Your pension, your future
Love your future. Shell Pension.

Pension update September 2021

Your pension, your future
Love your future. Shell Pension.

Pension update September 2021

Involved shareholdership

“This is how we can really make a meaningful difference”

Hollow phrase or clever idea? What does the expression 'involved shareholdership' stand for in the investment strategy of Shell Pension? A question for Arnold Gast, Risk & Investment Officer for the organisation.

Last year, Shell Pension organised a survey among Shell employees, former employees and pensioners. It showed that socially responsible investing is considered to be important, but should never come at the expense of returns on investment. How should we, in view of this, interpret involved shareholdership?

"We have a long-term investment horizon in a wide range of companies in order to ensure the highest possible return for the pensions of our participants. Within this framework, we are convinced that the investment returns should not only be beneficial for our participants, but that they can also contribute to a better world. That is why we encourage the companies in which we invest to adopt corporate social responsibility. We call this commitment 'involved shareholdership' and its purpose is to encourage responsible entrepreneurship and good governance."

What does that mean in actual life, in other words, what does this involvement achieve in reality?

"We want to bring about positive change. That is why we initiate dialogue with companies, but also vote at shareholders' meetings. In some cases, we even exclude companies from our investments."

Can this dialogue be realised in real life? There are over 10,000 companies in your investment portfolio?

"We do not do this ourselves, but instead have hired Hermes EOS for this job, a specialised company that fits in with our vision.  They engage in dialogue and give voting advice where necessary. This is carried out with about 1,000 companies in our portfolio. That way we can really make a meaningful difference."

How and when do you decide when to contact a company and start having talks with them?

"Each quarter Hermes EOS screens the companies in which we invest based on our engagement plan, the desired results and any controversies that have been identified. These controversies include violations of international standards, such as the United Nations Global Compact Criteria and Guiding Principles."

Then what’s next?

"We call upon these companies and start talks with them. For the majority, this leads to positive change. Only in a few cases, where we have spoken to a number of companies several times, dialogue appears to be no longer a viable option. These companies are put forward for exclusion. But because this is a complex area which is constantly changing with countless different views and data, we always. from that moment on, carry out a double check. For example, we compare the information from Hermes EOS with the data from our asset managers and investment advisers. In the end, it is then determined whether we part ways or continue to talk."

Can you give us a recent example of a company where you have achieved concrete results?

"At Novartis, a Swiss pharmaceutical company. Partly due to our involvement, more women have joined the board. In the first half of this year, this even grew to 30 per cent. This is an important topic for us. Gender equality is one of the four Sustainable Development Goals (SDGs ed.) of the United Nations, which we pay extra attention to in our socially responsible investment policy."

What other 3 SDGs - except for Gender Equality - do you focus on?

Climate Action, Affordable and Clean Energy and Sustainable Cities and Communities. These are a good match with our participants, Shell Pension and Shell.”

How come?

"Gender equality has been a key topic in our organisation for many years and the other SDGs are perfectly in sync with the very nature of our company and the global social and economic challenges."

Has the focus on the 4 SDGs already been translated into discussions with companies?

"For nearly 75 per cent of its interactions with companies in our portfolio, Hermes EOS already included a link to the SDGs until 2020. Also in their engagement plan for 2021-2023, the chosen SDG topics -Gender Equality, Affordable and Clean Energy and Climate Action - are also playing an important role. In addition, Sustainable Cities and Communities are included in the objectives set by Hermes EOS. With this, the 4 SDGs are firmly anchored in the Hermes EOS engagement plan and are we increasingly able to demonstrate what sustainability means for our investment portfolio. A real and considerable step.”

There are some pension funds that are convinced that socially responsible investing will also result in better returns in the long run. How do you see that?

"As SSPF, we are convinced that involved shareholdership promotes good governance and corporate responsibility, and the integration of ESG (Environmental Social Governance, ed.) factors makes a positive contribution to the risk-return profile."

Would you like to know more about our socially responsible investment policy? Go to our mvb-page.