Regulations

Sustainable Finance Disclosure Regulation (SFDR)

Philips Pensioenfonds promotes Environmental and Social characteristics and classifies as article 8 under the EU Sustainable Finance Disclosure Regulation (SFDR). These regulations provide standards for communicating about the sustainability characteristics of financial products. 

Summary Sustainability Information

Stichting Philips Pensioenfonds (PPF) offers: Flex Pension CLA and Flex Pension ES (hereinafter referred to as ‘the Pension Plan’), based on the same investment strategies. The Pension Plan promotes environmental or social characteristics and is classified by Philips Pensioenfonds as an article 8 financial product, under the European Union’s SFDR: Sustainable Financial Disclosure Regulation. When the term ‘financial product’ is mentioned below, this refers to the Pension Plan.

No sustainable investment objective
The Pension Plan promotes environmental or social characteristics but does not have sustainable investment as its objective.

Environmental or social characteristics of the financial product
The environmental or social characteristics that apply to the Pension Plan are:

• Exclusion policy
• Positive contribution to sustainable development goals (SDGs)
• Stewardship

Investment strategy
Philips Pensioenfonds’ ambition is to offer a pension that can be adjusted to price increases (for Former Members and Pension Beneficiaries/inactive members) and wage increases (for active Members). This means that our Investment Strategy must contribute to realizing indexation and at the same time contribute to the recovery of a realistic funding ratio in the next 15 years. Responsible Investment is an important part of our Investment Strategy.

Proportion of investments
Category #1 “Tailored to E/S characteristics” applies to approximately 60% of the investments. While category #2 “Other” applies to approximately 40%, this includes the investments of the financial product that are not aligned with the environmental or social characteristics and that do not qualify as a sustainable investment.

Monitoring of environmental or social characteristics
The Pension Plan promotes environmental or social characteristics. To gain insight, the following sustainability indicators are used:

• Exclusion Policy
• Positive contribution to sustainable development goals (SDGs)
• Stewardship

Methodologies for ecological or social characteristics
Every year Philips Pensioenfonds generates a list of excluded countries and companies, based on information from data providers specialized in the relevant topics. In addition, PPF chooses to invest a part of its portfolio in companies that make a positive contribution to Sustainable Development Goals 3, 11, 12 and 13. Finally, PPF believes that the investments should be managed responsibly, this is called ‘stewardship’. This is done by monitoring investments, entering into dialogue with companies and implementing a voting policy on equity investments.

Data sources and processing
The Pension Plan uses external information as input for the sustainable investment processes. The data providers include Sustainalytics, BlackRock, ISS, Bloomberg and Entis. When selecting data suppliers, we consider: data quality, the way in which data is processed and the amount of estimated data.

Limitations to methodologies and data
Philips Pensioenfonds recognizes the following methodological and data limitations:

• Data restrictions on exclusions related to controversial weapons, tobacco production and tar sands, brown and coal sales
• Methodological limitation for norm violators
• Data limitation carbon intensity of revenues of investee companies
• Methodological limitation for SDG-assessment

Due Diligence
In addition to financial consequences, the way in which companies operate also has an impact on society and the environment. Based on the results of monitoring of the portfolio, we enter into a dialogue with companies that very severely violate international agreements on responsible business conduct. This can lead to the exclusion of a company.

Engagement Policies
Based on the results of monitoring the portfolio, we enter into a dialogue with companies in the portfolio. We focus our attention on dialogues and companies that have the potential to lead to changes that contribute as much as possible to long-term value creation. At the very least, this means that companies adhere to international agreements on responsible business conduct. Companies that very severely violate these agreements and where dialogue does not lead to the desired results, are excluded.

Designated reference benchmark 
For this Pension Plan no comprehensive reference benchmark is used. For this reason, the article will not apply.

Sustainability Risks

Involving sustainability in investment choices

Sustainability aspects (such as the environment, social aspects and governance) can influence the risks of an investment, both positively and negatively. When making investment choices, it is always assessed whether the expected return is in balance with the associated risks. In this way too, sustainability aspects play a role in our policy and its implementation.

You will find more information in our Responsible Investment Policy, specifically paragraphs 2.2.3 and 2.3.1.