Dutch pension funds make no secret of their sizable investments in the arms industry. More specifically, in companies that manufacture controversial arms such as cluster bombs and land mines. The large number of innocent victims caused by these explosives has made them controversial around the globe. But for investment funds this is no reason not to do business with these companies.
Weapons, pollution, child labour
A recent documentary broadcast on public television showed that Dutch money is invested in weapons factories, businesses that cause serious environmental pollution and in companies that use child labour.
The Dutch pension funds administer a collective capital of 671 billion euros, the world's largest pensions 'piggy bank'. Nearly all employed Dutch people are obliged to save money for their retirement benefits, and each month deposit hundreds of euros in the pension fund. This money must be well managed and invested to guarantee all workers a good pension upon retirement.
Good returns
ABP Investment Director Roderick Munsters says it is no surprise that, in the search for profitable investments, part of the pension premiums are invested in controversial companies. The weapons industry usually offers good returns.
Peter Borgdorff of the Dutch Association of Industry-wide Pension Funds confirms this statement:"I believe that we have no objection in principle against the arms industry. If we maintain armies, then we're also maintaining the arms industry. The only question then remaining is whether you want to invest in all aspects of the arms industry.""Shocked"
Mr Borgdorff is of course aware of the existence of the United Nations treaty against land mines. Two years ago, the European Parliament made an appeal not to invest in companies manufacturing cluster bombs or landmines. Socialist European Member of Parliament Ieke van der Burg is "shocked" at the casual attitude regarding this type of investment, while, as he points out: "at the same time, pension funds are projecting an image of socially responsible investment." Mr Van der Burg, and several others, has fought for the introduction of a type of annual report showing the exact nature of pension fund investments: "This is not about dictating to pension funds how exactly they should invest premiums, but rather, where they claim to operate in a socially responsible way, to demand that detailed accounts be kept and audits carried out. Just like accountants audit a financial report, you can also have this type of social claims verified through reports."Mr Van der Burg does not advocate politics drawing up guidelines for investments. As a government, you cannot ban investment in a company that operates within legal boundaries. However, some countries think differently. Norway has created an ethics commission that uses a list of companies that are banned to investors. The commission says it does not want the Norwegian people to become complicit in controversial commercial activities. Belgium has a legal ban on investments in weapons factories that manufacture cluster bombs and landmines.
Transparency
Just like MEP Ieke Van der Burg, Peter Borgdorff of the Dutch Association of Industry-wide Pension Funds feels that the funds should take their own responsibility for transparency and socially responsible entrepreneurship: "We believe that pension funds should make clear to their contributors what their premiums are invested in, starting with setting out the fund's policies, what companies do you invest in and which companies are excluded [...] We work with social capital, money that people rely on for their pensions. So let's administer this money properly and explain what we do with it."The Hague has also received a wake-up call from the reports on controversial investment practices, and is now calling for transparency. But, for the time being, the names of the companies in which pension funds invest are still classified, pension fund members have no idea what their money is being used for and all the philosophical discussions about ethical norms are strictly without commitment.
* RNW Internet translation (gsh/tpf)
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