PGGM's Geraldine Leegwater: Preparing An Investment Organization For TPA in 3D

[Music] Hello and welcome to the Don't Get Fire Podcast. Dear I say season four, but today let's call it season four. We're excited to be here. We're still looking at innovations in the asset owner space. We're still trying to unravel Daniel just how this works, how these brave souls do creative things inside long-term investment organizations. I am, if you just happen to be dipping in because you think our guest is spectacular and this is your first podcast, I am Ashby Monk. I am the executive and research director of Stanford long-term investing. And Daniel, who are you? We heard your voice, but who is this voice? You know, I had some mystery and I asked myself that question. But I am, I go by Daniel Adamsen. I am the co-founder and CEO of Collective Global, which is a venture capital firm. I sometimes refer to myself as an adventure capitalist. That's how I describe it to my children. And Ashby, I don't know if you knew this and I don't want to make this whole show about me. But I look similar, but I'm actually Daniel 2.0. Okay. There's been an upgrade since I saw you last. I want you to know something. You are playing into the fears of our listeners when you say things like that. You don't even know this. But when I was at my conference last week at Stanford, I quite literally had somebody come up to me and say, "Come on, Daniel, this Daniel guy in the podcast, that's an AI, right?" I mean, it's funny because I, that's 2.0 version of myself. And Ashby, I look at you and I think there's a guy, he's at least a 3.0. 4.0. Like he's, you know, he's evolved and 3.1, 3.2. Like he's had versions of upgrades again. For me, I'm trying to get less AI. Not more. Oh, you're trying to do that. In my head, less, more listening, more. I don't want to be a guy who refers to himself in the third person. You know what I'm saying? As you're talking about yourself in the third person. A more about other people. So, let's, let's, let's head. I don't want Ashby Monk to be one of those people talking to the third person. Yeah, no, I get it. Don't be that guy. Well, how are you? This is the holiday season. I'm doing great. I love this time here. Who does it? Right? Thanksgiving coming up, it's the best. In America, it's our best holiday. It is. The thing about America that other countries, and I've lived in other countries, don't quite have, is if you live in a place like London, you'll walk into Marx and Spencer's in October, and there will quite literally be Christmas stuff up already in October, which feels outrageous. Whereas in America, we have this Halloween, then we move into the Thanksgiving, and then we naturally move into the holiday season. It's very balanced. You don't get bored of the Christmas. True, if you lived in any house other than mine, because my wife just decides that November rolls around in its Christmas decorations everywhere, and not just a little. Yeah. No, no, no. It's 20% of my year, and that's okay. I've just made food for that. You know, she has other virtues. That's just not one of them. We are going to talk to our guests in a second, but I just need to tell you a couple of things. One, Daniel, my daughter used her allowance to purchase a record player, and we have been buying Christmas records and playing them around the house, because that's what you do with a record player. And we are also in the process of already putting lights up around the house, getting, we're going full Christmas vacation. Yeah, that's something Ash before 0.0 should do. Yeah, that's right. That's evolved. Exactly. That's the advanced AI. Well, let's jump in, because this conversation I'm so excited about, because we are going to talk about the topic of the day, Daniel, and that is total portfolio approach, but we're going to do it with a lens of true impact. How do you optimize risk and return, but how do you also understand the real world impact that these portfolios are driving, and how do you build an organization around all of that? To help us understand, we are very lucky to have the CEO of PGGM Investment Management, Geraldine Lee-Gwater, join us on the podcast, Geraldine. Welcome to the Don't Get Fire podcast. So thrilled to have you. We know there's so much going on at PGGM right now, and we can't wait to jump into our case study. But before we do that, why don't you tell us a little bit about your pathway to PGGM, and then all the various functions you've had at PGGM if you want to share some of that before your current status as CEO of the Investment Management function? Yes, thank you. It's a pleasure to be here. I joined PGGM Investment five years ago, and although the title of my current role changed, the role hasn't changed that much. So during these five years, I have been leading the Investment Management part of PGGM, and before I joined PGGM, I've had a long history in pension fund investment management, in different roles in the long investment chain that we tend to have in the Netherlands. So it's executive board, non-executive board, it's executive offices being a CIO in pension funds. So that's my broad background over the years. I want you to tell us a little bit about PGGM, because I think of you as part of a club. I don't know if you know that you're part of this club, but there's three funds in the world, Hesta in Australia, who in Canada, Healthcare of Ontario Pension Plan, and PGGM in the Netherlands. And so maybe you can give us a little bit of information why I think that, and tell us a little bit about the portfolio and the assets. Well, PGGM Investment is basically the Investment Management Organization for the BSET W pension fund, and that is the pension fund, the second largest pension fund in the Netherlands for the social and healthcare sector. So indeed, we take care of the future pensions for approximately 3 million people here in the Netherlands, working in the social and healthcare sector, and that implies managing approximately 250 million euros. In assets, we have a diversified investment portfolio with a variety of asset classes in there, and what's important to realize is that we have a major part of our portfolio in a hatching portfolio, as we have a very liability driven approach in our investment portfolio. And for the part which is not in the hatching portfolio, that is a diversified return portfolio with of course private assets as well as liquid assets, liquid asset categories. And we do that with the team of a bit more than 500 people. We manage within the organization but also outsource mandates towards external managers. So just a substantial part is ultimately managed with external providers as well, but we take care of the whole portfolio. Your CEO of the Investment Function, it's a $250 billion fund working on behalf of the social and healthcare workers of Netherlands. Three million, I didn't realize, that's a big number. Just before we jump into the case, tell me about your relationship with the regulator. I'm not sure people quite understand how important the regulator is in the Netherlands and what the requirements are on you to stay fully funded. Yes, that's indeed the case. We still have a defined benefit system, but I must admit that's about to change, because here in the Netherlands we've been working on a major pension transition over the last 50 years. That's part of the problem and the case study we're digging into, but in the current system, it's indeed the case that funds need to be fully funded. And there are quite substantial solvency requirements. And that's exactly the reason why in the current system where we have to take market rates into account in discounting our liabilities and that there is such a substantial part of the portfolio invested in a liability. And it's indeed the case that the regulation subscribes that you can't even provide indexation to the pensions if you don't have sufficient solvency in the system. But as said, we're on the edge of a major transformation here in the Netherlands, a major transition of the pension scheme. Daniel, I think we just broke some news, my friend. I think this is breaking news. The Netherlands is about to change their pension system. What do you think? I'm at the edge of my seat. I don't know how quickly we can turn this podcast around. I'm live tweeting. We've been working on this for 15 years. In the pension space, Geraldine, that's breaking. Yeah, exactly. Okay, so we do a case study because it's an easy way for us to wrap our heads around a problem and how you solved it. You have a really interesting context with a strong regulator, but it sounds like you're actually building a portfolio that can be multi-use, both in the current context and the future context. And so there's a lot at play here. And so help us understand the problem. And then we'll move through the various aspects of the case study, which is the solution you built, how you moved from the problem state to the solve state. How did we implement the solution? And then we talk about the implications. And then we'll come to Daniel for some very deep thoughts at the end. end. But let's start with the problem you observed at PGM or or was observed by your team or the board and kind of get our head ends around that problem. - I mentioned to you already that we're on the edge of a major pension fund transition. And what we know for sure is that in this new world that our stakeholders will, what's more closely, what we're doing, why we have the portfolio that we have, how we take care of the pensifant money, and we need to be more transparent, and that's what stakeholders will require from us. And we also foresee that the pressure will even increase more compared to the current situation where we face already, of course, pressure from stakeholders on what we're doing. And we realize that with our long, waterfall investment process, that this process is no longer able to keep up with the speed and the complexity of the required adjustments that we foresee going forward. And also in the rapidly changing financial world around us. And in addition to that, we have set a strategy 2030, a few years ago, which is a joint strategy with the SW. So we're fully aligned, but in this strategy, there is a revised ambition on what we want to realize in terms of long-term sustainable investment returns. And also there, we realized that this requires a fundamental change in our organization. Not only in the portfolio that we will have in the future, but it also requires a change basically in the process and even more in the way we work together in the process. And maybe to illustrate a bit more on what exactly the problem is, it sounds strange, but I want to move to the solution immediately. Because I think that will make clear why this implies a, in my opinion, 180% move into a different direction. First of all, the solution is that we have to move from a multi-client approach that we used to have in the past to a single client approach, a fully focused on PFSAW to make sure that we fully aligned. Second, a move from what we say to the approach where your investment portfolio is driven by, mainly risk and return, towards a 3D approach. An approach where risk, return, and sustainability are fully integrated, not only in your portfolio, but also in your organization. It's a transformation from individual asset management mandates to a total portfolio approach from waterfall design to an iterative policy-making and implementation process, from analog to digital, from vertical silos in the organization towards a horizontal joint investment process, from controlling each other to trust each other's work and build on common goals. And last but not least, a difficult one, from financial rewards based on the result of your own mandate, towards rewards based on the results of the total portfolio of PFSAW in terms of risk, return, and sustainability. Well, probably by giving the solutions we thought we need, you probably also realize why the problem was there and what it implies to solve such a transformation. 100%. This is an incredible suite of changes. And you can feel how they all fit together. The 3D versus the 2D helps you have a really rich understanding of your portfolio and incredible data that emerges out of that. The analog to digital, you don't get a 3D portfolio without a digital toolkit. You need to design the incentive structures to prioritize that total portfolio view instead of the people just doing their own deals. And so it seems very obvious to me that this would all fit together, but it also seems incredibly ambitious. Like, you know, this is a big bang-type moment where you're reinventing an organization, which, if I'm honest, maybe actually that's the way you can do it, because if you're changing everything everywhere all at once, it's kind of like everybody kind of has to be on board. And maybe that's actually a useful way of doing it. But yeah, give us a little bit of understanding about how you convinced the board or the board convinced you or what was the process behind the scenes that led to this big bang. Yeah. Well, it sounds like a big bang, but I hope you realize that the show must go on while you're building this. We did need to deliver on the portfolio over time. So we could not just build a new factory and leaving the old one behind. So that was already a complication in itself, I would say. But if we go back to the beginning of this whole process, well, it all started, of course, with a vision a couple of years ago about the changes we foresaw in the financial sector. And again, also the transition, the changes related to the pension fund transition. And when it became clear to both our colleagues and the organization and also the board that we did need to redesign our investment portfolio to further incorporate sustainability in our portfolio, it was not immediately clear to all stakeholders that it would also desire a change in our process and our governance of the investment organization. So the first thing that happened was that we managed to have a common understanding on basically new investment beliefs and what the main drivers would be going forward for our investment portfolio. And the one thing which became clear at the start of the process, even though that took a while, was that just adding more sustainability to our existing portfolio reached the limits. Because PTGM MPFZW have been well known for their ESG and sustainability components already for a long time. But what we did do over the years was what I call add more sustainability to existing portfolios. And the first step in this whole process was the realization of both the board and us that we did need to build an investment portfolio where you fully integrate the three instead of just adding more sustainability for example by excluding sectors or by setting some goals and not knowing yet where to implement them. And when we had that common understanding, I found it more difficult to convince stakeholders around me that that would also require a new investment process. And why was that so difficult? I think a couple of aspects there. First of all, from the perspective of the board of PFZW, which I also fully understand that they had this perspective, they want the need to have an investment process outsourced partly to PTGM on which they are fully in control. If you outsource something, of course, the regulator here in the Netherlands requires very high standards on what it implies to be in control. And we had a very well in control design investment process. And we had conversations on, okay, if you design something new because you need something new, do you then also design the new set of controls based on a new process or is a precondition of redesigning that you keep the existing controls in place. But of course, keeping existing checks and balances in your process limits you to change the process. So I would say that was, that took a while to basically get all on the same page that's a white paper, white sheet of paper approach in designing first the required investment process. What are the products that need to be delivered? What are the steps in an in process that you require? And only then you ask yourself, what is required to be in control? Because in control is a goal and not a tool in itself. So that took a while, but when we both agreed on the requirements of the process and we started to design that and we all became enthusiastic. Well, then the next step was that they wanted to speed the board wanted to speed up and they really wanted to build on this new investment portfolio. But of course, we did not yet have this new organization in place. So that was another challenge along the road. But this was the way how we basically came on the same page on going forward to this. Maybe to add here, it was a completely different process within the organization to get everybody along. Because you can imagine by what I just mentioned on the major changes, for example, on the rewards, but also moving away from all those separate investment mandates towards the total portfolio approach. That implies you have to get, well, the internal colleagues along with you as well. So that was a major step as well. Geraldine, listening to this description of what I think could only be. be described as PGGM 2.0, you guys built it in your minds first and then ushered in into reality so carefully, right? With such introspection, such planfulness, seeing the entirety of the solar system, the future solar system as it needed to function, no planets bumping into each other, smooth orbits for everything. A question that I have for you, kind of an innovator's question for other CIOs and CEO's who might be listening is, you touched on it just a moment ago, is whether it really was something that could be conceived of and then implemented in that order or whether it was more iterative and when you were describing some of the goals moving from being siloed to horizontal, from analogue to digital, from control to trust. Sometimes more information, more scrutiny, more transparency to stakeholders can actually, if handled mismanaged, make people less trusting, less open to sharing their book, less open to being in a fabric with other people in which their every move will have ripples throughout the whole system. So I'm just curious whether there were setbacks along the way that you had to overcome. Certainly, it has been a long journey and I would also say we're still in the middle of this journey. Let me first point a few learnings or they are related to setbacks as well and we can dive deeper into the ones that might appeal you. I mentioned it already on the design of the process where I said that a setback for example was it requires an incredible stakeholder management for example to bring the message across what's in it for me because it's not immediately that it's of added value to all stakeholders and to all individuals in the organization. So there we certainly had to overcome pressure in the organization or people who had a feeling okay but what will this imply for my role or my job. But another one is the organization has a long history and has been doing very well and if you then want to create something with this far away from where we come from you really want to make sure that you also give the right credits for what has been achieved so far and to have the balance there that on the one hand you have to motivate colleagues that well the road ahead is different compared to the road of the past. You still want to and need to feel the people okay but what you did so far was not wrong. It's just not sufficient enough for the future and I realized by now after five years that in my and to jasmine on the vision and on the belief that we do need to change going forward that maybe in the beginning it was less attention to the fact that I should give the compliments for basically what's still going on and the run and especially or what we achieved that you shouldn't underestimate it so that is for example a setback that we've come to through and another one is like I mentioned when the board was convinced also on building this fully integrated portfolio also with sustainability risk and return and also the total portfolio approach they became so enthusiastic and they set a very ambitious calendar to start building on the new components in this portfolio as well so literally by redesigning for example a new equity portfolio but we did not have the factory ready so we still had this waterfall approach and all the the traditional steps that we were taking we still were designing the process and we still had to change our organization and and even more our way of working and we're still in the middle of finding out how it works so another learning is that to start building already your investment portfolio while still building the factory well maybe we should have slowed down a little bit on the content side of the investment portfolio and of course building this new factory while the run is in place as well you can't do it with the same people and of course some people then in the run the daily run they felt a bit of a distance compared to what we were building new we had some setbacks there as well and well I hear by show already that there are many many learning points if you are in such a major transition and I'm still learning every day oh I'm sure you're kind of inventing a new future every day is going to be an experience Andy Grove who was the former CEO of NTEL he used to talk about how success leads to complacency and complacency breeds failure for organizations that are long term and so PGM was and is a successful organization is role models an exemplar for me as an academic we would often turn to PGGM to ask ourselves why are they doing it because we know they're good at what they do and so that success often leads to complacency and complacency leads to failure so how the heck in a seemingly functional organization that was an exemplar to those of us studying pensions did you get the resources to build a parallel platform for PGGM was it client driven in the beginning you said we went from multi-client to single client so was it the client that sort of demanded this because it's very hard to do yeah well the honest answer is that writing division fission 2030 that started with PGGM and then of course we ended up in a dialogue with the board of psw and then it soon became clear that the road ahead to get the best out of each other is to really have a joint strategy so when that moment was there and and basically our message is was to psw that basically the added value for PGGM investments is in being fully aligned with psw because even though we were multi-client well less than 5% of our assets were with other pension funds so that helped to be fully aligned so on your question i was it psw was it us i think the moments that we found each other in in writing the joint strategy that that helped a lot to to get the ball rolling one more click into this topic because i'm still trying to trace through that catalytic thing when you were writing the 2030 which i had to imagine was probably 2022 2023 time horizon was it the threat of AI was it technology was it something that was missing in the world that led you to rethink your entire operating model and asset allocation like trace back to that moment that actually put you in the conversation with your client in this way well i think it was some of those elements in the outside world of course it was technology AI digitization of course it was already a dead time a geopolitical development of course it was the the growing role of sustainability which for us stands for basically connecting developments in the real world with developments in the in the financial world and basically bringing systemic risks into your whole thinking so it was all those elements but also aging population and what it would imply going forward for having the the right resources in place so it was basically all of this and in addition to that it was also in our way of working especially the waterfall approach where we basically had very long lead times to go through a process to to come up with proposals or to come up with with new investment ideas so it was all of that to bring that to the table and to basically have an outlook on okay what will this imply for the content of the investment portfolio what will be in the portfolio going forward as well as where will you generate your returns from in the future and what does that require for your organization so it was all out of that innovation and and i must admit when we wrote the vision of course it was 2030 seemed to be very far away which is obviously not the case coming back to Andy Grove he I think his his communication to his company was to stay paranoid he said paranoia as the recipe for readiness to change and in his case paranoia was about a bunch of stuff related to technology but maybe I don't want to call you paranoid but being very focused on alignment with your client and being to the point of almost paranoid about delivering on these goals for your client and building an aligned program to meet those goals puts you in a position to be ready to change so rather than pointing to one single crisis that catalyzed this maybe it was a culture of putting your client first and being almost paranoid about delivering on that that made you ready for this transformation. And I'm putting words in your mouth, so feel free to disagree with me. Well, I think what we did when we wrote this vision was obviously also have a look at well, how is the asset management market developing? And of course, increase in scale is a topic, required investments, is a topic, etc. And of course, we then did an assessment on what is the added value of PGM investments in this world. And of course, we're with 250 billion, we're an interesting amount of money that we can bring to the table and that we can build a portfolio with. But we will never have the size and the capabilities of a traditional asset manager, because our origination comes from in the past. We were just one organization together with PF-CW. So that's where our roots are and that's, I believe, is where our added value is. Our added value is to be the trusted advisor and trusted implementer and trusted manager of PF-CW. So it seems like that to some organizations, it might like a strange idea to basically focus on one organization, because in terms of scale, that probably places you in a long term in a different position. But if you keep in mind that already for a long time, we also provide mandates to external managers. And as I just said, we really had a deep dive into, but where's our added value? Our added value in the long term is not in managing besting class individual asset mandates. There will always be an asset manager somewhere in the world who can do that better. Our added value should be in where is the strategic value that we can provide to PF-CW. And that's where it comes from and that's where all these changes that we've come through probably find there already. So it is really from a deep thinking of where in the long term is our unique angle that we have compared to others. Thank you for going a little deeper with me because I often think pension funds should spend much more time thinking about their right to win in a market, their comparative and relative advantages, and build on those advantages. Both those advantages that they're endowed with in the beginning, like you're in the healthcare industry, you are Dutch, but also the advantages that you've cultivated over time. And that those advantages then become the foundation of an organizational identity and also potentially formulate new models of investment based on your unique circumstance. And so it's really cool to hear that that was, you started from a position of inward understanding rather than just outward, you know, gazing. And probably that also explains to you why the solution and therefore also the move that I just refer to from individual asset management mandates towards a total portfolio approach was such an important component in there because in order to really show this added value to PF-CW, you do need to have the total portfolio oversight and to get the added value from building from the total portfolio perspective as well instead of just managing individual components. And of course we were an advisor as well at that time, but that was also in another division within the organization, but probably that explains to you also that move as part of the solution. So I'm going to come to you Daniel in a second, but the last question for me before we get to very deep thoughts is really around the advice you would give yourself if you could send a message back three, four years. It's too early for us to like really do a diagnosis or a discussion of the outcomes because you've just recently implemented. And so rather than thinking too hard about how your performance is going, et cetera, let's think about this process of change. And if you had to go back or you could go back and tell yourself to not do something or to do something, what would that be? Well, I could come up with a long list of learnings that I have over the years, but probably the most important one is an I mentioned that already a little bit. The important one is once you have a group of people that is very enthusiastic about the proposed change, but you also have an enormous group of hard working colleagues who delivered all the results over the years and are still delivering the results. If you don't emphasis on a day-to-day basis, how important it is, what they do, what they continue to do, and that you give the credits for basically the past and why we were successful in the past. And you focus too much on what's on the horizon. Then you do not reach with the change and the required change a group of colleagues within the organization. So to find the right balance and also the right patience, and because it takes time to digest the strategy, it takes time to digest all those moves that I presented to you. And maybe I was sometimes a bit too impatient because I saw this dot on the horizon. And of course with me, a group of people, but to be patient and to really take the time, the balance, the past, why we, where we are, what we achieved and combine that with, where we are heading to, that's probably the most important learning in all its aspects. Perfect. Without further ado, Daniel, take us down. Thank you, Ashme. And Geraldine, and for any listeners who might be new to the podcast, this is the section in which we tend to swim out to see for a little while. But I promise Geraldine and our listeners that we will return to shore. And ultimately I'll have a question for you, Geraldine. But it's no coincidence that as you were describing this radical transformation that you've built the PGGM 2.0 that I gravitated toward this analogy of a solar system and the Copernican revolution. It may seem like a lofty comparison to say that you pulled off something akin to the Copernican revolution, but in some ways I think you did more. Right, after all, Copernicus just described the same solar system in a more accurate way. You actually changed the way your solar system operates. You moved the Earth from the center out to being one of the planets. You thought about how this all needs to work. It just wasn't a mathematical abstract exercise. It had to also be something that physically transformed an organization with three million stakeholders. Thinking about the Copernican revolution, though, even though we call it a revolution, it took decades. People didn't believe him for a long time. They thought, oh, this is a great mathematical model, but it can't possibly be true. We would feel the wind in our hair if the Earth really were moving that quickly. And I think part of the reason people didn't believe it is that they just weren't accustomed or they were only slowly becoming accustomed to even the notion that we could be wrong about things or make new discoveries. I think had we not discovered the new world in the decades prior, probably now on what have had the Hutzpah to say maybe the Earth is not in the center of the solar system. What why is this relevant? I mean, I think it's because Copernicus and his followers had to ultimately create a whole new language. We didn't really have the word discovery in English before Copernicus. We didn't really have a word for invention. It's not used. So if you read Shakespeare, he basically assumed that whether he was writing about Cleopatra or a Danish prince for the Middle Ages, that everyone's technology was about the same and there was no progress in the world. 100 years later, fast forward, you have bacon, and all of a sudden we have a language of progress and invention. That didn't just happen overnight. People invented words that help communicate that we could move something forward. So my question for you is, have you had to invent a new language in order to communicate both to your team and to the three million stakeholders who you are serving? What you are doing and what is that? You've used some of those words already today. So I know the answer is yes. But I'm just curious, what advice, linguistic advice you would have for others who might be trying to make this level of change in an organization so that they can communicate that vision that you saw five years before that you then had to bring into being. Thank you. Thank you also for your reflection on your deeper thoughts. I would say here two elements. The one is more on indeed, how do you communicate about your investment policy and basically what you're building with your portfolio? and the other thing which we didn't touch upon is where we are in the middle and which indeed will take a couple of years, maybe even years. That is, you can, and let me start with the second one, you can design a new investment process. You can set new guardrails. You can assign responsibilities different in your organization. But that will not change your behavior. That will not automatically change the way you work and indeed the way you have conversations with each other. So I've always been crystal clear in this process and now of course we're live with the new organization. That this is just a minimum essential requirement that we first need to build, which will at least enable us to start to change our behavior. Because if you stick to the same process, you stick to the same organization structure and all people still have the same head and the same type of responsibilities. And you then tell them, okay, the world is more complicated. We need to speed up. You need to take more responsibility. There are less incentives to do so. So for us, this whole new structure is just the beginning. I think it will enable us to change our way of working. So that part is just starting and well, I can elaborate on what it implies to really implement a new way of working a new culture and culture is a bus word of course. So that is the one element if you talk about the new language within the organization. So that's one element. The story to the participants, of course, that story is. It's PFSAW telling that story, but of course we're in debate with that continuously and we provide the input there. I think what is most different there is of course this component of full integration of sustainability in your investment portfolio. And of course you are aware that the timing of bringing out this story is extremely challenging. Of course we've been doing sustainability for a long time and then come to the outside world that we fully integrated, that we waited. It's all as important. We have the. we face the headwind of course and we come out with this story. So it's even more challenging compared to a couple of years ago to bring this story. But we do believe. we still do believe that we can come up with this story. And what's the most important element there is again is total portfolio management. Why? We believe that we can build an investment portfolio where delivering on the required investment returns had to come ultimately had to come up with the full pensions that we need to deliver on within the risk tolerance of the participants and the fund. And then also realize minimum standards with respect to sustainability and deliver even impact real world impact in parts of the investment portfolio. This does not imply that each and individual component in the portfolio adds to the same extent to return or risk or sustainability. Because that's something which people then have in mind that continuously on each and individual investment decision, you should be optimal. But on the total portfolio level we do believe that we can build such a portfolio and that does imply that that's why total portfolio management is so important. Certain sustainability goals can be achieved by certain parts of the portfolio. And that's why for some specific goals we assign for example impact mandates in our case that is on delivering on the healthcare sector in the Netherlands and healthcare investments that we sign a specific impact investment mandate. Another example which is clear to most people if you explain it, why do we have such a substantial interest hatch, hatching portfolio. Nobody is asking whether you have that to make a maximum return because the role of that component in your total portfolio is based to have slight abilities. And of course it requires minimum sustainability standards because there are levels that we don't accept anymore. But nobody is asking okay do you make the maximum return with that part of your portfolio. So I think that is important in our story towards the outset world and towards participants as well. We do believe we can build the portfolio with delivers on all those goals. It does not mean that each and individual investment contributes to the same amount to all these goals. And that's part of our story and the second element there is if you imagine a nurse just finishing her school education who will get delivered a pension more than 40 years from now. Imagine the world she's facing at that time. Imagine the rules that probably then apply to the responsibilities we have. With that rules and that society view they will give or assign us the responsibility of what we do today. So taking into account this long investment horizon I do believe there is no way you can just avoid taking care of the major transitions we are facing. 40 years from now they will ask us well why did you not take care of certain major transitions. You should have known by that time that that will it would have impacted your investment portfolio. We don't know do not know exactly how it turns out. And that's why this role is so difficult. We don't know what it ends up with but we do make sure that we take into account that we have a future responsibility as well. I think you just reignited in me this passion I have for this industry which is like you just helped us visualize 40 years from now. I mean is there a cooler job than this job. I mean in how many jobs is it like required that you take a step back occasionally and think about the world 40 years from now. Think of the rules think of the environment think of the effect of AI but actually as an intergenerational pension fund manager you have to. And so you know I just wish we could convince some young people to listen to this podcast Geraldine but I'll keep working on that. Dan you got to get some better jokes in the 3.0 version so we can get these young people. I think that's really unlikely. Let me just say also before we let you go. You know we talked about the entire investment overhaul the investment structure you mentioned a couple times but really I think part of what you just described is how hard it is to do TPA. Like if we just took a step back and said you see a lot of people talking about doing TPA actually you know what it takes it takes what you just described. It's an entire reboot of data of delegations of incentives of culture which is why you see people writing like I saw yesterday in the financial times that you know Calpers is really going to struggle with their TPA. Look what you've had to do to do it. It's massive. And then the last thing I'll say is I think the right word to describe PGGM is restless not paranoid. Restless. You are restless on behalf of your client. You are not waiting around and I think there's something incredibly cool that this passion for the 40 year you know liability makes you restless in a way that I don't see in a lot of other places and so I congratulate you on that stay restless my friends. All right well with that note thank you Gerald Dean for coming on Daniel you were very deep as always and we will be back in fact tomorrow with some more amazing podcasts on understanding of innovators. Thank you.