The mandate will be managed by BlackRock, the world's largest asset manager, with the benchmark developed by all three parties involved.
The index has been designed to align an equity benchmark with aspects of the United Nations' Sustainable Development Goals (SDGs).
Company weights within the index are adjusted using FTSE Russell's ESG research on themes such as climate change, human rights and labour standards.
The four SDGs included in Pensioenfonds Detailhande's sustainable investment policy are "decent work and economic growth" (SDG 8), "responsible consumption and production" (SDG 12), "climate action" (SDG 13), and "peace, justice and strong institutions" (SDG 16).
Furthermore, the exposure to CO2 emissions and fossil fuel reserves will decrease by approximately 50%, while exposure to green revenue will increase by around 10%.
Henk van der Kolk, chairman of Pensioenfonds Detailhandel, commented: "The creation of this unique SDG aligned index is an important first step to make the entire portfolio sustainable in a way that aligns with the ESG themes and SDGs our participants find important."
"We are thrilled to have been able to initiate and implement this new benchmark with Pensioenfonds Detailhandel, which will ensure that the pension fund can realize its sustainability objectives via this new investment solution."
Waqas Samad, CEO of FTSE Russell, added: "This innovative approach demonstrates our firm commitment to support investors as they make the choice to incorporate sustainable investment objectives into all aspects of their portfolios and I look forward to furthering the partnership."