Dutch Pension Funds face Balancing Act: Ethical Investing vs. Returns
Amsterdam – Major Dutch pension funds, managing over €1700 billion in assets, are increasingly scrutinizing their investments based on ethical considerations, but debate continues over whether such strategies ultimately impact pension benefits. The shift comes as the Norwegian state fund’s recent divestment from Caterpillar drew criticism from the U.S. government, and contrasts with a trend of some American asset managers scaling back sustainability policies amid legal challenges.
Dutch funds like ABP, with approximately €524 billion under management, and PFZW are significant global investors, holding shares in companies worldwide. However, the effectiveness of divestment as a tool for change is questioned.”The number of shares will not change. If you sell them, someone else will buy them again,” explains Bas Werker of Netspar, a pension research institute. “Perhaps it is a suitable way to provoke discussion. At the same time you also lose the prospect to start the direct conversation with the company.”
The debate centers on whether prioritizing ethical investments compromises the legal obligation of pension funds to maximize returns for beneficiaries. ABP maintains that returns and sustainable investing are not mutually exclusive,stating,”The way we invest should ensure good returns and at the same time be socially responsible.” Economist Werker agrees, noting that ethical investing isn’t inherently detrimental to returns. “It could of course be that you miss a high return as you exclude a company, but if that company falls over due to all the criticism, then you’re in the right place.”
This approach diverges from the current climate in the U.S., where asset managers face potential lawsuits for prioritizing sustainability over maximizing financial gains for their customers. The norwegian state fund, which holds more assets than all Dutch pension funds combined, faced U.S.backlash after its divestment from Caterpillar, prompting a demand for discussion from the U.S. government, as reported by Reuters on September 3, 2025.
