Dutch top lawyer Louis Burggraaf says that pension funds need to focus more on stewardship. (“Meer oog voor rentmeesterschap”, FD February 6^th). He is of the opinion that, despite their long term responsibilities most pension funds have outsourced their thinking (meningsvorming) to providers of ‘governance services’ and voting advice. However, these providers have a short term focus. Pension funds should focus more on stewardship and less on ‘carpe diem’, says Burggraaf.

 

On the mirroring page of the paper one can find a happy story about the growth of sustainable investment funds (“duurzame onderstroom van beleggingsfondsen is niet te stuiten” FD February 6th). This article covers the continuing growth of these type of funds, and how ‘regular’ funds are becoming marginally more responsible too. Interestingly, one of the quoted bankers in the article notes that demand for sustainable investment funds initially came from...pension funds.

 

It is rather striking to see those two articles so closely together in one news paper. However, I believe it is a fair reflection of the state of responsible investing in many pension funds; they simply are schizophrenic. Some may respond that they are trying hard but it is complex stuff, others that Burggraaf referred to bigger responsibilities than sustainability, and yet others that their primary concern is the return for their ultimate beneficiaries (pensioners and policy holders). The point is that most pension funds hardly have a clue on how to deal with stewardship responsibilities in this day and age. The game has changed, but they are hanging on to old times’ practices.

 

The old times are over and the first step all pension funds should take is to redefine their mission and purpose to adjust to current dynamics. How can we deal with the new challenges and demands which go beyond direct (let alone short-term) financial obligations? How can we leverage our capital and thinking to guard the long-term financial and non-financial interests of our stakeholders?

 

If they will not do this on their own, others will force them to go that route. On what scenario would you place your bets?