The $65 billion Dutch pension fund PME is warning U.S. money managers not to abandon their “basic principles of stewardship” under pressure from the current political climate. PME alleges that some managers are risking their business by yielding to political pressures, specifically from the Trump administration. Daan Spaargaren, PME’s senior strategist for responsible investing, voiced concerns that U.S. money managers are not condemning actions taken by the Trump administration on issues like climate change and judicial integrity.
“We are worried about that,” Spaargaren stated. The PME is reconsidering its $5.7 billion mandate with BlackRock Inc., the world’s largest asset manager, after BlackRock withdrew from the Net Zero Asset Managers (NZAM) initiative. A decision is expected in the coming weeks.
Spaargaren highlighted concerns about attacks on the judiciary, counter-efforts against America’s transition to cleaner energy, and the removal of diversity, equity, and inclusion (DEI) policies. He warned that aligning with the current administration could legitimize such actions in the eyes of international investors. PME, with assets under management of about €57 billion ($65 billion), is the latest in a string of pension funds in Europe to express such concerns.
Earlier this year, State Street lost mandates in Scandinavia and the UK after it withdrew from a major climate alliance for the industry. Spaargaren says PME has come to the conclusion that “existing frameworks on benchmarking different asset managers — the old frameworks — are not working anymore.” The administration of President Donald Trump has attacked the judiciary and is in the process of derailing America’s energy transition. It has also sought to wipe out diversity, equity and inclusion policies, dubbing these “illegal.”
According to Spaargaren, this is a political development that requires the investment industry to take a stand.
Pension fund’s principled investment stance
“If asset managers align their interests and their policies with the current administration in the US, then we are legitimizing also these steps and these practices by offering them our funds,” he said. PME is now “evaluating” next steps, Spaargaren said.
Whether it stays invested in companies — or holds on to existing external mandates — will depend on the outcome of a revised screening process the pension fund has introduced. The new filter will assess holdings based on parameters such as how well investments support good governance, freedom of association, as well as environmental considerations such as water scarcity. Spaargaren says investors need to adapt to what’s become a fundamental split between values in Europe and those being promoted by the Trump administration.
“There is now a divide between European and American asset managers,” which is “quite” clear when it comes to engagement, active ownership, membership of climate initiatives, and voting, he said. PME’s public stance underscores the significant influence political climates can have on global investment practices and emphasizes the importance of maintaining foundational stewardship principles amidst external pressures. The Dutch pensions investor is rolling out its new ESG screen this year, starting with equities.
It’s already cut the universe in which it will invest by roughly two-thirds, to around 1,000 stocks. U.S. companies have the opportunity to persuade institutional investors like PME that they’re not caving in to Trump’s agenda, which includes continuing to provide clear ESG disclosures, Spaargaren said. “The problem is if companies stop reporting on diversity, equity, and inclusion or on climate,” he said.
Though PME has regularly reviewed its external managers, Spaargaren says this time is “different.” It’s “a new situation when it comes to the attitude of asset managers in the US,” he said. “They sometimes align with, or go very easy on what’s going on in the US.” And the worry is that “it’s more fundamental than just another administration.”