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Compliance concerns the entire organisation. Compliance at PGGM is based on a model with three lines of defence. The management responsible holds primary responsibility. The compliance officers monitor, check and advise the management and employees on Compliance matters, on request or otherwise. The goal of the compliance officers is also to increase knowledge and awareness of ethics, laws and regulations and other compliance-related subjects.

The Compliance department consists of a team of compliance professionals, each with their own account responsibility and/or specialism. The account managers perform the second-line compliance tasks relating to the chain (including the legal entities in this chain). The specialists in the compliance team advise and/or support the account managers in the performance of their tasks.

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The confidence we are granted by all stakeholders and the parties with which we do business is based on integrity and verifiable compliance with laws and regulations. We pursue an active or proactive compliance and integrity policy that ensures that we comply with integrity standards, laws and regulations and with the requirements of supervisory authorities. As an organisation, PGGM must earn and keep the trust of stakeholders and the parties that it does business with. This goes beyond simply complying with laws and regulations. PGGM itself, its clients and society impose increasingly high standards for good governance, a culture of integrity and behaviour with integrity. This requires managed business operations performed with integrity to a high standard. PGGM is aware that culture plays an increasingly important role in the management of risks. For this reason, it focuses on ‘soft controls’ (factors that influence behaviour) in the management of risks and the realisation of objectives, as well as ‘hard controls’ (demonstrable measures in processes and systems). Employees are taught how to deal with integrity issues through integrity sessions.

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Compliance with laws and regulations

PGGM monitors developments in laws and regulations pro-actively, through the deployment of a multi-disciplinary team. We do this by identifying changes early, carrying out an impact analysis of these changes and by subsequently implementing the changes in documentation, processes and/or systems and verifying the correctness, completeness and timeliness of the implementation. To transparently account for the way in which we process changes in laws and regulations, the process of implementing changes in laws and regulations has been incorporated as a control measure in the PGGM Standard 3000.

In 2019, no significant incidents occurred in the field of compliance and integrity. We were not involved in any noteworthy legal proceedings or sanctions relating to non-compliance with laws and regulations in 2019. The Netherlands Authority for the Financial Markets (AFM) did issue a warning in connection with failure to demonstrably comply with specific provisions pursuant to the Markets in Financial Instruments Directive (MiFID) II. See the following paragraphs for more information on MiFID II. The mitigating measures are currently being implemented and will continue until the end of the first quarter of 2020.

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Developments relating to relevant laws and regulations

PGGM Vermogensbeheer is under the supervision of the AFM and De Nederlandsche Bank (DNB). The AFM granted us a licence in 2014 to manage investment institutions and to offer rights in investment institutions to professional investors. We were also given permission by the AFM to provide certain investment services. The AFM supervises the compliance of PGGM Vermogensbeheer with the licensing requirements and the permanent rules of conduct. DNB supervises our financial solidity. Financial enterprises such as PGGM Vermogensbeheer are increasingly bound by European rules designed to create a level playing field within the European Union. These European rules, such as Regulations and Directives, are usually translated in Dutch laws and regulations, such as the Dutch Financial Supervision Act or the Dutch Anti-Money Laundering and Anti-Terrorist Financing Act. In connection with our service provision and the licences granted to it, the following regulatory developments relevant to us took place.

Markets in Financial Instruments Directive (MiFID II)

In 2018 and 2019, the AFM conducted a MiFID II investigation of 10 companies that provide investment services to professional investors and qualifying counter-parties. The investigation covered matters including compliance with the obligations relating to cost transparency, product governance and commissions. PGGM Vermogensbeheer was one of the selected parties. According to the AFM, between January and July 2018, we did not comply with all cost transparency, product governance and commission obligations and in connection with this, it issued a warning to PGGM Vermogensbeheer. On the basis of our response, some of the AFM’s findings were then withdrawn. We used the findings of the AFM and the report published by the AFM with general outcomes of the sector-wide investigation to conduct a thorough assessment of necessary changes in the internal procedures and measures aimed at compliance with MiFID II. PGGM Vermogensbeheer maintains close contacts with the AFM in that regard. The Supervisory Board has discussed the effects of these developments on the business operations and strategic choices with the Management Board.


Transparency obligations based on the European Directive concerning shareholders’ rights (Directive 2007/36/EC, as amended by Directive 2017/828/EU, ‘SRD II’), became applicable for PGGM Vermogensbeheer on 1 December 2019. In general terms, the aim of SRD II is to further increase the engagement of shareholders with the corporate governance of listed companies and to promote transparency between companies and investors. The provisions of the SRD II are partly implemented in the Financial Supervision Act. For us, this means that it must have a shareholder engagement policy available on the website. Among other things, the policy must explain how we supervise matters such as strategy, financial and non-financial performance and risks, the capital structure, social and ecological effects and the corporate governance of the companies in which it invests, as well as the way in which voting rights are exercised. In addition, we will be required to report to our asset management clients at least once a year on matters including how the investment strategy pursued is consistent with the agreements with the asset management client, how the agreements contribute towards the medium to long-term performance of the investment portfolio, the main material medium and long-term risks associated with the investments and the composition, turnover rate and costs of the investment portfolio.

Expectations of AFM regarding outsourcing risks

On 29 November 2019, in a letter to managers of investments institutions such as PGGM Vermogensbeheer, among others, the AFM presented guides relating to the outsourcing of normal tasks. These guides apply in addition to the statutory standards. The AFM expects financial institutions to define (in more detail) whether all outsourcing risks have been identified, analysed, monitored and managed. The AFM also expects financial institutions to have an adequate outsourcing policy, to assess this regularly and to update it where necessary.

AFM and DNB investigations into benchmark-related activities

On 25 September 2019, the AFM and DNB published findings and best practices on the basis of an investigation into the transition to alternative interest benchmarks. The best practices identified by the supervisory authorities include that institutions should have a detailed and complete overview of the use of benchmarks throughout the organisation, as well as an overview of the term of the use of each benchmark, and the formation of a centrally organised project team which oversees and reports on all benchmark-related activities within the institution at the management level.

Investigations by supervisory authorities

PGGM Vermogensbeheer forms part of PGGM which, together with its clients, is subject to several supervisory regimes. PGGM is subject to supervision by DNB, the AFM, the Netherlands Authority for Consumers and Markets (ACM) and the Dutch Data Protection Authority (AP). As a pension administration organisation, PGGM is classified by DNB as a guideline group, as a result of which DNB exercised direct supervision of PGGM in 2019. DNB and the AFM also exercise direct supervision over PGGM Vermogensbeheer. PGGM perceives supervision as professional and as being of great added value, but also notes that the supervision is becoming more intensive and specific, as a result of which the costs of supervision (both internal and external) increased again this year. PGGM underwent various theme-based and specific investigations this year, including in the fields of asset management and ICT.

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Eumedion and the Dutch Stewardship Code

PGGM is a participant in Eumedion; PGGM takes part in the management, committees and working groups and is one of the founders of Eumedion. Eumedion represents our interests and those of our participants and other institutional investors in the fields of corporate governance and sustainability. By conducting talks with relevant policy-makers and exerting an influence on relevant Dutch and European laws and regulations, it works to promote good corporate governance and sustainability policy. In order to promote and accommodate engaged and responsible shareholdership, Eumedion drew up the Dutch Stewardship Code. Such partnerships make our efforts in the field of engagement in the home market highly effective and efficient. We welcome the stimulation of a constructive dialogue between ourselves, like-minded organisations and the Dutch listed companies. We aim for similar partnerships in all other major capital markets, in order to increase the impact we aim to achieve with our investments and stewardship activities.

PGGM endorses the basic principles recorded in the Stewardship Code. We do our best to comply with the principles and best practices. Where PGGM (partially) diverges from the requirements of the Stewardship Code, it explains the reasons for this and the extent of the divergence on its website.

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Corporate Governance Code

The Dutch Corporate Governance Code (‘Code’) applies to all Dutch listed companies. PGGM endorses the principles and best practice provisions of this Code. Despite the fact that PGGM is not a Dutch listed company, it will also voluntarily apply the best practice provisions of the Code itself as far as possible, as a realisation of good corporate governance. PGGM states on its website the extent to which it complies with the principles and best practice provisions in the Code. In the cases in which PGGM diverges from the Code, it also states the reasons for this and the extent of the divergence.

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