Winner
Taking matters into its own hands
“Euroclear has a sophisticated approach to ESG investing, understanding the potential shortcomings of its limited size and governance,” judge’s comment
Country |
Belgium |
Founded |
1980 |
Type |
Hybrid corporate pension fund |
Members |
3,057 active |
AUM |
€388m |
Performance |
BE DB section: 12.09% |
As at 31 December 2023 |
Euroclear Pension Fund (Euroclear) has decided to gradually adopt an ESG approach for its investments, while keeping its passive management philosophy. Looking in more detail at how ESG is implemented by different asset managers, it became apparent to Euroclear that each asset manager has a different philosophy regarding how to implement ESG, not only at the asset manager’s global level but also at the level of the different funds they propose.
Moreover, according to Euroclear, these asset managers often do not manage the ESG risk. They choose an ESG benchmark - often from the MSCI family – and manage the assets versus that measure, but without reporting on the over or underperformance of their choices. Therefore, Euroclear decided to seek a more tailor-made approach focusing initially on the global equity portfolio within the defined benefit segments of both its Belgian and its Dutch pension funds.
This new focus led to the decision to ask Impact Cubed, a leading firm dedicated to ESG for institutional investors, to help to set up a new benchmark and its own global equity mutual fund, together with JP Morgan Mansart, that should:
- be focused on global equity solely for the defined benefit segments
- align with Euroclear’s passive management strategy, such that the tracking error versus the non-ESG index should be as low as possible
- offer a better level of efficiency in its ESG impact by unit of tracking error compared with the usual MSCI PAB benchmark
- offer an ex-post analysis of the ESG content, performance and risk the pension plans can use as a discussion point for refinement
- offer Euroclear the flexibility to adapt the level of ESG and/or the intensity of each SDG factor
- have a cost aligned to the market that complies with Euroclear’s fiscal policies.
STRATEGIC TAKEAWAYS
➤ Gradual adoption of ESG factors in overall investment strategy based on passive approach |
➤ Launch of tailor-made ESG benchmark to manage risk |
➤ Creation of bespoke global equity ESG-focused mutual fund |
Highly commended
Country |
Spain |
AUM |
€56,821m |
Performance |
DuPont, BanSabadell 46: 12.4% DuPont, BanSabadell 46: 2.9% |
Spain’s DuPont, Corteva, IFF, and Celanese pension plan has effectively developed its investment strategy for both its growth and preservation portfolios, such that they now follow a well-diversified strategy across four major asset classes and various sub-asset classes, considering different geographic regions, managers, and risk premia. Over the years, this strategy has been further diversified to align with members' risk profiles and the fund’s objectives.
Country |
Cyprus |
AUM |
€191m |
Performance |
14.4% (1yr) |
MAP Fund’s investment objective is implemented using five investment options governed by risk-return profiles based on capital appreciation, inflation protection and capital preservation. MAP Fund has taken numerous steps in applying ESG factors to its strategy. Initially it screened out negative stocks but has since moved to an approach based on “positive selection that considers ESG integration for all the managers it employs.
Country |
Spain |
AUM |
€242m |
Performance |
8.8% (1yr) |
Pensions Caixa 2 (PC2) recently carried out a minor redistribution of its assets to align its strategy with changing market conditions and investment opportunities following its 2023 review. A notable development is the introduction of a climate equities subclass to enhance the fund's exposure to sustainable investments. This move supports global sustainability trends and reflects PC2’s commitment to ESG principles.
Country |
Latvia |
AUM |
€104m |
Performance) |
18.32% (1yr) |
Swedbank’s Pension plan Dinamika+100 is Latvia’s first pension fund to offer a unique investment strategy that is permitted to build a portfolio wholly comprising equities and equity-like instruments. It is a well-diversified global portfolio based on an annual strategic asset allocation that encompasses both qualitative and quantitative factors to shape its regional exposures. This is supplemented by tactical asset allocation to optimise investment opportunities.
Judged by
Bart Heenk
Alex Koriath
Edwin Meysmans
Christian Winder