Over three quarters (83 per cent) of the 50 largest Dutch pension funds now include biodiversity in their responsible investment policy, a report by the Dutch Association of Investors for Sustainable Development (VBDO) has found.

The report, Benchmark on Responsible Investment by Pension Funds in the Netherlands 2024, also showed an increase in pension funds addressing biodiversity through corporate engagement and voting activities, as 100 per cent said they conduct corporate engagement on biodiversity and/or related topics such as deforestation.

In addition to this, 74 per cent could demonstrate that they incorporate biodiversity in their voting decisions.

The report also revealed that sovereign bonds (29 per cent) were the largest asset class, closely followed by publicly listed equity at 27 per cent.

Despite this, VBDO found that pension funds tend to focus their responsible investment instruments on corporate investments, except for impact investing.

VBDO noted that while many funds excel in governance and environmental, social and governance (ESG) integration, more consistent efforts are needed to achieve broad-based impact across all asset classes.

The report also showed a slight improvement in board gender diversity as the board composition was, on average, one-third women.

However, 51 per cent of participating pension funds reported that less than a third of their board was female.

The report also revealed that the pension fund Detailhandel was the leader in responsible investment practices of the 50 largest Dutch pension funds due to its “strong” performance driven by an ambitious internal policy. This was reflected in the fund's active ownership of several topics, such as biodiversity and labour rights.

Meanwhile, for the category of small funds pension fund TNO emerged as the top-performing fund.

Additionally, the report highlighted a narrowing performance gap among pension funds, with small and medium-sized funds increasingly competing with larger ones in adopting advanced ESG practices.

VBDO said this year’s update offered a more comprehensive approach and assessed funds based on four critical areas: governance, strategic asset allocation, portfolio, and individual investments.

The association said the update was in response to evolving global standards and increasing awareness of sustainability risks. It aimed to emphasise active ownership and encourage pension funds to think more strategically about sustainability contributions.

“Pension funds are no longer just financial stewards; they are becoming central players in advancing sustainable practices,” VBDO executive director, Angélique Laskewitz, said.

“With this new benchmark, we’re pushing the sector not only to adopt responsible investment practices but to truly integrate them, reflecting a commitment to meaningful, measurable change.”

Laskewitz encouraged all pension fund stakeholders and board members to engage with the findings of the 2024 benchmark report.

“Use them as a foundation for strategic discussions on the future of responsible investing. We created the benchmark as a learning tool for growth by and for the sector. It’s up to them to use it: we can write the book for them, but we can’t make them read it,” she added.

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