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Welcome to the UK Social Investment Forum's quarterly update for pension funds and their advisers. It is produced as part of UKSIF's Sustainable Pensions Project which assists occupational pension funds to adopt more responsible and sustainable investment strategies.
I. Key Responsible Investment Highlights |
Stern Review highlights magnitude of climate risk
Economist Sir Nicholas Stern's assessment of the effect of climate change on the world economy suggests that this threatens to be the greatest and widest-ranging market failure ever seen. Tackling it is "a pro-growth strategy for the longer term". The report concludes that one percent of global GDP needs to be invested to mitigate the effects and that failure to do so could cost up to twenty percent of global GDP. See Executive Summary or Stern Review Index.
II. The UKSIF Sustainable Pensions Project (SPP) |
UKSIF surveys FTSE4Good companies' pension funds
UKSIF has started to survey the pension funds of companies in the FTSE4Good UK index about their responsible investment practices and alignment with their corporate sponsors' social responsibility and sustainability policies. The results, to be published in June, will highlight leadership examples that others can learn from. Participating funds will be offered confidential feedback. Details from andrea.krug@uksif.org.
III. Pension Funds and Responsible Investment |
1. UK PENSIONS
New LAPFF guide to making shareholder engagement effective
Their 'Trustee Guide on Delegating Shareholder Engagement' encourages trustees to dialogue with and assess their fund managers on the effectiveness of their engagement activities. Visit www.lapfforum.org/news/2.html.
Pensions Regulator trustee toolkit module covers SRI
The latest module of the toolkit examines what trustees should expect from their fund managers on 'corporate governance, including shareholder activism and ethical investment considerations'. Visit www.trusteetoolkit.com.
2. INTERNATIONAL PENSIONS
PGGM commits €250m to RI in Emerging Markets
Dutch pension fund PGGM's new relationship with Albright Capital is based on integrating global citizenship, corporate governance, socially responsible policies, and transparency into an emerging markets investment program. See here for details or visit www.pggm.nl.
ERAFP selects SRI providers
ERAFP, France's supplementary pension scheme for civil servants, has awarded SRI mandates worth up to €1.2bn in total to BNP Paribas AM, Integral Development AM (IDEAM) and Robeco Institutional AM. A second tender for commercial bonds will take place in 2H07. It has also chosen research agencies Vigeo and Oekom to support its SRI policy. ERAFP will have €8 billion in assets under management by 2010. See Asset Manager Press Release and (in French) Research Agency Press Release.
FRR selects providers for extra-financial reports
The €31.1bn French Pension Reserve Fund (FRR) has appointed three external research providers. Vigeo will analyse the European equity portfolio on the basis of the FRR's five SRI principles. EIRIS will report on compliance with international conventions of companies in the global equity portfolio. Trucost will assess the environmental impacts, risks and opportunities of the global equity portfolio. Click here for details or visit www.fondsdereserve.fr.
Sweden's AP funds launch joint Ethical Council
Sweden's national pension buffer funds AP1, AP2, AP3 and AP4, with assets in excess of €80bn, have introduced a joint ethical council to review their SRI holdings in foreign companies. The aim is to engage with companies, with divestment as the final resort. Visit www.ap1.se.
3. COLLABORATIVE INITIATIVES BY PENSION FUNDS
Global investors petition SEC for enhanced shareholder rights
A coalition of pension funds and asset managers, including USS, F&C, Railpen and Standard Life, has petitioned the US Securities and Exchange Commission for more rights for shareholders in changing the composition of US boards. Contact dsummerfield@uss.co.uk.
UN PRI and EAI announce collaboration
The UN Principles for Responsible Investment (PRI) and Enhanced Analytics Initiative (EAI) have announced a formal alignment and are inviting signatories of each initiative to join the other. Visit www.unpri.org.
CONSULTANTS
Mercer explores growing impact of universal ownership
'Universal Ownership: Exploring Challenges and Opportunities' has been published by Mercer in conjunction with the Center for the Study of Fiduciary Capitalism. It examines the influence of large institutional investors owning securities in a broad cross section of the economy, such as pension funds, on the way companies are managed. Click here for details or visit www.merceric.com.
OTHERS
UNEP FI launches Responsible Property Investment Group
The new United Nations Environment Programme Finance Initiative (UNEP FI) Property Working Group has been launched to encourage sustainability in mainstream property finance. Initially, it will gather best practice demonstrating the financial and environmental value of responsible property investment. Click here for details or visit www.unepfi.org.
ABI publishes updated RI Disclosure Guidelines
The Association of British Insurers has published its Responsible Investment (RI) Disclosure Guidelines, updating and replacing its 2001 SRI guidelines. Click here for details or visit www.abi.org.uk.
ECCE: new European centre for sustainable investment
The European Centre for Corporate Engagement (ECCE), launched in January, intends to help institutional investors remove barriers to implementation of sustainable investment strategies. Visit www.corporate-engagement.com.
FTSE launches FTSE4Good climate change criteria
These aim to keep the criteria governing the FTSE4Good series in line with CSR best practice. Click here for details or visit www.ftse4good.com.
DWP Personal Accounts White Paper includes SRI options
'Personal accounts: a new way to save' states that the government expects SRI options to be available in the new national pensions system. They will research attitudes to SRI and international SRI best practice and develop recommendations on removing barriers to SRI. Visit www.dwp.gov.uk/pensionsreform/new_way.asp. See www.uksif.org for UKSIF's response.
UKSIF is grateful for financial support from Esmée Fairbairn Foundation for the Sustainable Pensions Project.
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