US fund managers are caving in to Trump warns $65B pension fund

by Frances Schwartzkopff

Dutch pension fund PME is issuing a blanket warning to US money managers, amid concerns America’s investment industry is caving in to pressure from the Trump administration to abandon basic principles of stewardship.

They “aren’t condemning what Trump is doing and how he is operating and how he is handling issues like climate change and demolishing the judiciary,” Daan Spaargaren, senior strategist for responsible investing, said in an interview. “We are worried about that.”

PME, with assets under management of about €57 billion ($65 billion), is the latest in a string of pension funds in Europe to express such concerns. Earlier this year, State Street lost mandates in Scandinavia and the UK after it withdrew from a major climate alliance for the industry. PME has already made clear it’s reviewing a €5 billion mandate with BlackRock Inc., after the world’s largest asset manager quit a key net zero coalition. It expects to make a decision in the coming weeks.

Spaargaren says PME has come to the conclusion that “existing frameworks on benchmarking different asset managers — the old frameworks — are not working anymore.” 

The administration of President Donald Trump has attacked the judiciary and is in the process of derailing America’s energy transition. It has also sought to wipe out diversity, equity and inclusion policies, dubbing these “illegal.”

It’s a political development that requires the investment industry to take a stand, Spaargaren said.

If asset managers “align their interests and their policies with the current administration in the US, then we are legitimizing also these steps and these practices by offering them our funds,” he said. 

PME is now “evaluating” next steps, Spaargaren said. Whether it stays invested in companies — or holds on to existing external mandates — will depend on the outcome of a revised screening process the pension fund has introduced, he said.

The new filter will assess holdings based on parameters such as how well investments support good governance, freedom of association, as well as environmental considerations such as water scarcity. It will also automatically exclude passively managed equity investments in emerging markets because of the perceived environmental, social and governance risks. 

Spaargaren says investors need to adapt to what’s become a fundamental split between values in Europe and those being promoted by the Trump administration.

“There is now a divide between European and American asset managers,” which is “quite” clear when it comes to engagement, active ownership, membership of climate initiatives and voting, he said. Key is watching how firms navigate the Trump administration, he said. 

Others in Europe have made similar points. Last week, a senior portfolio manager at Allianz Global Investors warned that Republican policies under Trump mean the US may no longer offer a “reliable investment runway.”

 PME currently uses a number of the biggest US asset managers to help oversee its portfolio. The fund reviews those mandates on an annual basis, with the next update set for around June 30.

Europe’s pension funds and insurers face increasing demands from clients and regulators to address ESG factors, particularly climate. In addition to being the fastest warming region in the world, Europe is home to the toughest requirements around disclosing environmental and social harms, and addressing work-place inequities.

PME began work on the ESG screen back in 2022, as it became increasingly clear that things like simple bans on oil investments weren’t enough to create a “future-proof” portfolio of companies, Spaargaren said.

Back then, “we thought the wrong way,” he said. “We thought that excluding would leave us with a sustainable portfolio, but we were just focusing on excluding harmful activities instead of focusing which companies, which sectors, were necessary for a more sustainable future.”

The Dutch pensions investor is rolling out its new ESG screen this year, starting with equities. It’s already cut the universe in which it will invest by roughly two-thirds, to around 1,000 stocks.

US companies have the opportunity to persuade institutional investors like PME that they’re not caving in to Trump’s agenda, which includes continuing to provide clear ESG disclosures, Spaargaren said. 

“The problem is if companies stop reporting on diversity, equity and inclusion or on climate,” he said.

Though PME has regularly reviewed its external managers, Spaargaren says this time is “different.”

It’s “a new situation when it comes to the attitude of asset managers in the US,” he said. “They sometimes align with, or go very easy on what’s going on in the US.” And the worry is that “it’s more fundamental than just another administration.”

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