PME Pensioenfonds, a Dutch pension fund with $70 billion in assets, has terminated a $5.9 billion equity mandate with BlackRock due to the manager’s misalignment with the fund’s environmental, social and governance framework, the fund announced on Monday.
According to the release, PME began reviewing its relationship with BlackRock as early as January, following the firm’s departure from the Net-Zero Asset Managers Initiative, a collective of asset managers who sought to achieve net-zero portfolio emissions by 2050. The initiative paused operations following the departure of BlackRock, which was among the most prominent asset managers to leave.
“As part of our strategy to invest for a good pension, we make deliberate choices about the companies included in our equity portfolio,” PME’s announcement stated. “We aim for a portfolio with a limited number of stocks, enabling us to better understand our investments and pursue an improved balance between risk, return, and sustainability. Implementing this strategy also means we carefully select and evaluate our external asset managers.”
In 2022, PME began defining its ESG goals, evolving the goals into an ESG framework and later an ESG index portfolio it called the portfolio of tomorrow, in which “every company is selected based on deliberate choices aimed at achieving solid returns and supporting a living world,” PME stated.
Following PME’s evaluation of BlackRock, the pension fund decided to end its relationship with the $11.5 trillion asset manager.
“BlackRock has provided PME with high-quality services for many years in managing part of our equity portfolio,” PME stated. “We value that collaboration and the contribution they have made in managing our investments. However, PME also considers which external managers best align with our vision and the principles of the Portfolio of Tomorrow.”
Going forward, PME will only rely on two asset managers to manage its equity investments—UBS Global Asset Management and MN, an investment manager based in The Hague, Netherlands. The move to two managers for the equity portfolio also will lower the pension fund’s costs, according to PME.
“BlackRock has been entrusted by clients in the Netherlands and around the world to manage more sustainable and transition assets than any other asset manager. These clients see us as their partner of choice for achieving their investment goals, including their net zero objectives,” a BlackRock spokesperson wrote via email. “We manage more than €350 billion in total for our Dutch clients and are proud of our continued growth in the country. We are grateful for the opportunity to have served PME and its members for more than a decade.”
PME is the latest European allocator to terminate a mandate due to ESG misalignment. PFZW, the Dutch pension fund for the care and welfare sector, terminated BlackRock—as well as AQR Capital Management LLC and Legal & General Investment Management—in September.
In March, AkademikerPension, the Danish pension for academics, terminated a 3.2-billion-Danish-Krone ($503 million) mandate with State Street due to ESG misalignment, and U.K.-based defined contribution master trust The People’s Pension terminated a 28-billion-pound ($37.42 billion) mandate, also with State Street, due to misalignment with the pension fund’s sustainable investing policy, awarding the business to Invesco and Amundi.
The termination of these European mandates showcases the tightrope that asset managers like BlackRock must walk regarding ESG factors—some investors and lawmakers deem BlackRock to be uncommitted to ESG goals, while others have criticized the firm for the opposite reason. In the U.S., the manager has lost mandates, including a fixed-income mandate from the Indiana Public Retirement System, due to its ESG commitment.
“PME’s decision reinforces a clear shift in how asset owners are responding to climate risk,” said Alasdair Docherty, a sustainable finance and data analyst at the Norway-based Institute for Energy Economics and Financial Analysis, in a statement. “Large pension funds increasingly see climate change not as a moral issue but as a systemic financial threat to long-term portfolio values, and they expect their managers to act accordingly.”
In November, New York City Comptroller Brad Lander called for the city’s $308.3 billion pension system to drop BlackRock, Fidelity and PanAgora Asset Management for failing to meet the system’s climate expectations from its managers.
“Stewardship failures are now being treated as a material mandate risk,” Docherty continued in his statement. “For asset managers, particularly in the U.S., retreating from climate stewardship may once have felt like the path of least resistance, offering short-term relief from political and commercial pressure. Increasingly, that looks less like pragmatism and more like a strategic miscalculation.”
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Tags: BlackRock, PME Pensioenfonds