What are we held responsible for?
Responsibility is an ever evolving concept. With new regulations that move in tandem with societal demands, ideas of responsibility are like a river that slowly changes course, until it floods and change comes rapidly. The harvest of natural gas in Groningen causes over 1600 earthquakes (Tweede Kamer, n.d.). Thousands of houses are unsafe, resulting in worsening living conditions for the local population, including extra stress and health issues. For decades, the gas of Groningen provided the Dutch government with revenue streams. However, a recent parliamentary inquiry concluded that the Dutch government has a ‘debt of honor’ to the people of Groningen (Tweede Kamer, 2023). In light of changes in the attribution of responsibility, both from a legal and a moral perspective: who and what is APG responsible for?
As a fiduciary, APG has a duty to act in the best interests of its clients. Traditionally, the fiduciary duty of an asset manager is interpreted in financial terms, equating the clients’ best interests to maximizing financial returns while preventing exposure to major risks. APG’s clients, in turn, have a duty to ensure that retirees can receive a regular income stream during their retirement. In recent years, society’s expectations of financial markets participants have noticeably changed, leading to the reconsideration of the role of asset managers in contributing to a sustainable and fair world. This carries considerable implications for APG. If APG’s fiduciary duty is directed towards pension funds, to what extent are we responsible for ensuring that pension money is invested – not only to generate financial returns – but also societal returns? What is our responsibility towards the final beneficiaries of these returns? What does it truly mean to act in the clients’ best interest?
Our responsibility towards the people that are alive today is tangible. But what about the generations of tomorrow? What happens to Gen-Z and beyond in a world without a planet-B? Our answer to this question is responsible investing. This means investing in the energy transition, combating climate change, protecting biodiversity, and more. 66% of respondents in a survey among ABP participants agreed: responsible investing is important to them (ABP, 2022). The concept of responsibility becomes murky here: people that do not yet exist are not our clients, so there is no explicit legal obligation towards them. Arguably, our responsibility towards future generations is moral, and ambiguous. What if we have to make investment decisions that are against the best (financial) interest of our participants, but necessary to contribute to the viability of our planet for future generations? Our philosophy is that these two options are not necessarily mutually exclusive. Sustainable decisions rarely lead to a decrease in returns (APG, n.d.).
Can an organization like APG be responsible for the protection and the interest of nature? Does nature have something that can be described as an interest? Some countries, like India and New Zealand, bestowed legal personhood on nature or natural entities (van Zeebroek, 2022). For example, the Urewera Forest in New Zealand is a legal person, and in India nature is a legal person referred to as ‘she’. In consequence, interest groups can litigate on behalf of natural entities. Ecuador was the first country to do so, even going as far as including the rights of nature in the constitution (de Walsche, 2022). To this day, the Netherlands has no such law, although there is an ongoing discussion about the topic (den Outer, 2021). In light of the Urgenda case, where the Dutch government was ordered to lower emissions, it is not unthinkable that we will have a similar structure in the future (urgenda, n.d.). This begs the question: what are APG’s responsibilities towards nature? Is preserving biodiversity a part of acting in the best interest of our clients? In the absence of legal obligation, do we have the moral duty to protect nature?
Winston Churchill once proclaimed that ‘the price for greatness is responsibility’ (Churchill, 1943). We all have to do our part in taking responsibility. Societal expectations on the role of pension investors are evolving. The status quo on the fiduciary duty of asset managers is being challenged. There is a growing demand for responsible investing. Our view is that responsible investing is not at odds with our duty to make strategic investment decisions that ensure the long-term financial health of our clients. In that case, what are we responsible for? How far does our duty to act in the best interest of our clients extend – by transitivity – to nature, communities, and future generations?