APG sets out new strategy targeting energy transition investments

Dutch pension investment manager APG will focus its infrastructure strategy on its commitment to the energy transition in 2024.

APG’s new strategy is based on five themes: decarbonized mobility and transport; clean and connected renewable power; equality and quality of life; a circular economy and digital infrastructure with enhanced connectivity.

APG manages the assets of the largest pension fund in the Netherlands, ABP, which has three million participants and $545 billion (€502 billion) in assets. APG is a direct subsidiary of ABP.

ABP’s infrastructure investment is set to be reorganized. The mandate for APG to handle its investments is set to be renewed in Q1 2024, and ABP increased its allocation to infrastructure from 4% to 7% in December.

APG will bid alongside SSE Renewable for two offshore wind developments with a 2-Gigawatt (GW) capacity each, which the Dutch government is set to invite proposals for soon.

The pensions investment manager is already invested in a 396-Megawatt (MW) German offshore wind farm, but the 2GW farm would be a much larger undertaking.

Jan-Willem Ruisbroek, head of global infrastructure investment at APG, is responsible for investments in infrastructure, such as high-voltage grids, wind farms, ports and toll roads. He said: “These are potentially interesting investments for ABP; they offer stable income over a long period, contribute to spreading risks and often have social value.”

While the mandate is still in draft form, Ruisbroek expects it will be approved in the coming months.

A new strategy

Even with the new strategy, the core principle remains that an investment must offer strong returns for the pension participants.

Ruisbroek said: “There is a lot of demand for investments in sustainable infrastructure, which means that a lot is often paid for it. In order to make a good return, we have to distinguish ourselves. For example, by looking at alternative green investments, such as in 'smart cities', solutions for the smart city of the future.”

Loek Dalmeijer joined APG as a group sustainability officer in 2020. At the time, he said the manager had a longstanding commitment to improve its own ESG credentials.

He said: “Even before APG’s current strategy was launched several years ago, the organization was increasingly asking itself the question: would we actually invest in APG if we could? The answer then was ‘no’. There were about 30 hard points on which we were not transparent, inclusive or sustainable enough.”

As a result, sustainability was made a high priority for the organization.

He added: “To make the organization completely sustainable, you need someone to orchestrate that. In practice, that means encouraging business units to look at how they can concretely contribute to that sustainability — and being transparent about it. From procurement and facility services to reporting and asset management.”

Kenter

APG also recently invested in Kenter, an energy solutions provider, on behalf of ABP. Kenter, which is a subsidiary of network company Alliander, aims to provide future-proof energy solutions for business in the Netherlands.

Kenter seeks to provide solutions for the rising demand for energy and the growing urgency of problems associated with an overcrowded power grid. It provides energy solutions for over 28,000 companies.

Erik van der Ende, CEO of Kenter, said: “We are now able to make a much greater contribution to the energy transition, such as reducing grid congestion” as a result of the investment.

Ruisbroek added: “The largest pension fund in the Netherlands, our client ABP, likes to invest in the Netherlands to stimulate economic growth, employment and sustainable projects. This not only contributes to sufficient and sustainably generated energy in the Netherlands, but also generates long-term value for their pension participants.”