Collaboration
A Double Dutch Investment Partnership
APG and PGGM are used to working together. CIOs Eduard van Gelderen and Eloy Lindeijer—each responsible for managing the assets of the Netherlands’ two biggest pension funds (ABP and PFZW, respectively)—could name dozens of examples of their two companies working together on investments, strategy, policy issues, and regulation domestically and internationally. According to Lindeijer, it’s their joint responsibility to use their size and scale to make a positive difference to both their members and Dutch society in as many ways as possible.
So when CIO asked the two pension managers separately for interviews on the subject of collaboration, their communication chiefs set up a joint conference call with Lindeijer and APG Chief of Strategy Gert Dijkstra to explain exactly how it’s done.
First, there’s the obvious stuff: Investing. During the Netherlands’ double-dip recession of 2012 and 2013, politicians began to ask APG and PGGM what they were doing to help kickstart domestic growth. A series of discussions involving other Dutch investors led to the establishment of the Netherlands Investment Institute (NLII). The institute has raised more than €500 million ($561 million) of credit for small and medium-sized businesses, while at the same time opening up this fledgling asset class to smaller Dutch pensions. And the NLII has leveraged APG and PGGM’s collective expertise to launch a €200 million health-care real estate fund.
“We are bundling together expertise and making it accessible to other pension funds,” explains Lindeijer. “We really feel a responsibility to invest more in the domestic economy and provide other pension funds a capability in private markets.”
Second, sustainability. Along with Sweden’s AP funds, the Dutch duo have led European efforts to bring climate change risks and opportunities to the attention of global policymakers, business leaders, and other investors, with considerable success. Cementing their position as “truly international pioneers of sustainable investing,” in the words of Dijkstra, the two groups joined forces in 2009 to create the Global Real Estate Sustainability Benchmark (GRESB). Now an independent company, GRESB surveys real estate funds around the world to assess their compliance with environmental, social, and governance criteria and has more than 200 asset-manager and asset-owner members. “Looking back, I think it’s a very successful result of our collaboration,” he says—adding that a similar benchmark for infrastructure launches this month.
More broadly, both investors are “looking far into the future,” Dijkstra adds, assessing ways to support “future income, future care, future housing, and other concepts for participants of pension funds.” Collaboration is not simply about increasing returns—although this is an important starting point—but also about “managing social capital,” he says.
Third—and most complex—is regulation. Because the two companies work so closely together, they share one office in Brussels to help coordinate their activities in relation to the massive volume of legislation emanating from the European Union, such as the controversial financial transaction tax and the pension implications of the second Markets in Financial Instruments Directive.
As the conversation goes on, Dijkstra and Lindeijer also cover their collective work on climate change policy, impact investing, Dutch pension reform, central clearing rules for derivatives, and the use of big data in sustainable real estate investing—each arguably worthy of an article in itself.
“There is a very long agenda of topics on which we try to collaborate,” says Lindeijer. “That agenda is so long we sometimes feel we don’t have enough time to give everything the attention that we would like.”
“Eloy, can you stay on the line so we can share a few words?” asks Dijkstra as our call comes to an end. Truly collaborative investors never sleep. —Nick Reeve