I am very proud to present you with PGGM Vermogensbeheer B.V.’s first integrated annual report. After publishing two separate annual reports for many years, with one always devoted entirely to our progress in responsible investment, we have now merged the two. A clear sign that the principles of responsible investment have now largely been integrated in our investment processes.
PGGM Vermogensbeheer performs the mandates for a number of pension funds, among which Pensioenfonds Zorg en Welzijn (pension fund for the healthcare and welfare sector) occupies an important position in terms of size. PFZW’s responsible investment ambitions once again presented us with interesting challenges in 2019, and we ensure that the experience we amass in this context is used to benefit our other clients as well.
The coronavirus crisis will most likely still be in full swing when you read this. Against that backdrop, the 2019 investing year seems a long time ago. The contrast with 2020 will be stark. By the time this report was being finalised, PGGM Vermogensbeheer had managed to quickly and successfully secure our operational continuity, with the large majority of our employees working from home. Our teams dealt with the dramatic movements on the financial markets in close dialogue with our clients in order to protect their capital as much as possible.
At the same time, it is important to remember in calm and unstable periods alike that we need to achieve a long-term return with the pension capital entrusted to us. Investing with a long horizon, whereby we doggedly persevere with our task of making the capital increasingly sustainable and, where possible, impacting society positively through investment. We once again took steps in this respect in 2019, and will continue to do so in 2020, both in private and public markets.
With an integrated annual report, we present our financial and non-financial information below in such a way that we can place PGGM Vermogensbeheer’s activities and results in a broader context. This is aimed at providing the reader with a framework for gaining better insight into and understanding of our considerations and actions.
Thanks to extremely good results achieved mainly in public markets, an overall return of 18.7 percent was attained.
2019 will go on record as one of the best years for PGGM’s clients in terms of investment. Thanks to extremely good results achieved mainly in public markets, an overall return of 18.7 percent was attained. Our private market investments also performed well, creating stable cash flows for a predictable result.
This was also the year we again took major steps in terms of increasing the sustainability of the investments. The investments with a measurable impact grew by 4.5 billion euros, so that the ambition of investing a total of 20 billion euros in solutions in 2020 is cautiously coming into view. A four-year CO2 reduction programme in the equity portfolio was also completed for PFZW, decreasing the carbon footprint of these investments by more than forty percent overall. This included moving capital to the most energy-efficient companies in energy-intensive sectors.
In the hectic times brought on by a pandemic and a world in crisis, it can be difficult to predict what the future will bring in terms of managing pension capital. One thing that is certain is that this future will hold out opportunities. Risk premiums have risen dramatically as a result of the market turbulence, something that long-term investors like PGGM will be able to profit from.
Government policy and EU policy will create new opportunities, in which context I would like to refer to the Dutch Climate Agreement, the EU’s Green Deal and the new EU taxonomy for facilitating environmentally-friendly investing. This added to new ambitions that PFZW is formulating for the period up to 2025 will provide direction for our efforts as manager of the pension capital on which some three million people in the Netherlands directly depend.
Chief Investment Management PGGM