Pension funds will need to rethink their role and responsibilities as Europe moves from a world governed by rules to one driven by power, Clingendael Institute director, Monika Sie, has warned.

Speaking at APG’s annual summer course, themed Agile and Adaptable, Sie said pension funds - traditionally seen as anchors of stability and trust - would play an increasingly strategic role as geopolitical tensions reshape the global economy.

“Institutions like pension funds have always stood for security and solidarity,” she noted.

“Now, those values are not only economically important, but geopolitically vital. Investments can contribute directly to the safety and protection of our way of life.”

Sie warned that the post-war era of globalisation, built on legal order, open markets, and economic efficiency, had come to an end.

The new landscape, she argued, was defined by competition for influence.

“For decades, the world ran on law and cooperation. Today, it runs on leverage,” she continued.

“Trade, energy, technology - even data and migration - can all be used as tools of power.”

This shift, she added, meant institutions must prepare for volatility rather than predictability.

“We’ve moved from a ‘just in time’ world to a ‘just in case’ one,” she explained.

“It may not be efficient to produce your own medicines or chips, but it could be wise.”

Sie identified the United States as a growing source of uncertainty for investors, arguing that the “Pax Americana” - the post-war order underpinned by US power and stability - was now being dismantled from within.

The rise of Donald Trump and his Make America Great Again movement, she said, symbolised this break.

“Trump doesn’t want to lead; he wants to win. And that makes the international order more unpredictable than ever.”

She drew parallels between Trump and Chinese President, Xi Jinping, describing both as leaders who have built national narratives around grievance and restoration.

“These movements are powerful because they forge a sense of identity out of perceived loss, and that makes them unpredictable and dangerous,” she observed.

The combination of geopolitical rivalry and domestic fragmentation, Sie warned, also had social consequences.

“Where pension debates once focused on markets versus solidarity, they now touch on trust, identity, and the role of elites,” she said.

“People feel that the institutions meant to protect them no longer do. That erosion of trust is a serious challenge for pension funds, which depend on long-term confidence between generations.”

To navigate this environment, Sie urged Europe to become “strategically mature”, with pension funds playing a connecting role between politics, business, and society.

“The Netherlands cannot do this alone,” she stressed.

“We need European cooperation to build mass and resilience. Pension capital can be a bridge - strengthening Europe’s strategic foundations while serving its societal goals.”

That, she said, required investors to go beyond traditional financial and environmental, social and governance (ESG) metrics.

“Investing is no longer neutral. Ignoring geopolitics means taking risks - financial and moral,” she cautioned.

“A UN exclusion list or an ESG score tells you something, but not enough. You need to understand who holds power, how they use it, and what that means for your portfolio.”

Consequently, Sie called for closer collaboration between pension funds and research institutions to analyse global developments more deeply.

“Geopolitical risks are no longer external to what we do - they are at the core of it,” she concluded.

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