Dutch pension fund PME, managing about €57 billion ($65 billion) in assets, has issued a strong warning to US money managers. The fund is concerned that many US investment firms are yielding to pressure from the Trump administration, compromising core principles of responsible investing and stewardship.
Daan Spaargaren, PME’s senior strategist for responsible investing, said in an interview that US managers “aren’t condemning what Trump is doing” on issues like climate change and judicial independence. This, he added, is deeply worrying for PME.
PME joins other European pension funds expressing similar concerns. Earlier this year, State Street lost mandates in Scandinavia and the UK after it left a major climate alliance. PME is currently reviewing a €5 billion mandate with BlackRock, which also quit a key net zero coalition, with a decision expected soon.
Spaargaren explained that traditional frameworks for evaluating asset managers no longer work. The Trump administration’s attacks on the judiciary, rollback of climate policies, and rejection of diversity, equity, and inclusion (DEI) initiatives have created a political environment that demands a clear stance from investors.
“If asset managers align with the current US administration, we risk legitimizing these actions by investing our funds with them,” Spaargaren said.
PME is revising its investment screening process to reflect these concerns. The new criteria will evaluate governance, freedom of association, and environmental issues like water scarcity. It will also exclude passively managed equity funds in emerging markets due to ESG risks.
Spaargaren highlighted a growing divide between European and American asset managers, especially regarding climate engagement and active ownership. He noted that how US firms handle the Trump administration’s policies will be critical.
Other European investors share PME’s worries. A senior portfolio manager at Allianz Global Investors recently warned that Republican policies could undermine the US as a “reliable investment runway.”
PME currently works with several large US asset managers but reviews these partnerships annually, with the next review due around June 30. European pension funds face increasing pressure from clients and regulators to address ESG factors, especially climate change.
PME began developing its new ESG screening in 2022, realizing that simply excluding harmful industries wasn’t enough. Instead, the fund is focusing on investing in companies and sectors essential for a sustainable future. This year, PME has cut its investable universe by about two-thirds, to roughly 1,000 stocks.
US companies still have a chance to prove they are resisting Trump’s agenda by maintaining clear ESG disclosures, Spaargaren said. “The problem is if companies stop reporting on diversity, equity, and inclusion or on climate,” he warned.
Spaargaren emphasized that this review is different from past ones. “US asset managers sometimes align with or go easy on what’s happening in the US,” he said. “This is more fundamental than just another administration.”
READ MORE:
