linder: “What’s more, companies that issue labeled bonds to finance sustainability improvements can inspire their peers to do the same, helping to raise the bar for ESG performance and governance for high yield bond issuers across the board.”

Volgende publicatie:
APG acquires interest in Australian electricity grid

APG acquires interest in Australian electricity grid

Published on: 9 December 2021

APG has acquired a 16.8% interest in Ausgrid on behalf of its pension fund clients ABP and PPF. The company operates the largest electricity grid on Australia's east coast, supplying more than 4 million Australians with electricity. The company is expected to play a critical role in the energy transition and contribute to further carbon emission reductions.


The network down under uses intelligently connecting renewable energy and storage solutions to the existing network. In addition, it has a strongly growing activity in intelligent energy meters that enable households to properly monitor their energy consumption.



It sees itself playing an important role in the energy transition in Australia. Therefore this investment is classified as an SDI (Investment contributing to the UN Sustainable Development Goals) and thus contributes to the sustainability objectives of APG's pension fund clients.


Great addition

Hans-Martin Aerts, Head of Infrastructure at APG Asset Management Asia, said: “We are pleased to become an investment partner in Ausgrid. We see this asset as a great addition to our clients' investment portfolio. Ausgrid is expected to play a critical role in the energy transition and contribute to further carbon emission reductions. We look forward to working with our partners to ensure a long-term, stable and sustainable investment return for our clients.”


APG acquires the stake from peer Australian Super, which will remain a shareholder with a smaller stake. The agreement was signed today. Closing is expected at the end of June.


Volgende publicatie:
Additional fiber roll-out of Dutch fiber by APG and KPN

Additional fiber roll-out of Dutch fiber by APG and KPN

Published on: 7 December 2021

Glaspoort is connecting another 170,000 addresses in small Dutch villages and kernels to fiber at an accelerated pace. This was announced today by Glaspoort, the joint venture between pension administrator APG and telecom provider KPN. The expansion of Glaspoort's scope will involve an additional investment of 85 million euros.


In March of this year, it was announced that KPN and APG - on behalf of its pension fund client ABP - were jointly investing 1 billion euros to connect nearly 900,000 households and businesses in small towns and more remote areas to fiber before 2026. To this end, the Glaspoort joint venture was established and launched last summer. At that time, the mandate of Glaspoort was also expanded by an additional 70,000 addresses. Now an additional 170,000 connections will be added, bringing the scope of the roll-out to almost 1.15 million Dutch addresses by 2026.


The further acceleration of the rollout involves an investment - by APG, on behalf of pension fund customer ABP - of 85 million.


APG and KPN acknowledge the importance of access to reliable and secure internet. Examples are the recent developments around Covid and the ongoing work-from-home advice. In addition, fiber usage is more energy efficient than copper and therefore contributes positively to the energy transition.


The collaboration with ABP will enable the roll-out of fiber in more remote areas to be accelerated. This should enable nearly 80% of addresses in the Netherlands to have access to high-speed fiber by 2026.


Glaspoort has an open-access network strategy. This means that the network is also accessible to operators other than KPN. End users are therefore able to select a telecom operator of their choice. This promotes competition and innovation in the Netherlands.

Volgende publicatie:
APG wins two Investment & Pension Europe awards

APG wins two Investment & Pension Europe awards

Published on: 6 December 2021

APG won two prizes at the IPE awards in Madrid, for investments in Real Assets & Infrastructure and Commodities.

According to the expert jury, APG's infrastructure investments are an example for other pension investors. “APG's visionary long-term outlook is impressive, as is the emphasis on megatrends and the consideration of the consequences of the pandemic,” said the jury report, which explicitly mentions the recent doubling of the investment in the Smart City Infrastructure Fund.


Katherine Kucherenko, investment specialist at APG Asset Management, accepted the award. “A great performance by our investment teams who balance risk, return, cost and sustainability throughout the investment process to ensure a healthy and predictable financial future for our retirees.”


Jan-Willem Ruisbroek, head of infrastructure investment strategy at APG, adds: “We use the knowledge, expertise and skills of the infrastructure team to invest in the right infrastructure companies, but also to focus the policy within these companies on solid long-term financial and social objectives."


The jury is also pleased with the broad diversification of infrastructure investments and the use of co-investments with other international investors. APG left the Swedish AP4 and the Danish Industriens Pension behind in the elections.


According to the jury, APG's raw material investors particularly excel in risk management. “By combining internally developed risk tools with a fundamental understanding of market developments, a good understanding of the risks to which the portfolio is exposed is obtained,” said the jury report.

Senior Portfolio Manager Marco van Eijkelenburg received this award in Madrid. “A great recognition for APG and the commodoties product that we have developed with our team. The active strategy, which has been live since April 2009, has added a lot of value to our clients' commodity investments over the years. This was also the case last year, despite the turbulent market developments due to the Covid-19 pandemic."

Volgende publicatie:
Stockholm Exergi’s landmark carbon capture solution receives EU backing

Stockholm Exergi’s landmark carbon capture solution receives EU backing

Published on: 22 November 2021

Stockholm Exergi’s flagship Bio-Energy Carbon Capture and Storage (BECCS) project is one of only seven large-scale projects in Europe to be awarded a grant by the EU Innovation Fund. The project has been selected based on its potential to transform the European energy industry and mitigate climate change. APG, on behalf of its pension fund client ABP, owns a 20.5% stake in Stockholm Exergi.


The grant from the EU Innovation Fund will help Stockholm Exergi to fund and build a pioneer full-scale Bio-Energy Carbon Capture and Storage (BECCS) plant. The company has already validated the economic and environmental efficiency of this approach through the use of an R&D installation. Stockholm Exergi expects to launch an industrial scale BECCS facility in 2025, which will be connected to an existing bio-energy combined heat and power plant in Stockholm.


Ahead of sector peers

The European Commission has praised the BECCS concept for its outstanding energy efficiency. This is largely due to its ability to recover heat from the capture and liquefication processes and use it for district heating. Carlo Maddalena, Senior Portfolio Manager Infrastructure at APG said: “We envisage Stockholm Exergi playing a pivotal role in the energy transition and positively contributing to much-needed innovation in the energy sector. The grant by the EU Innovation Fund is a testament to the quality of the company and its management team, which places Stockholm Exergi ahead of its sector peers in Europe.”


Exergi’s BECCS plant will contribute to Stockholm’s ambition to become the world’s first climate-positive capital city. The facility is expected to have a capture capacity of 800,000 tonnes CO2 per year, which is roughly equal to Stockholm’s annual traffic-related emissions. The captured CO₂ will be permanently stored in sub-sea geological aquifers or in depleted oil and gas fields in the North Sea. The EU’s CCS Directive lays out very stringent environmental safety criteria for selecting sites for the geological storage of CO₂. Based on the successful outcome of this first project, Stockholm Exergi plans to build additional facilities at its other bio-energy heat and power and waste incineration plants.


Key tool to drive the energy transition

To achieve the Paris climate goals, it is not sufficient to only reduce CO2 emissions by switching to renewable sources of energy. Of the 78 scenarios of the Intergovernmental Panel on Climate Change (IPCC) compatible with a warming of 1.5°C, 73 partly rely on bio-energy carbon capture and storage to meet the objectives. Once scaled up, Stockholm Exergi expects BECCS to become a key tool to drive the energy transition, limit global warming and meet the Paris climate goals.


The EU Innovation Fund is one of the world’s largest funding programs for supporting innovative low-carbon technologies. The program will provide around €20 billion of support until 2030, aiming to bring industrial solutions that decarbonize Europe to the market and support the transition to climate neutrality. During the first round, a total of 311 projects applied for funds. The 7 projects that were selected are to share the €1.1 billion allocated in this first round of grants.


In June 2021, an APG-led consortium acquired a 50% stake in Stockholm Exergi from Fortum Oyj, a Finnish energy company. The company is the largest supplier of district heating in Sweden and an industry leader in sustainability. Stockholm Exergi has the ambition to become a ‘climate positive’ company by 2025.


Volgende publicatie:
APG invests in property development and re-development Hong Kong

APG invests in property development and re-development Hong Kong

Published on: 15 November 2021

APG has launched a joint venture with Wang On Properties to enable affordable housing, urban regeneration and urbanization in Hong Kong. With the so-called JV Company, 523 million euros will be invested in housing and housing development.



Graeme Torre, Head of Real Estate for APG Asset Management Asia Pacific: “We see the Greater Bay Area being an economic cornerstone for China and Hong Kong as a critical part of that initiative. We are therefore delighted to be able to partner with an operator as experienced and embedded in the local market as Wang On. Investing on behalf of our long-term pension fund clients, the strategy for our new joint venture will address several strategic themes for us such as housing affordability, urban regeneration and urbanization. The latter being a key tenet of our aspirations around climate and sustainable investing."


Read the press release.

Volgende publicatie:
Pop-up store in Batavia Stad set to start a debate on sustainable clothing

Pop-up store in Batavia Stad set to start a debate on sustainable clothing

Published on: 3 November 2021

A pop-up store that only sells sustainably produced and second-hand clothes. That is the concept, the newest store in Batavia Stad. The Fashion Outlet in Lelystad is one of the shopping malls owned by real estate owner, VIA Outlets, which developed this sustainable shopping concept together with its tenants. The aim of these stores is to start a debate about sustainability. But is that the duty of a real estate owner? How does VIA Outlets envisage this kind of discussion about sustainability?

Geert Paemen (Group Sustainability Director at VIA Outlets) explains: “We have two types of customers: storekeepers who rent retail space from us, and their customers who buy clothes. We regularly talk to the tenants about their power consumption, for example, but with we also want to start a discussion about the sustainability of the clothing itself. The pop-up store is actually an excuse to spark a debate about sustainability with the customer. For example, the sales staff working in the pop-up store has been trained to answer customers’ questions about sustainability.”

Roland Mangelmans (Senior Real Estate Portfolio Manager at APG) adds: “By opening, VIA Outlets – which we invest in on behalf of ABP and of which we are full owners – will be killing two birds with one stone. They are actively discussing sustainability with the clothing store and with the customers who come to shop there.”

Among other things, APG called for the appointment of a sustainability manager at VIA Outlets. Thanks in part to its initiatives, sustainability at VIA Outlets has rapidly gained momentum, and the company gets high ratings for sustainability standards, such as GRESB [a certification mark that evaluates real estate companies on sustainability, ed.] Opening is probably the right thing to do in the eyes of the people who come up with these standards. Did that play a part when you were setting up
“VIA Outlets has been working on sustainability for several years, even before I was appointed. But you need time before you can achieve anything. And we feel that we have now made enough progress to communicate with the customer about this. All the company’s departments have to operate sustainably if they are to achieve the right results. This year, for instance, we achieved the highest GRESB rating possible: five stars. Take, for instance, the results of our sector: we see that more and more companies are getting high ratings, and that is good news,” says Geert.

Roland adds: “At APG, we believe it is important that the companies we invest in integrate sustainability into their business operations, in all their processes. Consultants could be used for this, but by appointing a sustainability manager, we can rest assured that there is someone who gets up in the morning to go and deal with sustainability in the company.”

So it’s easy to get these good sustainability ratings?
Geert: “No, it’s not easy to get a high rating. Our results are compared with other real estate owners. Of course, they’re working sustainability too, so we need to keep on improving if we are to maintain those high ratings. At a building level, the entire portfolio of VIA Outlets now has a BREEAM In-Use certificate. This certification mark is used to measure the sustainability performance of existing buildings. This standard is also regularly fine-tuned and anticipates legislation, which is also becoming stricter.”

Roland adds: “I can imagine that Geert does have a point about the GRESB standard. But it is a means rather than an end in itself. It’s mainly an indication that VIA Outlets is doing well compared to similar real estate owners. We demand more of our real estate investments than merely having a good GRESB rating. And VIA Outlets is already going above and beyond in terms of sustainability than what the GRESB rating measures. What’s more, with a score of 92, there is still room for growth. And that room would still be there, even if we got a rating of 100. The GRESB criteria are ramped up a bit each year. That also motivates us to keep doing our best in the field of sustainability.”


The clothing industry has not always attracted positive news reporting in recent years. Is the opening of a sustainable pop-up store part of a trend towards paying more attention to sustainability?
“It certainly is a trend, in all sectors. A few years ago, the fashion industry realized that it ought to be concerning itself with sustainability. When, as a company, you start looking at sustainability, the first place you consider is where you can get the best results. For clothing brands, this involves the chain from production to consumer,” says Geert.

You mean like working conditions in Bangladeshi clothing factories?

“Yes,” says Geert. “And, more recently, clothing brands have also started to focus on reducing their carbon footprint. For instance, brands are now looking at what materials they use and how much energy it takes to produce and sell their collections. Most major brands are now working on improving working conditions as well as reducing environmental damage.”

Roland adds: “There is a race to the bottom under way in shopping malls to see who can offer clothes from low-wage countries that are made as cheaply as possible. Clothing that is sometimes made under appalling conditions. This is a trend we would like to break, even if it is difficult.”

And VIA Outlets is trying to promote the discussion with these pop-up stores?
Geert comments: “Yes, we do want to start a debate about sustainability. We felt like it didn't exist at all in the retail outlet environment. Sustainability is growing in importance, for us and for the customer. We, as VIA Outlets, can talk about standards and how much energy we save, but customers aren’t interested in that. If your aim is to make sustainability relevant to the customer, you have to communicate about topics that are relevant to them. That could be Holding themed days on, say, reducing plastic waste can also get customers thinking.”



The pop-up store is actually an excuse to spark a debate about sustainability with the customer.

Is facilitating this discussion the duty of a real estate owner? Is making money not more important?
“First and foremost, we have to make money, otherwise we have no future as a company,” explains Geert. That said, we also have a role to play in society. People expect us to be sustainable. I think it’s dawning on companies that it’s becoming more and more important to be concerned with the long term, and not just with making as much money as possible in the short term. As a real estate owner, we are part of the chain in the clothing industry. We are only a link, but as such we can influence the chain.”

Roland adds: APG believes it is important that the real estate investments in which it invests show initiative when it comes to sustainability and reducing their carbon footprint. Because APG wholly owns VIA Outlets, we can encourage the company to lead by example in the fashion industry. The interesting thing about is that a real estate owner is sparking the debate about the products in the stores, where previously the conversations might have been only about the store’s power consumption.”

Is VIA Outlets alone at the top when it comes to sustainability or are there more major players in the real estate field that are rated as highly as you are?
“We are in ninth place when it comes to retail in Europe. That’s not bad when you consider that we are a small company. Listed companies are often further along in the process because they have to meet higher standards when it concerns reporting on sustainability,” says Geert.

How would you describe your partnership with APG in your pursuit of sustainability?
“This partnership is very important, because we know that APG values sustainability. We also have regular meetings in which we update them on what we are doing in terms of sustainability. We also have a dashboard that shows APG the results of our key commitments with them. And we discuss specific initiatives with them. So APG monitors our progress very closely and they also encourage us to be very ambitious. This is a very positive thing as far as we’re concerned,” says Geert.

Roland emphasizes that VIA Outlets is not the only company where APG is calling for the appointment of a sustainability manager. “We have a progressive policy, and we sometimes encounter resistance in the beginning. That is why it is necessary to engage in dialogue with the companies and funds in which APG invests. By engaging in that dialogue, we can ensure that we are not only raising GRESB ratings but also the overall awareness for sustainability. We are one of the frontrunners and, if we want to take the rest of the pack with us, it means that we have to spend time and focus our attention on this.”

Real estate contributes more than 30% to global carbon emission and 40% of global energy demand, and that is why it has a major impact on climate change. What is VIA Outlets doing to contribute to the Paris Climate Treaty goals?

Geert comments: “We are using the CRREM for this. It’s is a way to get insight, for each building type per country, into how much energy and carbon a building may consume and emit through to 2050. Shopping malls that comply with the CRREM are ‘Paris proof.’”

“Originally CRREM only applied as a method for commercial real estate in the EU. Along with two other investors, APG facilitated the development of CRREM for all global real estate markets. For APG, CRREM is the standard for measuring the extent to which a real estate or portfolio meets the Paris climate agreement. This approach chimes with ABP’s aim to reduce the use of fossil fuels in carbon-intensive sectors, and is our largest pension fund client,” says Roland.

Volgende publicatie:
ABP most sustainable Dutch pension fund for fourth consecutive year

ABP most sustainable Dutch pension fund for fourth consecutive year

Published on: 1 November 2021

APG’s largest pension fund client ABP has topped the ranking of sustainable Dutch pension funds for the fourth consecutive year. This was announced today by the Association of Investors for Sustainable Development (VBDO). BpfBOUW retained the number two spot; SPW (9) also made it into the top 10.


ABP scored 4.0 out of a possible 5 points. APG’s other asset management clients also achieved good results. BpfBOUW finished narrowly behind ABP with a score of 3.9 points. SPW scored 3.0 points. 


Really encouraging

ABP chair Corien Wortmann finds it ‘really encouraging’ that ABP is named the most sustainable pension fund for the fourth consecutive time. Still, the fund continues to critically evaluate its own performance. "What do we achieve, how can we be more effective? How can we make more impact in the context of creating a more sustainable world? And at the same time, together with other pension funds, we demonstrate this can be done while maintaining financial returns. In this way we inspire and stimulate each other to improve."

Since 2006, VBDO has annually examined the policies and sustainability performance of the Dutch pension sector. The benchmark assesses the 50 largest pension funds in the Netherlands, accounting for 89% of assets managed with a total value of €1,540 billion. The score reflects how each pension fund performs in four categories: policy, governance, accountability and implementation. 


Room for improvement

APG's clients have few opportunities for improvement in policy, governance and accountability. This year, VBDO took a stricter look at the real impact of pension funds' investments on society and the environment. For APG's clients, there are mainly opportunities for improvement in measuring, steering and reporting when it comes to real-world impact.


Want to find out more? Download the full VBDO report here.


Volgende publicatie:
Investors urge South Korea to step up its climate efforts

Investors urge South Korea to step up its climate efforts

Published on: 14 October 2021

APG lead signatory of pressing letter to Korean government


APG and 22 other large global investors encourage South’s Korea’s government to outline a clear and fully Paris-aligned decarbonization pathway and stop building new coal-fired power plants. Clear climate policies will help Korean companies to transition to net zero emissions by 2050 or sooner. APG is co-leading this investor initiative on behalf of its pension fund clients.


In a letter to South Korea’s Presidential Committee on Carbon Neutrality, the investors state that for many of the Korean companies they engage with, national policy on energy and climate change is critical to the achievement of their net zero ambition. The letter is supported by Climate Action 100+ and signed by investors with a combined €5.8 trillion in assets under management, including lead investors APG, BMO Global Asset Management, EOS at Federated Hermes and Sumitomo Mitsui Trust Asset Management.


Companies need clear climate policies

According to the signatories, South Korean companies need clear signals from policymakers to enable them to make a successful transition to net zero emissions, mitigate climate risk and protect long-term value. “This must include clear dates for phasing out coal in line with achieving the Paris objective of keeping global warming to 1.5°C,” the letter says.

The investors urge that the International Energy Agency’s recently developed Net Zero 2050 scenario be embedded in the transition pathways the Committee is developing. “It is critical these pathways are fully aligned with the Paris Agreement, reach net zero emissions by no later than 2050 and do not further embed coal in the Korean economy, delaying the inevitable and urgent transition that is required,” says Yoo-Kyung (YK) Park, Head of APAC Responsible Investment & Governance at APG. 


No coal expansion

In August, APG sent a separate letter to the Korean government to express its concerns about private coal-fired power plants under construction there. APG also sold its stake in the Korea Electric Power Corp. (KEPCO) last year, citing the state-run company's construction of coal plants in Vietnam and Indonesia. “The expansion of coal-fired power in South Korea goes against efforts to combat climate change,” says YK, “It also puts assets at risk of becoming stranded and unprofitable due to low utilization and extra efforts necessary to offset carbon emissions.”


Climate Action 100+ is the world’s largest investor engagement initiative on climate change. It involves more than 615 investors, responsible for over €47 trillion in assets under management. The initiative aims to ensure that the world’s biggest corporate greenhouse gas (GHG) emitters take action on climate change.

Volgende publicatie:
APG invests €195 million in first EU green bond

APG invests €195 million in first EU green bond

Published on: 12 October 2021

EU further strengthens its position as sustainable finance leader

The EU has issued its first green bond. The proceeds will be used to finance the economic recovery in the wake of the Covid-19 pandemic. “As a committed labeled bond investor, APG is enthusiastic about participating on behalf of our clients in the EU’s long-awaited debut issue”, says treasuries portfolio manager Chris Lam. APG has been allocated €195 million in EU green bonds.

This inaugural NextGeneration EU (NGEU) green bond is part of a large economic recovery package (worth around €800 billion) to support EU member states in tackling the consequences of Covid-19. Around 30% of the funding is earmarked for green bonds and will focus on environmental and climate-related investment. According to Oscar Jansen, who manages a portfolio of euro-denominated credits, this week’s €12 billion inaugural issue is just the first step on a path which will establish the EU as the world’s largest green bond issuer. “It underscores Europe’s leading position in sustainable finance”. In 2020, APG already invested in the

EU’s SURE social bond, the proceeds of which help reduce the negative social impact of the pandemic.


Supporting member states’ sustainable recovery

According to Lam, this event is a milestone for both Europe and the green bond market. “This issue will give investors unprecedented access to financing green projects across a range of countries that will help the EU achieve its ambitious climate goals. Energy-efficient infrastructure and transportation, and renewable energy investments will help rebuild post-Covid Europe and reduce greenhouse gas emissions. But there will also be funding available to stimulate innovation and finance research to aid green transition”. 


The EU’s green bond framework has been drawn up in alignment with the market standard – the International Capital Markets Association’s green bond principles – and positively assessed by second-opinion provider, Vigeo Eiris. It identifies nine investment categories in which it will finance green investments and reforms via its member states recovery and resilience plans.

Solid framework, monitoring and reporting to mitigate risk of greenwashing

As instigator of the EU Taxonomy – a classification system for environmentally sustainable investments – and the soon-to-be-implemented EU Green Bond Standard, the EU has blazed a trail for establishing a regulatory framework for sustainable investments and for measuring their impact across a range of industries. In the case of this issue, where individual countries will submit plans showing how they intend to allocate funds, ensuring transparency and monitoring how the proceeds are actually used will require substantial oversight at EU level. The allocation reporting will be verified by an external auditor and environmental impact will be measured according to standard climate impact reporting metrics.

Jansen is not unduly concerned about greenwashing. “With the solid regulatory structure the EU is building and the emphasis on the ‘Do no significant harm’ criteria for investments, there is a strong focus on ensuring that the proceeds of this bond will be used for truly green investments,” he says. “The diversity in the potential use of proceeds in an issue like this enables us to maintain a broader and more diversified exposure to a variety of green investments. Boosting the demonstrable impact of our portfolios is a crucial part of ensuring that our pension fund clients meet their ambitious responsible investment goals.”

APG is one of the world’s largest labeled bond investors and committed to supporting this market’s growth and development. At the end of last year, APG organized a webinar where representatives from the investment world and the EU examined the planned support program, its potential impact on the labelled bond markets and the important role investors have to play.


At the end of 2020, we had invested €12.2 billion in green, social and sustainability bonds on behalf of our pension fund clients. Our APG Guidelines for Green, Social and Sustainable bonds explain more about our policy for investing in labeled bonds. 

Volgende publicatie:
"Automation is more than replacing people with machines"

"Automation is more than replacing people with machines"

Published on: 12 October 2021

Climate change and digitalization leave no sector untouched. Anna Pot, Manager Global Responsible Investment & Governance Netherlands at APG, conducted a study into the consequences for employees. "Employees are especially important for companies to survive these changes. Committed, trained and flexible employees help a company to adapt and innovate."


For twelve years now, Anna Pot has been studying how companies treat their employees, something that is also referred to as human capital management. She spoke to companies about issues such as child labor in the cocoa industry, workers' right to join unions and working safely during the coronavirus pandemic. Her most recent study highlights three major trends - transitions - that have a major impact on employees, namely automation, digitalization and climate change. She makes suggestions for critical questions that investors can present to companies in this respect.



How does climate change affect employees?

"Fossil fuels are slowly but surely making way for renewable energy. Coal mines are closing. Climate change threatens industries that employ huge numbers of people, while it is still unclear exactly how many and where new jobs will be created. According to estimates of the International Labor Organization, there are 24 million, in industries such as clean energy generation, electric vehicle manufacturing and energy efficiency. But it's not just about jobs. The requirements attached to the knowledge and skills of employees are also changing. Under pressure from society and green regulations, companies have to switch to a climate-neutral business model, encouraged by investors such as APG. Innovation is becoming increasingly important. We already see this trend at car manufacturers, who are now switching from combustion engines to green engine technology en-masse."


What's new about the conclusion that automation is costing jobs?

“The conclusions from studies into this issue are not unequivocal. One study predicts a loss of two billion jobs, the other predicts millions of new jobs will be created. Automation is more than replacing people with machines. Automation also creates a need for other skills, for example, because people and machines work together. Toyota has a nice term for this: jidoka, i.e. automation with a human touch. If they want to remain competitive, companies must constantly improve their digital systems. The economy is therefore becoming increasingly knowledge-intensive. Machines are taking over routine tasks and people are being required to innovate and be more creative."


How do companies benefit from treating their employees well?

"Companies going through major changes need the support and knowledge of their employees to make them successful. They recognize that qualified, flexible and committed people are indispensable to be able to continue to innovate and adapt. Companies have identified human capital and innovation as their top priorities for the coming years. They have to think about how they can stimulate the creativity and innovative capacity of employees. In the battle for top talent, companies want to be known as a good employer. This is a crucial condition for wanting to work for a company, especially for the young generation. To be innovative, companies must create the right conditions in which employees can be creative, dare to experiment and make mistakes. Employee engagement is needed to keep them on board and make the transition effective."


Can you name a company that does this well?

"You wouldn't expect it after Dieselgate, but Volkswagen is a front-runner in this area. They have committed to allowing the transition to take place entirely on the basis of natural attrition, i.e. without laying off people. They have extensive programs in which they train employees to make the change. And it's not just about mechanics who have to switch from combustion to electric engines, but also about office workers who learn new things, such as programming or analyzing data. With digital skills, they can make the transition to other departments within the company or even join a different company. Incidentally, we are still in talks with Volkswagen about the aftermath of Dieselgate. We're asking the company to create a more open corporate culture and establish a truly independent supervisory board."


And what if companies don't do this?

"Companies that don't treat their employees well miss out on bringing in top talent, they run the risk of jeopardizing operations, or sustain reputational damage due to abusive labor practices. And it goes beyond that. If we as a society do not deal well with these major shifts, it can cost many people their jobs or significantly affect the quality of their work. This will mainly affect the less educated, poor and vulnerable groups, resulting in an increase in social discontent."


What does APG ask of companies? What does 'treating employees well' mean in specific terms?

"Our minimum requirement is that companies guarantee safe working conditions for their employees. We use the standards of the International Labor Organization. Safe work and healthy labor relations are also taken into account in our sustainability criteria. If necessary, we engage with companies to improve their working conditions. We want to know about the strategies of companies that are in transition. We ask them for a skill gap analysis: what skills do your employees have now and which ones are still lacking? And how do you get from A to B? Are you going to fire people and hire new ones? Are you solving it through natural attrition, or are you training your current employees? A year and a half ago, we asked the automotive industry to conduct such an analysis. At that time, hardly anyone did it and now, almost all car manufacturers are working on it. Ford has already included the analysis in its annual report."


In addition, APG sets requirements for company training programs, says Pot. "We want companies to report on those programs and show their impact. Employees must be included in the transition of the company. Clear communication, training and the adoption of new expertise are key elements in that respect."


You have years of experience in the field of employment rights. What was the biggest eye-opener for you during this study?

"We've always paid attention to the social component of sustainability, but this aspect has really taken off since the corona pandemic and the emergence of transitions. Especially the companies themselves now see the importance of it."


What will you do with the results of the study?

"Companies with good human capital management are attractive to us as an investor. Studies show that investors who invest in these types of companies perform better on average. We therefore discuss our findings with our portfolio managers and how they can use them in their investments. Our paper contains specific suggestions for questions they can ask companies in transition. It's a pretty long list. If you only have five minutes, I'd ask three. First: what is your strategy for human capital management? Second, how does it fit into the company's long-term strategy? For example, is it a driver of innovation, or customer satisfaction? And third: how do you measure progress as a board? These three questions give a pretty good idea of how seriously a company takes human capital management."


Volgende publicatie:
APG invests in responsibly managed FSC forests

APG invests in responsibly managed FSC forests

Published on: 4 October 2021

On behalf of pension fund client ABP, APG has acquired a significant direct interest in Wenita Forest Products (Wenita), the largest producer of forest products in Otago, New Zealand. Wenita manages a plantation estate comprised of approximately 30,000 hectares of Forest Stewardship Council (FSC) certified forests in New Zealand. This means that in an area more than three times the size of the province of Utrecht, the conservation of biodiversity and the economic and social well-being of local communities and employees are paramount. The acquisition expands APG’s sustainable investment portfolio and direct investments into responsibly managed forestry assets.

Wenita is among the largest timberland estates in New Zealand and has a three-decade track record of successfully supplying forest products to local and international markets. With extensive experience in plantation estate management and established infrastructure, the company also provides a range of responsible forest management solutions to other forest owners. The estate is predominantly comprised of Radiata Pine forests, which serve as an integral raw material used in a wide variety of end markets as houses, veneer as plywood.  


Globally, about 15% of greenhouse gas emissions are caused by deforestation. Climate reports from the International Energy Agency and the UN Climate Panel (IPCC) clearly show that global warming is still going way too fast. Like many of the pension fund participants, APG and ABP are also concerned about the climate.


The forest’s investment attributes offer strong alignment with APG’s ambition to seek opportunities that fight climate change, protect biodiversity and deliver sustainable returns for its clients. Due to the substantial carbon sequestration characteristics of the forests, the acquisition presents APG with an opportunity to support efforts to reduce embodied carbon within New Zealand and international construction and housing markets. All Wenita forests are also certified according to FSC standard, which means that in an area more than three times the size of the Netherlands province of Utrecht, the preservation of biodiversity and the economic and social well-being of local communities and employees are taken into consideration. As such, Wenita forests not only provide a good investment return for ABP participants, but also contribute to a liveable planet.

Ben Avery, Senior Portfolio Manager at APG commented: “Wenita offers an established platform with over 30 years of operating history, immediate access to a significant woodflow profile underpinned by a high quality and large scale FSC-certified softwood forest resource capable of delivering ABP attractive risk-adjusted returns in a sustainable and responsibly qualified manner. This new investment is a further step in our strategy to support global decarbonisation ambitions and ABP’s transition to a net zero environment."

APG is making the investment together with the UK pension provider Pension Protection Fund (PPF). Under the agreement, together the two organizations will acquire a controlling 62% interest from Sinotrans NZ, a local representative of the Chinese logistics and transport giant Sinotrans. A New Forests-managed fund, the Australia New Zealand Forest Fund 2, has owned the other 38% shareholding since 2018 and will remain invested alongside APG and PPF.


This investment will enable APG, on behalf of ABP, to contribute to the realisation of the Sustainable Development Goals (SDGs). The SDGs were established in 2015 by the United Nations with a view to creating a better and more sustainable world.

Volgende publicatie:
APG infrastructure investors win an award

APG infrastructure investors win an award

Published on: 1 October 2021

Best Real Assets & Infrastructure Investor of the Year. With this prestigious IPE Global Award, APG outshone no fewer than twenty other large institutional investors across the world this month.

“We are incredibly proud of this. IPE is an independent, impartial organization, one that has a good reputation in the marketplace. So this Global Award means a lot to us,” Jan-Willem Ruisbroek, head of investment strategy in infrastructure at APG, tells us. “The entire team won this award – forty infrastructure specialists at our New York, Hong Kong and Amsterdam offices.” What was the jury’s opinion on APG’s strategy for Real Assets & Infrastructure? Ruisbroek reads from the jury’s report: “A mature strategy in sustainable infrastructure, rewarded with solid returns. APG’s reference to megatrends is innovative and has guided investment decisions well.’

APG’s Infrastructure team does not invest in stocks or bonds. Instead, it invests in companies that are not listed on the stock exchange, with the aim of achieving long-term, stable returns. Its portfolio is quite broad: from transport (airports, toll roads, harbors, trains, railways) and telecom (transmission masts, fiber optic cables) to energy generation, for instance wind and solar farms and transporting energy. Out of the total invested assets of 567 billion euros, APG has invested around twenty billion euros in infrastructure.


Contribution to welfare

The emphasis in this is increasingly on improving sustainability or supporting the transition to a climate-neutral energy supply, Ruisbroek recounts. “Our aim is not only to achieve solid investment returns for our pension fund clients, but also to produce tangible benefits that contribute to the well-being of the public. As an example, we have proven to the IPE jury that we invest a lot in wind and solar farms that have yet to be built; we consciously take more risk with this than with a comparable investment in existing infrastructure. We can do this because we have the knowledge and expertise in house, so we are in a position to assess the risks properly.” The returns on this kind of “entrepreneurial investment” are higher, relatively speaking. An example of this is APG’s investment in a wind turbine project in Oostflakkee, which Kallista Energy, a French renewable energy producer, has since built.

Another trend that APG is responding to with its investments is digitization. Ruisbroek elaborates: “Future generations will be using more and more data. That is why we launched a joint venture together with KPN, for the large-scale rolling out of fiber optic connections in the Netherlands. By replacing the old copper network with high-speed internet connections using fiber optic cable, KPN can offer its consumers as well as businesses better support for their digital operations.”


On the picture: Jan-Willems colleague Robert Jan Foortse, who accepted the award.

Volgende publicatie:
“To us, it’s achievements that count, not labels.”

“To us, it’s achievements that count, not labels.”

Published on: 24 September 2021

ABP’s investment policy is being put under increasing scrutiny, in which various advocacy groups are serving as the key “watchdogs”. How do you deal with this as a pension fund and administrator? And what effect does it have on your policy? Diane Griffioen, Head of Investments at ABP, and Claudia Kruse, Head of SRI at APG, discuss this in PensioenPro. “I think we are quite ambitious.”


Every year, the Dutch Association of Investors for Sustainable Development (VBDO) compiles a list of the most sustainable pension funds. ABP is once again at the top of the list. This seems to stand in stark contrast with current criticism on the fund and its administrator’s SRI policy. Advocacy groups accuse ABP of being in agreement with Shell’s climate policy, which they believe is lacking ambition.

These are signals that are taken seriously, and which contributed to ABP’s decision to start recalibrating its policy straight away. In an interview with the pension professional journal, Griffioen says: “In 2020, we reviewed our SRI policy, examining the long-term situation. This included a vision for 2050, objectives for 2030, and short-term goals for 2025. We are achieving these goals, but concurrently we are recognizing that negative effects of climate change are happening faster than we thought. The question is if Net Zero will be enough in 2050. We have to work harder. This doesn’t apply to us alone, but to all parties concerned: the corporate community, investors, politicians. We want to be a frontrunner in this field. That’s why we’re going to formulate new goals.”


20 percent in Sustainable Development Investments

Part of the current – as yet unrevised – policy is ABP’s intention to invest 15 billion euros in the energy transition. The question arises: Is that ambitious enough? “Two years ago, our target was 15 billion euros. That’s what we’re looking at today. I think we are quite ambitious. Those 15 billion euros is not all. We also aim to put 20% of our assets in SDIs by 2025.”


Credibility threshold

The interview with the two ladies at the top continues with their vision on engagement. Diane: “We do not exclude any sectors, with the exception of the tobacco industry and nuclear weapons. We regard the companies we select with a critical eye, and we want them to deliver on their promises. But we do apply a lower limit; a credibility threshold.” The interview also examines the current mishmash of sustainability laws, regulations, and labels. Kruse: “This multiplicity is part of the phase we are in now. As far as we are concerned, it’s achievements that count, not labels.”


Read the entire interview in PensioenPro. Note: the interview is accessible exclusively to subscribers.




Volgende publicatie:
“Would a monkey invest as well as an investor?”

“Would a monkey invest as well as an investor?”

Published on: 23 September 2021

Current issues related to economics, (responsible) investing, pension, and income: Every week, an APG expert gives a clear answer to the question of the week. This time: chief economist Thijs Knaap about the question of whether you can beat the market with active investing. “Not as a private investor. But as a pension fund you are in a fundamentally entirely different position.”


Give a blindfolded monkey some darts, get him to throw a bunch at the newspaper’s stock page and you’ll get an equity portfolio that will yield the same as a professionally assembled one.  What Princeton professor Burkon Malkiel meant when he made this claim in 1973 was that stock prices show a random and unpredictable course. In other words, deviating from the stock index by investing in specific stocks from that index - i.e., an active investment strategy - does not provide additional returns without additional risk, and therefore makes no sense.


Does this claim hold water? Knaap says it probably does for  the private investor. Does this mean that a pension fund is also better off investing its entire capital in the index? No, the economist asserts, because a pension fund is in a fundamentally different positition. Partially because it has investment options that require scale, professional knowledge, and staying power. These types of investments, which a private investor does not have access to, are a source of extra revenue for pension funds.


Not the only smart investor

Knaap: “Malkiel was right in the sense that so-called stock picking does not make sense for private individuals. You are not going to be the only smart investor who analizes a company and tries to predict the price movement of that stock based on that analysis.  Information is usually factored into prices - prices reflect expectations. With that assumption, it is not possible for a private investor to beat the market with active investing. In that case, it is better to invest in the entire stock index. And that is possible today with inexpensive index trackers.”


However, there is a world of difference between investing in equities as an individual and investing as a pension administrator, which invests total assets of 620 billion euros for its clients. First of all, because a pension fund must match its investments to the (payment) obligations to participants, a process called asset-liability management.


“If you let the proverbial monkey invest in stocks, the choice to invest only in stocks is already made. But do you want to invest in shares at all, and if so, how much of your capital do you want to invest in them? Two thirds of our investment portfolio consist of other investment categories. These include bonds, real estate, commodities, infrastructure and loans to companies. As a pension fund, you have to decide which categories you want to invest in, and in what proportions. In such a way that you can pay out the right pension amount to each participant at the right time. This requires a great deal of analysis, because it is quite complex and there is no one right method.”


No lists

A pension fund also differs from a private equity investor because its position is better in terms of information, and because participants expect more from their fund than just a market return.

Knaap: “We talk to the companies we invest in about sustainability and good corporate governance - by voting at shareholders’ meetings and denouncing any abuses, for example. We  are familiar with companies as shareholders, as discussion partners, and also from the debt market. And the same applies to their competors.  Compared to the private investor, you therefore often have better information and can perform better analyses. Of course, that also involves costs, but in this way we think we can beat the benchmark - the index. And if you look at it over a longer period, our stock and corporate bond investors are doing the same, by a wide margin.”


And thirdly, perhaps the most fundamental reason why you can’t compare APG to a private investor: An investor of this scope can invest in assets that are not an option for the individual. Knaap: “You can only invest in asset categories like infrastructure and loans to companies if you have enough capital for that. In addition to scale, you must also have the required knowledge to be able to invest in them. For certain assets, in China for example, you must have considerable local knowledge. There are no lists of such investments to choose from, as there are at a stock exchange. You really have to look for them. Our stake in the joint venture with KPN for the rollout of fiber optics only becomes an asset once we have established the joint venture with KPN. But there is an entire process that precedes that. And you wouldn’t send a monkey to Rotterdam for that.”


Sell quickly 

Knaap continues: “Moreover, you invest in such assets for the long term. You don’t just sell illiquid investments like that overnight. As a pension fund, you are in an excellent position to invest in a certain asset for a long period of time. It is precisely in the markets where patience is required that we are currently seeing the best opportunities. As a pension investor, you can beat the index by investing in the more illiquid, less accessible markets. Liquid markets, such as the stock market, still have a function, because you also need assets that you can sell quickly if necessary. But for large pension funds, active investment in illiquid assets is currently a major source of return. And this works out in the favor of the participants in the long run.”

Volgende publicatie:
APG invests €360 million in Spanish and UK green sovereign bonds

APG invests €360 million in Spanish and UK green sovereign bonds

Published on: 22 September 2021

The growth of Europe’s sovereign green bond market continues unabated as, within the space of two weeks, two relative latecomers, Spain and the UK swell the ranks of sovereign issuers. APG has invested in both of these latest new issues on behalf of its pension fund clients, receiving an allocation of €99 million in the Spanish bond and £224 million (approximately €261 million) in the UK’s issue.


In 2020 and 2021 so far, European sovereigns Sweden, Germany and Italy have all issued inaugural green bonds and with the first green issue from the Next Generation EU (NGEU) fund penciled in for October, existing issuance records look set to be broken.



Green bonds are issued by companies, governments and government-related entities to fund climate-related or environmental projects. Their transparent use-of-proceeds structure makes them appealing to investors as you can more easily assess the impact your investment has. Europe is at the forefront on regulation and reporting on green investments and the EU taxonomy that is currently being implemented will raise the bar still higher. The labeled-bond market’s popularity is underscored by the investor appetite for these new issues. The € 5 billion Spanish issue was 12 times oversubscribed and the UK’s £10 billion green gilt around 10 times.


Spanish inaugural issue supported by strong green-bond framework

Spain has committed to ambitious climate and energy targets in terms of emission reductions, renewable energy, energy efficiency and enhancing climate resilience. According to second- opinion provider Vigeo Eiris, bonds issued under the Spanish sovereign green bond framework will make an ‘advanced’ contribution to sustainability, the highest score on VE’s four-point scale. The country’s framework is also aligned with the four core components of the ICMA’s Green Bonds Principles and best practice as identified by VE.


According to the framework, there are seven eligible categories to which Spain’s green bond proceeds could be allocated. These are renewable energy, clean transportation, energy efficiency, sustainable water and wastewater management, biodiversity and natural resources, pollution prevention, and adaptation to climate change. The lion’s share of the proceeds is likely to be earmarked for clean transportation. These are focused on improvements to the national railway system and investments in railway infrastructure, promoting the shift towards a clean transportation system.


The first sterling-denominated green government bond

This first sovereign issue will be a shot in the arm for the sterling sustainable fixed income market. In April, the UK government set an ambitious target to cut emissions by 78% by 2035 compared to 1990 levels. The categories to which the UK bond’s proceeds will be allocated closely mirror those of the Spanish bond. The largest sum will also be allocated to financing clean transportation, for example, by funding plans to decarbonize the UK’s bus fleet with 4,000 new zero-emission buses.


The UK’s green-bond framework is also aligned with the Green Bond Principles but scores one grade lower on its contribution to sustainability than the Spanish framework (robust instead of advanced). In its second opinion, VE also indicates some areas for improvement, for example, in the categories relating to pollution prevention and control, energy efficiency, and living and natural resources. These three areas are relatively small in terms of the percentage of funds to be allocated. However, APG has raised some questions with the UK Treasury on the first of these categories where proceeds are earmarked for carbon capture, usage and storage. CCUS qualifies as an EU-taxonomy eligible sector and does have a role to play in the energy transition, but the UK green bond framework currently lacks clarity on industries and thresholds. As is the case for all our green bonds, APG will follow-up on this issue, critically assess the allocation report, which also contains material developments relating to eligible green expenditure, and ensure that the bond continues to fulfill the APG Guidelines for Green, Social and Sustainable bonds.


Green bonds are an effective tool to contribute to sustainability ambitions

One advantage of sovereign and government-related issues is that they give investors the opportunity to invest in large public infrastructure projects that have a direct impact; projects where it is more difficult to gain exposure via the corporate bond market, for example. As a result, these new green bond investments help contribute to our pension fund clients’ ambitions as long-term responsible investors. Both ABP and bpfBOUW, APG’s two largest clients, have set ambitious targets to increase the percentage of assets they invest in companies or projects that contribute to the UN’s Sustainable Development Goals (SDGs) by 2025.


Major player in the sustainable bond markets

APG is one of the world’s largest labeled bond investors. At the end of 2020, APG had invested €12.2 billion in labeled bonds (green, social and sustainability bonds) on behalf of our pension fund clients, €3.9 billion of which was in sovereign bonds. In late 2020, APG invested in the EU’s SURE inaugural social bond, the proceeds of which are being used to reduce the negative social impact of the Covid pandemic.

Volgende publicatie:
APG signs the Global Investor Statement to governments on the climate crisis

APG signs the Global Investor Statement to governments on the climate crisis

Published on: 15 September 2021

APG supports an international investor initiative calling for world leaders to step up their efforts to combat climate change. Why are ambitious national climate policies crucial for investors who want to contribute to the Paris Agreement goals? Four questions and answers that explain more about why APG has signed the Global Investor Statement.


Why is it important for investors that governments step up their ambitions?

Government policy is crucial for creating an environment that promotes large-scale private investment in the energy transition. The signatory investors highlight the gap between the commitments governments have made so far and the efforts required to limit global warming to 1.5 ºC. Many of the commitments in the current nationally determined contributions (NDCs) are insufficient to reduce global carbon emissions by 45 percent by 2030 (from 2010 levels). This is the target that needs to be achieved to stay on track to reach net-zero emissions in 2050 or sooner. Many countries also continue to subsidize fossil energy and invest in carbon-intensive infrastructure, including coal-fired power plants, while at the same time insufficiently incentivizing private investment in net-zero solutions. "This reduces our ability to properly allocate the trillions of dollars needed to support the net-zero transition,” the statement says. 


What is this initiative exactly?

International investors are urging world leaders to rapidly implement a number of policy steps in the fight against climate change. These steps are, amongst others; step up national climate ambitions for 2030 to help achieve a carbon neutral world by 2050 or earlier; optimize conditions for investments in climate solutions by, for example, introducing realistic carbon prices and abolishing fossil fuel subsidies; and to require companies to report on their transition plans in line with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD).


Who signed the statement?

This statement to world leaders is supported by 587 international investors – including APG. Together, they manage nearly € 39,000 billion in assets, representing an estimated 40 percent of all global assets under management. This initiative comes in the run-up to the important UN Climate Conference (COP26) in Glasgow in November. In August, the UN Climate Panel (IPCC) published an alarming report, which stated, among other things, that the physical consequences of climate change are observable right now, and that in order to combat global warming, carbon emissions must be quickly and drastically reduced.


Does this mean investors are shifting responsibility to governments?

Of course, asset managers and pension funds have their own responsibility when it comes to combating climate change. This is explicitly acknowledged in the investors’ statement. “In this shared global crisis, investors and governments each have a responsibility to act swiftly and boldly”. So investors and governments must join forces. This is why our pension funds have already set a range of ambitious targets for reducing the carbon footprint of their equity investments, phasing out investments in coal mines and tar sands and investing in climate solutions. ABG’s largest client ABP announced in June that it would further strengthen its sustainable and responsible investment policy.

Volgende publicatie:
APG investment connects 1 million American households to fiber optics

APG investment connects 1 million American households to fiber optics

Published on: 14 September 2021

APG invests, on behalf of its pension fund clients, 500 million dollars in the deployment of fiber optics in the United States. To that end, APG takes an interest of 16.7 percent in the American fiber optics production company SiFi Networks America Limited (SiFi). APG establishes a joint venture with SiFi, intending to actually realize those connections.

The collaboration ensures that over a million households in several American cities, for whom no fast internet is available yet, will be connected to fiber optics.


The importance of a stable, reliable and fast internet connection became evident in the past year and a half when many people were forced to work from home. The new joint venture between APG and SiFi mainly focuses on those areas in the US where other major telecom providers don't really prioritize the construction of fiber-optic connections. The capital injection provided by APG and the collaboration with SiFi help to accelerate the bridging of this digital divide.


Also special is that the joint venture's fiber optics network will be open access. This means the network is accessible to third party operators. Once finished, it will enable every household to choose its own telecom provider. SiFi is one of the first American companies working according to this open access model. Meanwhile, SiFi has built such publicly accessible networks in many American cities or has entered into agreements to provide these cities with fiber optics in the future.


Smart City Infrastructure Fund

In addition, APG also invested 500 million euros this month in the so-called Smart City Infrastructure Fund, which was established in November 2018. This fund, managed by infrastructure manager Whitehelm Capital, focuses on investments according to the Smart City concept. The aim is to make cities more energy efficient and to make it a more pleasant and efficient place to live. Among other projects, the Smart City Infrastructure Fund is also investing in the further roll-out of fiber in the United States via SiFi. The first investment from this fund was made in 2019 in a fiber optic network from SiFi that was built in Fullerton, California.


Attractive return

On the global stage, APG is an active investor in infrastructure and has a growing presence in the telecommunications industry. Patrick Kanters, Managing Director of Global Real Assets, commented, “APG is excited to announce an additional investment with SiFi that will position the Company to provide vital infrastructure to underserved markets and customers well into the future. This partnership also contributes to APG’s ambition to support digitalization and the energy transition. Importantly, this investment is expected to deliver an attractive and sustainable return for our pension fund clients and their participants.”

Volgende publicatie:
APG will be offering sustainable index investments

APG will be offering sustainable index investments

Published on: 8 September 2021

Baskets of shares in sustainable companies, where the client can choose from different sustainability grades. That is how you could describe APG’s new investment product. The launch of iSTOXX APG World Responsible Investment Indices in September 2021 is a joint response by pension administrator APG, index provider Qontigo and asset manager BlackRock to the growing demand for customized, sustainable index products. For an active investor like APG, this step may come as a bit of a surprise at first glance, as the pension administrator is not known as a great advocate of what is irreverently known as “passive investing”. An interview with APG’s Ronald Wuijster (member of the board responsible for asset management) and Ronald van Dijk (managing director of quantitative strategies). “We primarily want to offer the best solution for our clients. In certain cases, that may include an index product.”


The difference between an active investor and an index investor is that the former aims for a higher investment return than the average on the stock market or a certain stock market index (weighted average of several important stocks or other investment categories, such as the AEX, S&P 500 or Nikkei 225). The index investor, on the other hand, invests in a basket of shares whose return is approximately equal to that of the market as a whole. The “iSTOXX APG RI Index Family”, launched by APG, Qontigo and BlackRock, consists of five “Responsible Investment Indices” and is therefore an index investment product. That is a step you would not really expect from a pension administrator that has always shown itself to be a staunch active investor.


For the first time, APG is offering pension funds the opportunity to invest in indices. Have you fallen away from your faith?

Wuijster: “Let me say first of all that we still advocate for a very active form of investment for those clients who have the opportunity to do so. But that form also involves higher costs and is therefore only attractive from a certain asset size. Not every client has that size. There are smaller funds that want the low cost of an index product, but want to be active on the ESG front (exerting a positive influence on sustainability and corporate governance, ed.). It is precisely for those funds that this product is suitable. In addition, some clients are simply less convinced of investment analyses as a method of selecting certain companies. Ultimately, the client decides what is good for him. We then want to offer the best solution. That solution is somewhere on a continuum, with a very active investment policy at one end and pure index investing at the other end. The “iSTOXX APG RI Index Family” is not the ultimate in active investing, but it does have active components. In short: we have certainly not abandoned our beliefs, because we are still sincerely convinced of the value of active investment and if it is possible for a client, we also advise it. But we primarily want to offer the best solution for our clients. And in certain cases that can therefore also be an index product.”


What do those active components consist of?

Van Dijk: “The basis of this product consists of the 'iSTOXX World Index' over which five filters (see box, ed.) can be placed, depending on the preference of the customer. The first filter is 'Exclusions'. By applying that, you exclude companies that do not meet certain sustainability requirements. You could call that the entry level of this product. By applying additional filters, you increase the sustainability content of your investment portfolio. The criteria then become increasingly stringent and when all five filters are applied, the most sustainable portfolio is created. In this way you go further than just investing in, for example, the iSTOXX World Index. That makes it a somewhat more active form of index investing. As far as we know, there is no other index series yet, where a pension fund can consistently opt for an increasingly ambitious SRI policy over time.”


Isn’t there a risk that this index product could cannibalize your range of active investment activities?

Wuijster: “This is unlikely to happen, if only because this product offers just a fraction of the investment mix you need as a pension fund. This product is suitable if your pension fund is not of the scale that makes active investment attractive, but you do have serious sustainability ambitions. But if you do have that size, you can still achieve higher returns by active investing.”


What does the most sustainable form of investment in the iSTOXX APG RI Index Family look like?

“In concrete terms, you then have the companies from the iSTOXX World Index, which certain companies - the Exclusions - are removed from. The sustainability leaders are then selected from what remains. From these, we then select the companies with low carbon emissions. If you then select the companies that contribute to achieving the UN Sustainable Development Goals, you are left with the most sustainable portfolio. This is then optimized so that the risks are virtually the same as those of the broad index - the iSTOXX World Index.”

Couldn’t APG have offered this product entirely on its own?

Wuijster: “It is always better to seek cooperation for those things that are not part of your standard capabilities. You could look at APG as the architect of the product. We determine the ESG profile and make sure it is appropriate for our current clients and other Dutch pension funds. Then we selected partners that can make it happen.”

Van Dijk: “Qontigo maintains the index on a daily basis. This is a discipline in itself, which is also highly regulated. BlackRock makes sure every day that the right shares are bought and sold, so that the client’s investment portfolio reflects the chosen index. We also have a trading department ourselves but BlackRock already offers many index products and therefore has the experience and manpower to keep track of such an index. Accuracy is very important when tracking an index. APG takes care of the voting policy and monitors whether the companies in the indices comply with the ESG profile we determine. APG also votes for the clients of this product at shareholder meetings.”


Does a product like the iSTOXX APG RI Index Family already exist?

Van Dijk: “Certain components of the product can be found in the market, such as index products of companies with a low carbon footprint. But the SDI component (Sustainable Development Investments, companies that contribute to the achievement of the SDGs, ed.) is unique. There is also no index product yet that uses a global standard to define what is an SDI and what is not. In addition, the ESG profile of this index product is truly APG-inspired. We are a Dutch player and we focus on Dutch clients. We invest internationally, but for the ESG profile of this product we try to take into account as much as possible what is going on in Dutch society. The Dutch have a different view of sustainability and good corporate governance than Americans, for example. Perhaps not when it comes to universal issues such as child labor and emissions, but certainly when it comes to executive pay, for example. That Dutch perspective is reflected in this product. In that sense, clients with this product benefit from the fast-growing ambitions of our pension fund clients, including ABP. As a result, we lead the way in knowledge, approach and experience with responsible and sustainable investment. Therefore, in terms of ESG standards, the bar is set high for this product.” 


How big are the assets under management that APG expects to attract with this?

Wuijster: “It is not part of our strategy to attract clients purely for this purpose. We see this as an enhancement of APG’s product range, with which we primarily want to serve existing clients. This product may attract new clients, but we expect to serve them integrally. That means not only with equity investments but also with other investment categories. An active approach to investing is inherent in this. By the fourth quarter, 1 billion euros will have been invested in this product, but we cannot yet indicate the size this will grow to.”


Can't you offer this product to the private sector too?

Wuijster: “That would be possible, but we do not currently serve private investors. It is not part of our strategy. We are not 'wildly commercial' with this product."


Read here the press release.

Volgende publicatie:
“You could have been cycling along merrily without noticing that you’d been cycling on the edge of a ravine”

“You could have been cycling along merrily without noticing that you’d been cycling on the edge of a ravine”

Published on: 31 August 2021

Nobody needs to explain that investing is risky. And everyone knows it can offer real financial returns. Indeed, that’s an important reason why investors start on the stock exchange, sometimes with borrowed money. So where is the risk? And what can we learn from the past? Five questions for APG’s senior strategist Charles Kalshoven.


“Let’s be clear: I think it’s good to see young people getting involved in their financial future from an early age,” stated Kalshoven before the first question has even been asked. “And they’re right that it’s just not been worth saving for quite some time, so it’s attractive to look for alternatives. Moreover, you can also learn a lot by getting involved in financial markets. However, there are obviously some pitfalls.”


But surely everyone knows the risks by now? Such as “past results offer no guarantee for the future” or “you can lose your investment.”

“Yes, but it can be difficult to imagine those risks. Certainly if you grew up in the period when interest rates just kept getting lower, savings offered no returns, and things were going well on the stock exchanges. Of course, coronavirus caused a crash, but for many people that was actually the right time to start investing. They bought during the dip and their investments are now often worth much more.”


What’s wrong with that?

“In principle nothing, but it can, however, give a wrong impression of what the market does. A young generation of investors has never experienced anything other than stock exchanges performing well. But if the past has taught us anything, it’s that a hefty correction or even a crisis will take place from time to time. If you’ve never felt the “pain” of such a situation, you may be inclined to take more high-risk investment decisions. Or you’ve been lucky in making good returns without realizing that the risks were much higher than you thought. You could have been cycling along merrily without noticing that you’d been cycling on the edge of a ravine.”


But it’s a fact that stock exchanges are still doing well. So you could say there’s no cause for alarm?

“Nobody can see into the future. What you can see, however, is that the Great Moderation is over – that’s the period in which high inflation was subdued and interest rates kept falling. Stock exchanges made major profits from those falling interest rates and company valuations increased considerably. And high valuations depress expected returns, so you shouldn’t just keep doing what you did in the past. Of course, you can still do really well on the stock exchanges even with those developments. I only want to say that new investors would be wise take into account scenarios that are less rosy than the current stock exchange climate.”


So what is your advice?

“Spread and re-balance. If you’re going for the long term, like pension investors, then it’s good to have a broad portfolio with a certain percentage in equities, a certain percentage of bonds, etc., which you come back to periodically. That’s the re-balancing. In fact, you then automatically exchange the categories that are doing well for categories that are lagging behind. It’s a proven method of improving your risk-return ratio. And you prevent that you trade based on emotion. But what’s even wiser is to invest in yourself instead of in equities. A study program often provides good long-term financial returns. And you also get a sense of satisfaction from this.”


But what if that study program is really expensive?

“Of course, with an expensive study program, you could invest to finance your study. Some people do this with borrowed money. But obviously, the risks are higher with borrowed money. After all if you lose a part of that money, you’re quickly straddled with debt. We call that the leverage mechanism, which we saw in the equity lease affair in the 1990s. At that time loans were offered for investment purposes, often to inexperienced investors, and loan providers weren’t upfront enough about the risks. When the share prices took a nose-dive in 2001, many people were left with a huge residual debt. In this respect, it’s simply safer to invest using your own money that you can afford to lose.”


Also read Daniël’s story who invested his student loan to pay for his pilot training.

Volgende publicatie:
“The advent of 5G is going to create a lot of innovation”

“The advent of 5G is going to create a lot of innovation”

Published on: 25 August 2021

613 Billion euros. That is to APG’s total invested assets worldwide (position at the end of July 2021). The goal: a good pension in a livable world for the pension fund participants. The portfolio is obviously diversified. From investments in wind farms in Zeeland to Australian listed shares in stores. And from safe bonds to the somewhat more fluctuating trade in gold or soy. Who are the people behind these investments? What choices do they make? And why?


In this episode of the series The Investors: Frank Dekker, responsible for investments in the telecom and media sector at APG.


Telecom companies are installing fiber optic networks at lightning speed. This means more speed and more options when it comes to, for example, 5G, artificial intelligence and the Internet of Things. At the same time, the dynamics in the sector are increasing and telecom companies are attractive acquisition targets. Will KPN be taken over by foreign investors? Who will buy T-Mobile, which is currently in the shop window? What is the impact of such market movements on APG’s telecom investments?


Senior portfolio manager Frank Dekker has been following the sector for fifteen years and is responsible for the investments in telecom at APG. This includes KPN, which APG recently entered into a joint venture with. “Very promising,” is what Dekker says about this partnership, which will make it possible to accelerate the rollout of KPN’s fiber optic network. But perhaps Dekker is not entirely objective?


Dekker: “Good question. But not correct. As portfolio manager in telecom shares, I am completely shielded from the activities of the people that were involved in this deal. During the period of the deal and its preparation, I was not allowed to trade in KPN shares. Nor was I allowed to communicate with anyone internally about this. We are very strict about this. And we have to be. Anyway, I think the joint venture between KPN and APG is very promising. Because APG’s investment will enable KPN to complete the construction of the fiber optic network sooner. This will allow them to phase out their copper network faster, leading to significant cost savings. Moreover, this accelerated construction cuts potential competitors off from KPN.”


What does that competitive field look like in the Netherlands?

“Ziggo merged with UPC a few years ago and then merged with Vodafone. T-Mobile bought two price fighters, Tele2 and Simpel. And then we have market leader KPN. The Dutch telecom market is now very clear, with these three parties. The Netherlands has good networks for mobile phones and landlines. The prices for mobile services have dropped considerably in recent years.”


T-Mobile will be sold as soon as possible if it’s up to owner Deutsche Telekom. What does that mean for the Dutch telecom market?

“T-Mobile has a small, fixed network in the Netherlands. Deutsche Telekom would like to be number one or two in every market. In the Netherlands that is probably not going to happen, so that is why the company is going to be sold. KPN or Vodafone Ziggo are probably not allowed to take over this number three because of European competition rules. Whether competition in the Dutch telecom market will increase or decrease as a result of the sale of T-Mobile depends on the new owner. It's hard to say who that will be. Delta is known to invest heavily in fiber optic networks. In a partnership with T-Mobile, that company could provide additional competition on the Dutch telecom market. Right now, T-Mobile largely rents the fixed line from KPN for their customers who still use a landline phone.”


APG invests more than average in KPN. How much longer can that go on? 

“Unfortunately, my role does not allow me to go into detail on that. We are looking at a period of three to five years. It is difficult to predict which sector will do better than others. That is why we mainly try to achieve an above-average return within a sector; for example, by choosing the companies that perform best in class and that show the best return-risk ratio. If we look at the Dutch market, Vodafone Ziggo is KPN’s main competitor. That company does not yet have fiber, and has yet to invest heavily in the necessary upgrade of their current cable network.”


In general, are telecom companies in the Netherlands really a good investment?

“Investors usually look at the dividend yield. But what you often see is that telecom companies with a high dividend yield are a bad investment. They are paying a relatively high dividend at the moment, but the question is whether that is sustainable. After all, they will have to invest heavily in their networks in the coming years. To us, the underlying cash flows for the coming years, where we try to estimate what the sales and margins will do, is much more important than dividends. We also look at the structure of the telecom market, how the competition will develop. And what the relationship is with the regulator and politics. The corona epidemic has once again shown how important good connectivity is; policymakers will therefore want to stimulate investments in this, for example through regulation. In conclusion, we are seeing a relatively healthy market structure in the Netherlands. The downside for telecom companies is that politicians want low prices for consumers. At the same time, I consider the chance of a price war to be fairly small.”

What would be the impact of such a price war?

“Price wars occur when there are changes in local competition. More competition often means that companies start to stunt and rates drop. That’s nice for the consumer, but not beneficial for the shareholder. With less competition, the chance of price increases is higher and the cost of customer acquisition can be reduced. Our investment philosophy is therefore aimed at staying ahead of price wars. India, for example, is now a more interesting market, since they have gone from fourteen to three telecom providers. But Brazil, Canada and Finland are also interesting. In the US, on the other hand, the likelihood of a price war is rising. There has been a big takeover there, with the result that other players are trying to gain market share in a more aggressive way.”


For telecom companies, isn’t the real competition more likely to come from giants like Amazon, Facebook, Apple, Google and Microsoft in the long run?

“Certainly. A lot of value is being created with the digitalization of society. This value creation no longer goes to the KPNs of this world, but to those giants. So that’s what we invest in as well. These American and Chinese companies are increasingly investing in digital infrastructure such as data centers and the submarine cables that carry most intercontinental Internet traffic. These used to be owned by telecom operators, but those days are over. Most of the digital infrastructure that European telecoms companies still own is the last mile, the last piece of the connection to the customer.”


5G is central to that digital infrastructure. What will that network do for us in concrete terms?

“Looking back, we can attribute the arrival of Uber to the breakthrough at the time of 4G, the smartphone and data centers. I expect that 5G, along with applications of artificial intelligence, is going to bring a lot of innovations in areas such as self-driving cars, virtual reality, remote-controlled robots that perform operations, drones, you name it. All of which require a tremendous amount of computing power and as little delay as possible. For example, an ambulance transporting a victim with third-degree burns to the hospital, where a doctor can make a diagnosis and prepare the required equipment remotely via a video link. Or artificial intelligence that allows you to perform real-time simulations: for example, what is the probability of an accident occurring with a self-driving car. For this kind of innovation, you really need 5G.”  


There is increasing political pressure to ban Chinese equipment from, for example, Huawei, which telecom providers in the Netherlands also use. Does this present a big risk for the Dutch telecom sector?

“Yes, it definitely does. The U.S. is concerned about China’s technological lead in 5G. We’ve seen more initiatives by politicians and security agencies to warn of cybersecurity risks due to ownership of Huawei equipment, for example. Increased scrutiny of Chinese equipment suppliers forced KPN to remove Huawei from its core mobile network. KPN also selected Huawei for other 5G components, such as antennas. Now KPN is in danger of having to remove Huawei from its mobile radio network as well. But not KPN alone: T-Mobile has mostly Huawei equipment in its network. A ban on Huawei will cost telecom providers money, but they can partly compensate for that by charging consumers higher prices in the wireless market.”


Finally, even as a large investor, you face competition. How do you differentiate yourself from it?

“The nice thing about working for APG is that we are large scale. As a result, we have above-average access to research, management and alternative data, but are able to keep costs down. That data, especially sector-specific data, is expensive and not every investor can afford it. Anyway, it’s also about what you do with that data. My team and I look at developments within sectors and not between sectors. This is called relative investing. In that sense, we can make full use of our time to investigate the differences between players in the telecom market and to make them work to our advantage.” 


And is that working?

“We have outperformed the competition (benchmark) by about 30 percent over the last 11 years, with an absolute return of 12.6 percent per year. So: yes, it’s working well.”

Who is Frank Dekker?


He earned a Masters of Finance at the Vrije Universiteit. He has been working in the Fundamental Stock Selection at APG for fifteen years. He manages the portfolio together with colleague Henny Crauwels. This department is characterized by sector knowledge, taking relative bets and investing for the longer term. He is married and has three children. And he lives in Zandvoort.


A career in investing

“My father was a carpenter and had a bad back. After he was declared disabled, he started investing privately at home.” So, Dekker was familiar with the concept of investing from an early age. And that has never stopped. “In my spare time I like to read books about investing,” he says.


Working method

“I enjoy delving into a subject and forming an opinion about it. I’ve inherited a thick skin. That helps me take a stand that differs from the consensus.”


Investment Philosophy

“Many investors look top-down at how the macroeconomy or how certain sectors will develop. We differentiate ourselves by looking at longer-term business trends within a single sector.”

Facts & Figures 


What does APG invest in in terms of telecom and media?

Interactive media: Google, Facebook, Snap, Twitter

Broadcasting: Fox, Prosieben, Discovery, Viacomcbs

Interactive home entertainment (gaming companies) Activation Blizzard, EA

Cable & satellite: Comcast, SES

Advertising: (Advertising agencies) Publicis, WPP

Movies & entertainment: Netflix, Disney


How much?

The satellite portfolio 1218 invests just over 1.5 billion euros.


Volgende publicatie:
“We can still make it, but we'll have to work hard.”

“We can still make it, but we'll have to work hard.”

Published on: 13 August 2021

The report by the United Nations’ IPCC, Intergovernmental Panel on Climate Change, underscores the rapid, human-induced increase of global warming. If we don't take action now, temperatures could rise by nearly six degrees Celsius towards the end of this century. If we do act now, the goals of the Paris Agreement are still achievable. Large companies and investors can make a difference. The question is: Are we currently doing enough to turn the tide? According to Joost Slabbekoorn, senior responsible investment & governance manager at APG, at least we're on the right track. “We have long seen the need to take action and that's exactly what we're doing."


The conclusions drawn by the UN report don't really tell us something new: Humans “unequivocally” play a role in climate change, the earth has warmed by more than 1 degree in 100 years (much faster than before), the effects of climate change are felt all over the world, and temperatures will definitely continue to rise in the next 30 years. Whether that's by 1.5 degrees in the best-case scenario or 5.7 degrees in the worst-case scenario depends entirely on the actions we take globally.


Reassessing policies

“Yes, the IPCC report makes for very uncomfortable reading," says Slabbekoorn, the person who, together with his team, is responsible for implementing sustainable and responsible investment policy for the ABP pension fund, among others. “But actually, we already knew that things haven't been going well." We have known about climate change for some time. It's with good reason that our focus has grown substantially in recent years in terms of sustainable and responsible investment policies for fund clients such as ABP. But sometimes you know that our approach must and can be more effective, says Slabbekoorn. Conclusions such as those drawn by the IPCC report may then actually be decisive for revising policy. "That's what ABP did recently. We realized that accelerating the energy transition is the only option – and current policies do not adequately make that happen. That's why we’re setting our climate ambitions higher in 2022." ABP is taking this issue very seriously. A panel of scientists at universities is helping us create these improved policies. 


Fossil fuel

In addition, APG, along with 32 other large investors, collaborated on the “Net Zero Investment Framework” – a framework that provides guidance on how to tackle climate change. “It's exactly these types of initiatives – as well as our engagement efforts – that allow us to contribute to a liveable world by using our influence as investors to encourage companies to make more sustainable decisions.” But as Slabbekoorn emphasizes, one doesn't make an impact on their own. “As an influential pension investor, I think we have an obligation to do everything within our power. But everyone must do their part.” One option that climate organizations often propose is moving away from investments in fossil fuels. Does the IPCC report mean that APG will advise its clients to completely stop investing in fossil fuels? "Not necessarily," says Slabbekoorn “Ideally, the fossil fuel industry also needs to be part of the solution. But oil and energy companies will need to accelerate their transition from fossil fuels to renewable energy in the coming years. We are paying close attention to their actions in this regard. If things aren't moving fast enough for us, or we lose confidence, we will stop investing in fossil fuels.”


Mapping out risks

One of the report's other conclusions is that the effects of climate change can be seen all over the world. The floods in Limburg (the Netherlands), Belgium, and Germany are a case in point, and these sorts of phenomena are also influencing APG's investments. “Changing weather conditions are already impacting our investments. In any case, temperatures will continue to rise. This means that climate change will continue to affect our investments. That's why, for our real estate investments, we're already mapping out risks in case of floods, droughts, forest fires, or rising sea levels. We have also developed a dashboard that shows us the physical risks of climate change by country,” says Slabbekoorn.


Ray of hope

“The report, or rather the report's conclusions, truly impact the way we invest. We are taking the right steps, but there is always room for development," says Slabbekoorn, who, despite the report's bleak message, also sees a ray of hope. “The report also states that we can still meet the climate goals by 2050. But to achieve those, we'll really need to get moving.”

Volgende publicatie:
How do environmental disasters impact real estate investments?

How do environmental disasters impact real estate investments?

Published on: 29 July 2021

Current topics with regard to the economy, responsible investment, pension and income: every week, an expert at APG provides a clear answer to the “Question of the week”. This week: Asset Management professional Steve Goossens discusses the impact of climate change and environmental disasters on real estate investments.


Hundreds of millions of euros: this amount alone represents the damage caused to the city of Valkenburg when the surrounding region was hit by severe floods in mid-July. This says a lot about the total financial impact of the flooding – and environmental disasters in general. Due to climate change, crises like this are becoming more frequent as well as more severe. With all the consequences – and damage – that this entails. To what extent does this affect investments in both the short and long term?


“The impact of climate change on investments is bigger than you might think,” says Goossens, who works in the real estate asset class. And he should know. Together with his team and co-workers from the Responsible Investment Team, he has been focusing on climate-related risks concerning the investments made by APG’s fund clients for more than two years now, primarily for his own department: real estate investments. “If at all possible, the data I collect will also be used in relation to investments in other areas, such as infrastructure.” After all, the impact of natural disasters is not limited to real estate alone. Goossens also examines risks associated with floods, forest fires, droughts, or rising sea levels in relation to real estate, for example. “Look at Amsterdam: droughts have been causing the piles on which the city is built to be exposed above water level for long periods of time. This, in turn, causes the wood to rot and the ground to subside more quickly. This is accompanied by an enormous investment task, which has a direct impact on some real estate investments in Amsterdam and the surrounding area.”


Direct and indirect risks

Goossens distinguishes between two types of risks related to climate change on investments: direct and indirect risks. The subsidence in Amsterdam, the flood damage in Limburg, as well as the devastating effect of forest fires on homes elsewhere in the world are all examples of the direct impact that climate change has on investments. “This is quite easy to explain: investment properties suffer damage and part of the costs in relation to this will always be borne by the investor. That, in turn, affects an investor’s returns: the higher the costs, the lower the return.”


Then there is indirect damage: “When a disaster occurs, stores may need to stay closed or hotels may not be able to receive guests, which brings certain costs with it. A natural disaster may also force people to move. Not only that: insurance contributions, for example, will also be subject to considerable increases in response to environmental disasters, or certain types of environmental disasters will no longer be covered by insurance. Property owners pay the price of this. Insurers, like us, estimate the risk of disasters like these and base their prices on that. You can count on insurance contributions becoming much higher in the future.”

Our calculations allow us to estimate what it will take to meet the goals at individual investment level

Transition risk

Goossens therefore also draws up risk estimates for the investments APG makes for its funds. This is urgently needed, because it enables estimates to be made of the financial consequences of climate change in the longer term. Investors take this into account when estimating the value of an investment. At least as important is what is referred to as the transition risk: “This is the risk of rising costs in response to the energy transition. In other words: what additional investments are needed to achieve the goals of the climate agreement? Better insulation or new heating systems are examples of this. Climate change is causing the Earth to heat up faster. If we want to combat this and limit the ensuing rise in temperature to 1.5 degrees, as stated in the agreement, this will bring certain costs with it.”


Legislation & Regulations

According to Goossens, how much money and which investments are needed in the coming years also depends on legislation and regulations. The requirements set by governments for energy labels is a significant factor in this. “We have no influence on that, but we do know what the ultimate goal is for 2050 and that we need to keep reducing the amount of CO2 we emit.” APG and other large investors have developed the global CRREM standard to measure the transition risk and, in doing so, gain a clear overview of that ultimate goal. This provides insight into whether a real estate investment complies with the Paris Agreement. An office building in the Netherlands complies with the climate agreement if it consumes no more than 14 kWh/m2 of energy, for example. CRREM is stricter with regard to this than the Dutch Green Building Council (the network organization for sustainable construction practices), which applies 50 kWh/m2 as a standard, says Goossens. “Aside from that, the CRREM standard is scientifically substantiated. By applying this standard, we go much further than other organizations in the sector."


“Our calculations allow us to estimate what it will take to meet the goals at individual investment level. We then examine the various aspects involved in relation to our long-term real estate investment plans.” Goossens believes that these additional investments are necessary. “The alternative is that the Earth will heat up by more than 2 degrees and that even more environmental disasters will occur. The damage caused by that is many times greater than the cost of accommodating the energy transition.”

Volgende publicatie:
“Is the EC’s new climate plan bad for the stock market?”

“Is the EC’s new climate plan bad for the stock market?”

Published on: 15 July 2021

Current issues around economics, (responsible) investment, pensions and income: every week an APG expert gives a clear answer to the question of the week. This time: equity investor Martijn Olthof, on the impact of a stricter climate policy and higher carbon prices on the equity markets.


Fit for 55. That’s the name of the plan launched by the European Commission on July 14 to reduce European emissions by 55% by 2030. An important part of that plan is the revision of the Emissions Trading System (ETS). Companies that cause emissions must compensate for them through the purchase of carbon emission rights. They can do this within the ETS.


The general expectation is that Fit for 55 will lead to higher and more widely applied prices for carbon emissions in Europe. To meet the Paris targets, it will have to, despite the large increase we have already seen this year. But higher prices for emissions lead to higher costs for companies. There is speculation here and there that this will lead to falling stock markets. Justified?

Winners and losers

According to Olthof, this reasoning is much too short-sighted. “It's clear that the price of carbon emissions has to go up considerably for it to really make a difference. And in most Paris scenarios that will happen. But you really can’t predict that a rise in the price of carbon will lead to a certain fall in stock markets. It depends on so many more factors. What you will see is that there will be winners and losers among companies.”


Whether a company becomes a “winner” or “loser” depends on a number of factors. “Companies that do not make the switch to zero emissions in time and provide a product for which a more sustainable alternative exists are going to suffer from a high carbon price. Their product will simply be too expensive compared to the alternative. Coal-fired power plants, for example. The customer can also turn to companies that supply green energy, with zero emissions. These energy companies incur fewer costs and can therefore supply their products more cheaply. But if you are a cement company, for example - which causes considerable emissions - there are currently few alternatives for your product. Those kinds of companies can largely pass the cost of a higher carbon price on to the customer. As a result, they suffer less quickly and less directly when emission allowances become more expensive.”        

It is precisely the fossil companies that can benefit from clear policies like Fit for 55


Yet Olthof says it is still difficult to predict exactly which companies will benefit from a high price for carbon emission rights. “There are simply too many uncertainties about how the energy transition will unfold. Whether there is an alternative for a certain product and at what price depends very much on technological developments. It is difficult to predict these in the long term.” 

It may not seem like it at first, but it is precisely the fossil companies that can benefit from clear policies like Fit for 55. The beauty of Fit for 55 is that it offers clarity to many companies that are crying out for these kinds of measures. For example, there will be more support for green fuels. If the carbon price also rises, companies will have a double incentive to produce biokerosene, for example. That is what companies want, because then they know for sure that there is a market for it. Many oil companies also say they are in favor of a high and stable carbon price. Only then will the capture and storage of carbon become profitable. What is needed is a healthy combination of various policy measures. That means, for example, that you require airlines to use a minimum percentage of biokerosene or other green fuel. If you also ensure a higher carbon price, among other things, and apply it more broadly to more sectors, companies will take steps towards new technologies. Because they have more certainty that they will also earn back the large investments required for this.”


Vigorous counter measures

And even if a higher carbon price pushes down stock prices, you can ask how bad that is, Olthof says. “What’s the alternative? If you get catastrophic climate change, or harsh government intervention because the Paris goals are not met, that might be much worse for the stock market. To meet those goals, massive investments are needed. The government must then ensure that it is attractive enough for the private sector to make those investments. With a sharp and clear climate policy, it can ensure that.” 

Volgende publicatie:
Sustainability-linked bonds: new opportunities, but avoid greenwashing

Sustainability-linked bonds: new opportunities, but avoid greenwashing

Published on: 9 July 2021

APG recently participated in the issue of a number of sustainability-linked bonds (SLBs). Companies issuing such bonds promise to meet predefined sustainability objectives; if they fail to do so, they need to pay investors extra interest. This offers flexibility, but also means investors must pay close attention to the sustainable objectives to prevent greenwashing. “We need to do our homework thoroughly to weigh the credibility and robustness of these deals.”


Tesco is one of the growing number of companies to have issued a ‘sustainability-linked bond’ (SLB) this year. In January, the British supermarket chain launched a bond that is linked to the company’s commitment to reduce greenhouse gas emissions. Concretely, Tesco pledges to cut its greenhouse gas emissions by 60% in 2025 (compared to 2015). If the company fails to meet this objective, investors will receive a coupon premium.    

Rapid growth

APG on behalf of its pension funds participated in Tesco’s €750 million SLB issuance, the first of its kind by a retailer. So far, SLBs remain a small part of the ESG fixed income landscape, relative to conventional labeled (green, social and sustainable) bonds. But SLB issuance is growing fast in 2021. According to Bloomberg, over €12 billion of SLBs has been issued this year to date, nearly 5% of total labeled bond issuance in that period.

So what is a sustainability-linked bond? SLBs allow the issuer to raise money for general purposes while promising that if they fail to meet specified sustainability targets they pay investors extra interest. Such key performance indicators (KPIs) are, for example, ‘percentage of recycled materials used by 2030’ or ‘reduction of greenhouse gas emissions by 2025’. This is different from conventional green bonds, where the money raised has to be spent on specific sustainability projects.

The instrument is still fairly new. In 2019, Enel issued the first SLB. The Italian power utility company targeted a 55% share of renewables in its power generation capacity by the end of 2021. Investors will receive 0.25% extra interest on their bond holdings if Enel fails to meet this commitment. In the run-up to the issue, Enel discussed the particular features of this bond with a select number of investors, including APG.

Prevent green washing

Since mid-2020, the number of SLB issuances has been steadily rising, an encouraging sign of momentum in this nascent market. The flexible structure of SLBs may offer an alternative for companies which – owing to the nature of their business – face difficulty in finding sufficient (or sufficiently large) sustainability projects to issue a green bond. Retail companies, like Tesco, are an example. SLBs allow such companies to finance their overall sustainability strategy without having to ringfence the money for particular green projects, e.g. building a solar power plant.

However, that same flexibility also means that investors have less concrete information on how the proceeds will be used and the potential impact they will have. “Flexibility in terms of use of proceeds combined with customized key performance indicators could make it easier for issuers to ‘sustainability wash’ and twist objectives to suit their needs,” says Joshua Linder, Credit analyst Fixed Income at APG. “For that reason, some investors are hesitant to support this new structure. But we see a lot of potential for SLBs, provided the integrity of the market is firmly maintained. We need to carefully scrutinize the KPIs to find out if they are ambitious and robust enough and ensure they can be properly verified and tracked.”

Tesco’s SLB is aligned to its newly introduced Sustainability Bond Framework which, in turn, follows the International Capital Market Association (ICMA) principles on SLBs, released in June 2020. The ICMA principles aim to further develop the key role that debt markets can play in funding and encouraging companies to contribute to sustainability. The principles pertain to setting KPIs, bond characteristics, reporting and independent verification.

Hybrid bond

Recently, APG also participated in a ‘hybrid’ bond issued by NextEra Energy. This bond, one of the first of its kind, combines features of both conventional green bonds and SLBs. NextEra Energy is a US utility holding company overseeing the largest investor-owned utility in the United States, which serves more than 11 million residents across the state of Florida. NextEra Energy also owns a clean energy business, which is the world's largest generator of wind and solar energy.

The bond structure follows the ICMA green bond principles and ringfences the bond’s proceeds for specific renewable energy projects. However, it is also stipulated that if the company fails to fully allocate the proceeds within two years, investors will receive a 0.25% interest premium until maturity. Also, projects must become operational within twelve months after issuance, or replacement projects must be selected that still meet the two year window, or be subject to the higher coupon rate.

“These features create an added layer of accountability compared to conventional green bonds,” says Craig Hauret, Senior Credit analyst Fixed Income at APG . “It ensures proceeds are allocated to eligible green projects in a timely fashion. Another attractive feature is the requirement that proceeds finance only wind and solar energy projects that will become operational after issuance. As opposed to some green bonds which allocate proceeds to ‘refinance’ projects that were completed two or three years ago.”

This is not to say there aren’t any drawbacks to the deal, notably the absence of a green bond framework which typically serves as the basis for project eligibility, as well as the lack of independent audit. “We have communicated that concern to the company,” says Hauret. “However, we have confidence in NextEra due to its long-time status as an ESG leader, combined with the transparency into the specific renewable energy projects being financed.”  

Upholding market integrity

APG is one of the world’s largest green, social and sustainable bond investors and an advocate of the labeled bond market, including SLBs. “We are, however, very selective in terms of which SLB deals we support in these early stages of market development in order to uphold market integrity,” says Linder. “For instance, we have seen SLB issuance where one of the sustainability targets had already been achieved. Clearly, such a bond does not meet our standards.”

The need for transparency and effective reporting practices is crucial for upholding the integrity and credibility of this rapidly growing market. To make (potential) issuers aware of our expectations and foster healthy development of the market, APG has published the Guidance on Sustainability-Linked Bonds.


APG’s fourth annual ‘Growing the US Corporate Green and Social Bond Market’ roundtable event for institutional investors, capital market underwriters and other stakeholders this year focused on SLBs.  “Growing the corporate labeled market in the US whilst upholding market integrity has been a key objective since we started these events, “ says Anna Pot, Head of Responsible Investments Americas at APG. “We have made substantial progress on activating our peers and partners across the industry to stimulate issuance of high-quality corporate labeled bonds.”

Volgende publicatie:
APG takes 20% stake in Sweden's largest district heating and cooling supplier

APG takes 20% stake in Sweden's largest district heating and cooling supplier

Published on: 1 July 2021

A consortium led by APG has acquired a 50% interest in Stockholm Exergi Holding AB. With close to 10 TWh in yearly energy sales and an annual turnover of almost €700 million, Stockholm Exergi (700 employees) is the largest supplier of district heating in Sweden. The company is an industry leader in sustainability and has the ambition to become climate positive by 2025.

The consortium also comprises of PGGM, Alecta, Keva and AXA Investment Managers. APG has acquired the 20% stake on behalf of pension fund client ABP, which wants to further shape its climate- and responsible investing ambitions. The consortium has bought the 50% stake from the Finnish energy group Fortum. Stockholm Exergi's 800,000 customers are concentrated in the Stockholm municipality. The remaining 50% stake is owned by the City of Stockholm.


Carlo Maddalena, Senior Portfolio Manager at APG: “The Stockholm Exergi investment is an excellent fit with APG’s infrastructure strategy and with its strong sustainability focus, it is at the core of the energy transition.”

According to Maddalena, Stockholm Exergi's fundamentals are very strong. “High temperature-driven heating requirements in Sweden, an AAA-rated country, cause district heating consumption per capita to be amongst the highest in the European Union. This makes district heating a nationally important core infrastructure for Sweden. In addition, Stockholm Exergi also supplies electricity to the local grid, which resolves many of its current capacity issues. The transaction was a unique opportunity to acquire a leading sizeable utility business in Scandinavia. Investments of this quality are scarce in the region."

International role model

The company's sustainability goals are very ambitious. "Stockholm Exergi has transformed itself to a fossil-free energy supplier and wants to become climate positive by 2025. To this end, it has already developed a number of projects, which are still at an early stage. This strategy is aligned to the commitment of the City of Stockholm towards becoming an international sustainability role model. As such, Stockholm Exergi plays an important role in these local – and national – climate ambitions."

The APG deal team that worked on the transaction was composed of Carlo Maddalena, Bart Saenen, Jan Jacob van Wulfften Palthe, Marjolaine Lopes and Silvan Koortens.


Read the Press Release.

Volgende publicatie:
APG selling half of Spanish rental property portfolio

APG selling half of Spanish rental property portfolio

Published on: 1 July 2021

The Spanish rental market is growing steadily. Reason enough for APG to invest heavily in this market. Now APG is selling half of these homes to the Australian company Aware Super. Why? And why would a Dutch pension investor invest in Spanish rental homes anyway?

In 2017, APG and Spanish partner Renta Corporación launched Vivenio, which invests in rental properties in major Spanish cities like Madrid and Barcelona. A stable investment, yet APG is now selling half of it to an Australian partner, pension fund Aware Super. APG will receive more than 400 million Euros for this and will reinvest half of it in Vivenio for further growth in the quality and quantity of the residential portfolio. Aware Super is investing the same amount.

From APG, Rafael Torres Villalba, expert portfolio manager of Real Estate Europe, has been closely involved with Vivenio since its inception as one of the directors.    

Why did APG start investing in Spanish rental properties four years ago?

Torres Villalba: “It is an attractive growth market. In the past, the Spanish government encouraged the population to buy houses. This has been successful; over 80% of Spanish homes are owner-occupied. In the Netherlands, that figure is a little more than 55%. But in recent years a growing group of Spaniards want to be more flexible. They do not want to commit themselves; they want to be able to move easily for their work. And then it makes more sense to rent a house than to buy one. Because currently less than 20% of all homes are rental properties, we expect a lot of growth there. On top of that, just like in the Netherlands, the number of single-person households in Spain is rising rapidly; so there is simply more demand for housing.”


What are the returns on these investments for APG?

“In terms of rental income, we assume 3 to 4% cash return per year. Low?  Not really. Now that interest rates are so extremely low, and we don't earn much on bonds, for example, that’s an excellent return. On top of that there is the expected annual revaluation of the real estate. As a result, this investment has an attractive total return every year.”


What is APG's strategy, when it comes to investing in real estate? 

“We focus on a portfolio of global real estate investments that offers predictable returns. In doing so, making our properties more sustainable is a top priority. We invest not only in rental properties, like we do in Spain, but also in shopping centers, outlet centers, offices, distribution centers, hotels and student housing.”

“Making our real estate more sustainable is a top priority for us”

Wouldn’t it be better for APG to invest in Dutch rental properties so that our retirees can benefit from them as well?

“We certainly do that too. For example, through our interest in Vesteda, which owns over 27,000 Dutch rental homes. But in the interests of our members, it makes sense for APG to spread the investment risks as widely as possible. After all, that gives the best chance of stable returns in the long term. And that includes investing in real estate worldwide, not just in the Netherlands.”


Vivenio invests in some 6,000 homes. Are these the more expensive rental properties, or does that also include some social rental properties?

“It’s a mix. Spain does not have social housing as we know it in the Netherlands. For some of the rental properties, the possible rent increase is limited by the government, to protect the position of the tenant. We do include some of these in our investments, but the majority of what we invest in is in mid-range houses, with an average rent of 840 Euros per month, ranging from 1400 Euros at the top and 400 Euros at the bottom end of the scale.”


Are these relatively high rents by Spanish standards?

“Not really. A relatively high number of highly educated people live in the big cities and have good jobs. In most households, both partners work, so those rental fees are affordable for them.” 


What does APG do as a homeowner? Do you refurbish rental properties?

“Wherever possible, Vivenio adds value to the residences by building additional facilities. Such as an extensive gym and other sports facilities, rooftop terraces, spaces for flex offices for tenants who also want to be able to work from home, etc. Vivenio tries to be efficient with the space it has available in order to offer as many facilities as possible to its tenants. For example, by converting former retail spaces or office spaces.”


Is sustainability a priority?

“Absolutely. Vivenio participates in the Global Real Estate Sustainability Benchmark (GRESB). This is an international real estate benchmark that assesses the sustainability performance of real estate portfolios. For individual rental properties, BREEAM is the most commonly used assessment method to determine the sustainability performance of buildings.  The building materials used or the energy consumption, for example, are considered in this assessment. According to this assessment, Vivenio’s recently built rental properties score ‘good’ to ‘very good’. In addition, together with our internal Global Responsible Investments team, we are constantly looking for opportunities to raise the bar.”


What effect did the Covid-19 have on APG’s investments in Spanish rental properties?  

“In the beginning, people stopped spending money, but that soon changed. We then immediately said that if tenants could no longer pay the rent because they no longer had a job, we would not immediately throw them out into the street anyway. We felt it was important to treat our tenants in a socially responsible way and to make arrangements for this group. In the end, that turned out not to be needed.” 


You outlined the advantages of this Vivenio investment, such as the stable returns earlier. So why are you selling half of this equity stake?

“In the beginning, we had the ambition to grow this housing platform to a certain scale. Vivenio is now well on its way, but there is still room for further growth, becoming more efficient and ultimately delivering better returns. By admitting a new investor, more capital is available to achieve that growth and APG can cash in on part of this investment. We chose pension investor Aware Super, with whom we already work well in other investments, such as that in aparthotel chain City ID. The return is more than 400 million Euros, giving us nice total return. We have therefore met our return requirements. My coworkers and I are quite proud of that. We are reinvesting the proceeds partly in Vivenio, and partly in other real estate investments.”


Do your Spanish roots help when working with Vivenio and on a deal like this?  

“Haha, I was born and raised in the Netherlands, but yes, I do have Spanish relatives. The fact that I speak the language fluently is useful; it quickly breaks the ice. But for the rest all communication is in English, which is nice for my APG coworker. Culture clashes? Not so much. It is obviously not an Anglo-Saxon negotiation culture like we encounter with other investments, but that can also be a good thing. And the Spanish lunches are a relief, compared to the Dutch cheese sandwiches with milk.”   

Volgende publicatie:
2020: Pressing ahead with sustainable ambitions

2020: Pressing ahead with sustainable ambitions

Published on: 30 June 2021

APG publishes Responsible Investment Report


In 2020, APG has once again made great strides when it comes to responsible investing. By continuously improving, we can continue to meet the growing sustainable ambitions of our pension funds, as shown in our Responsible Investment Report (Dutch; English version expected in July) published today.


Responsible investing is one of APG’s strategic pillars. In their preface, Annette Mosman (CEO), and Ronald Wuijster (board member responsible for asset management) note that the Covid crisis has accelerated the increased attention for responsible investing. "Not only among NGOs, but also in the media and among the participants of the pension funds for which we work. We listen carefully, because we realize that our right to exist derives from the participants. It is for them that we work towards a good pension."


Investing in sustainable development

By the end of 2020, we had invested over €90 billion on behalf of our pension funds in companies and projects that contribute to the Sustainable Development Goals (SDGs). These were drawn up by the United Nations in 2015 to create a better and sustainable world. Our pension funds ABP and bpfBOUW both have a target for investing in the SDGs. A significant part of our investments in the SDGs (€12.2 billion) consists of labeled bonds. These are bonds issued by companies, governments and organizations to finance green, social or sustainable projects.


In 2020, APG, together with three international investors, established the SDI Asset Owner Platform to stimulate investing in the Sustainable Development Goals. Our ambition is to make this a global standard. In this way, we - together with other responsible investors - can contribute to goals such as sustainable cities and communities, affordable and clean energy and climate action.


Combating the Covid-crisis

By the end of 2020, APG had invested more than € 1 billion in so-called Covid bonds on behalf of pension fund clients. The proceeds of these bonds are used to combat the pandemic and the impact of the lockdown on people and businesses. Examples include the expansion of health care services, employment retention programs and support for SMEs.

In 2020, we also urged companies – both individually and together with other large investors – to mitigate the social consequences of the crisis and put employees’ health first. According to the U.S. organization Responsible Asset Allocation Initiative, APG is among the global asset managers that do the most to address the effects of the pandemic.


The carbon footprint of our equity investments decreased by 39% against the 2015 base year.

Global warming and the energy transition

The carbon footprint of our equity investments decreased by 39% against the 2015 base year. All our pension funds have a carbon reduction target. This year, for the first time, we also publish the carbon footprint of our corporate bonds, real estate and private equity investments (57% of the total portfolio). By 2022 at the latest, our pension funds will link these to 2030 climate targets. APG has contributed to a framework for reporting carbon impact as well as an overview of methods used by the Dutch financial sector for measuring the carbon footprint.


At the end of 2020, we invested €15.9 billion on behalf of our pension funds in the Sustainable Development Goal 'Affordable and Clean Energy' (SDG 7). By investing in this goal, we reduce climate risks in our investment portfolio and contribute to the energy transition.


Impact on risk and return

In 2020, we developed a method that provides insight into the effect of including (taking sustainability aspects into account in each investment decision) and excluding investments on the return of the equity portfolio. Over the past two years, the effect has been marginally positive. We do note that we can only make statements about the long term if we have measured over a longer period of time. In 2021, we will also develop methods to assess the impact of other instruments for sustainable and responsible investing on risk and return, such as carbon footprint reduction and investing in the SDGs.


Our own business operations

Although APG can achieve the greatest impact with the investments we manage for our pension funds, we also take into account our own business operations. We can only set a high bar for companies in which we invest, if we do the same for ourselves. In this way, we also motivate employees to consider sustainability in their daily work and choices. By 2030, APG wants to have a demonstrably climate-neutral business. In order to enable decision-making on our sustainable ambitions, we will establish a Sustainability Board under the leadership of CEO Annette Mosman. More on this in our annual report.


Sustainable future

APG invests over €570 billion on behalf of its pension fund clients ABP (government and education), bpfBOUW (construction), SPW (housing associations) and PPF APG, the pension fund of our own employees. Our pension funds have strengthened their responsible investing ambitions and objectives. ABP announced its new policy in 2020; bpfBOUW and SPW have recently done so. In line with our clients’ increasing ambitions, APG continues to develop in the area of responsible investing. We want to 'work together on your sustainable future'. A future with a good and affordable pension, in a sustainable, livable and inclusive society. That is what we are committed to, now and in the future.

Volgende publicatie:
APG awarded twice during Global Capital Bond Awards

APG awarded twice during Global Capital Bond Awards

Published on: 18 June 2021

APG's Credits team garnered two awards during GlobalCapital’s Bond Awards ceremony. APG took second place in the Most Influential Investor in Corporate Bonds category, moving up one spot from last year. And for the first time ever, APG placed in the financial bonds category, where the Credits team came in third.


The Bond Awards rankings are based on a poll among various players in the bond market, such as issuers, investors and banks. Each year participants cast a vote for the best performing players in different categories. "That is the reason why we are especially proud," Tim Slütter, Head of EU Credits, explains. “The award truly is an acknowledgment from our colleagues working in bond markets around the world."

Rinse Boersma, portfolio manager financial credits, thinks that APG owes its nominations to the transparency that the pension provider stands for. “Especially in times of COVID, the market was very volatile. Companies and banks needed financing but got a cold shoulder. APG has always been very forthcoming about what we buy for what price. That reliability is important.”


Oscar Jansen, portfolio manager corporate credits, thinks that APG's leadership in the field of ESG was also beneficial in getting awarded. “Green bonds, social bonds, there are more and more of them. For companies that bring these products to the market, it is important that you provide clear and substantiated feedback. APG is at the forefront of this.”


In the corporate bond category, investment manager BlackRock came in first. Pimco came in third place. In the financial bonds category, it was a matter of trading places. In this category, Pimco took first place, BlackRock came in second, while APG came in third. Tim Slütter: "Of course APG is a sizable candidate too, but compared with these parties we are almost punching above our weight. We are proud that we can compete with these kind of world-class players."


GlobalCapital is a news and data service for international professionals working in the capital markets. It has hosted the Bond Awards for twelve years. More information about the Bond Awards can be found here: Welcome to the GlobalCapital Bond Awards 2021! | GlobalCapital

Volgende publicatie:
“Transition to wood construction won’t happen overnight”

“Transition to wood construction won’t happen overnight”

Published on: 16 June 2021

APG is investing in over eighty thousand hectares of FSC-certified Chilean production forest. How do you arrive at such an investment? What does the market look like? And how does logging relate to sustainability? Six questions for Vittor Cancian, Senior Portfolio Manager Natural Resources at APG.

Why is APG investing in timberland?

“For an investor with sustainability ambitions, timberland is attractive because responsibly managed forests make a demonstrable contribution to achieving the Sustainable Development Goals. After all, trees absorb CO2 and FSC-certified timberland contributes to biodiversity.” 

From a return and risk perspective, timberland is a good investment for a pension fund because the return grows with the general price level. It therefore offers a natural hedge against inflation. Pension funds aim to have pensions grow in line with inflation as much as possible. So, it helps if the return on your investments also rises with the general price level.

Another advantage of timberland is that it adds diversification to your overall investment portfolio. The prices do not move much with developments in financial markets, as is the case with shares or bonds. So, if stock markets give slightly lower returns for a while, this need not apply to timberland investments. These two advantages – a hedge against inflation and diversification - also apply to farmland investments, for that matter.

The beauty of timberland is also that, depending on the market price of wood, you can delay or speed up the decision to cut trees. If in a certain year the price of wood is too low, you can wait for a better time to sell. The advantage is that the trees will continue to grow in the meantime, increasing their economic value. Or you can sell sooner if the price is right.


Would it not be even more sustainable to leave those trees growing in the forest?

“We only invest in production forests. That implies that at some point you also decide to cut the trees down. All our investments in timberland are managed in accordance with the FSC or a comparable quality mark. You only get this certification if you manage forests in a sustainable way. This includes the obligation to plant a new tree for every one that you cut down.

An older tree represents a higher economic value than a young tree. In addition, the CO2 absorption of older trees is flattened because they no longer grow as much. So, from a financial point of view, but also looking at the reduced CO2 absorption, it makes sense to cut down these trees and sell the wood.  Young trees, on the other hand, grow fast and need CO2 to do so. Selective felling a