Joeri de Wilde: Criticism of sustainability does not reflect reality

October 7, 2025

_{This column was originally written in Dutch. This is an English translation.}

By Joeri de Wilde, Senior Economist at Triodos Investment Management

Dutch pension funds are moving towards compact, sustainable portfolios. The persistent resistance of a number of conservative academics increasingly sounds like an echo from the past.

The Dutch pension sector is in the midst of a historic shift: sustainability is moving from a side issue to the new foundation of investment policy. One of the most striking examples is the recent decision by Pensioenfonds Zorg en Welzijn (PFZW) to sell its shares in some 2,700 companies. NRC called this “with some exaggeration, the biggest divestment of all time”, but that is hardly an exaggeration. PFZW has consciously opted for a smaller, actively managed portfolio of around 800 companies, so that it can better embed sustainability in its investment policy. ABP also opted earlier for further sustainability through a more concentrated, partly active portfolio.

This change of course is met with stubborn resistance from a small group of (former) academics. This old guard stubbornly clings to one-dimensional financial models and dismisses the proponents of sustainability as sustainability evangelists. But their criticism is increasingly out of touch with the reality in which pension funds operate today.

Sustainability is a core task

The old guard continues to hammer home the legal obligation for pension funds: an adequate pension through an optimal risk-return ratio. According to them, this is incompatible with a smaller portfolio focused on positive impact. That is an outdated perspective. After all, a good pension is of little value in an unliveable world. Moreover, sustainability is not optional, but legally mandatory.

The idea that thousands of investments are needed to achieve sufficient diversification and returns is also untenable. Various studies show that a smaller number of companies is more than sufficient. In addition, a compact portfolio makes it easier for shareholders to play an active role: understanding, engaging with and steering companies.

Exclusion sets the standard

Another hobbyhorse of the critics is that exclusion is pointless because other investors will simply pick up the shares anyway. According to this reasoning, exclusion does not change the share price or company profits, but excluded companies lose the incentive to become more sustainable due to a lack of opposition at shareholder meetings. This is a misunderstanding of what really matters.

Exclusion is not about a direct financial blow, but about drawing a moral line. It gradually deprives companies of their “social licence to operate”. This does not happen overnight, but the effect is real: companies notice it through critical media, conscious consumers and employees, and ultimately through stricter legislation. Anyone who takes sustainability seriously knows that setting standards is indispensable.

Political neutrality does not exist

The argument of support among participants is also misused. Participant surveys by PFZW and ABP consistently show that a large majority want to invest sustainably. But these academics dismiss this with the claim that participants do not understand the questions properly or give socially desirable answers. Their solution to these “measurement errors”? A so-called politically neutral approach in which nothing is excluded.

You have to dare to label the continuation of our polluting and unequal economic system as neutral. It is a political choice that maintains the status quo.

Echoes from the past

Seen in this light, this resistance is not about returns, but about the inability to let go of an old worldview in which social responsibility is secondary. The Sustainable Pension Investment Lab (SPIL) has already stated that nothing is stopping pension funds from moving towards more concentrated, sustainable portfolios. All it requires is a “slightly different way of thinking”.

More and more pension fund managers are showing precisely that courage. They are listening to their participants and making their investment policies future-proof. The criticism of the old guard stands in stark contrast to this development. It no longer sounds like a relevant scientific counterargument, but like an echo from an outdated past.