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Responsible and Sustainable Investment Update |
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News for Pension Funds and their Advisers on Responsible Investment from the |
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Issue Number 6 – Published Spring 08
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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
UKSIF helps Pensions Bill Committee MP to table Responsible Investment amendment for the Personal Accounts System
The Pensions Bill amendment requiring the Personal Accounts Delivery Authority (PADA) to have regard to ‘international best practice on responsible ownership and environmental, social and corporate governance issues’ for the Personal Accounts System (PAS), tabled by Nick Ainger MP with UKSIF’s support, was debated in committee on February 5 together with an amendment from the Liberal Democrats on signing up to UN PRI supported by FairPensions. DWP ministers committed to report the views and feelings of committee members to PADA and to ask PADA to give their views on RI to the committee. James Plaskitt MP highlighted that ministers and PADA staff had held recent meetings and discussions with UKSIF. For the full debate, click here. Contact anne.desgagniers@uksif.org.
UKSIF holds member consultation to inform response to the Personal Accounts Charging Structure Consultation
A small meeting of UKSIF pension fund members and others, hosted by USS, was held to discuss the UKSIF Sustainable Pensions project’s response to PADA’s Charging Structure Consultation. UKSIF’s submission to PADA addresses the types of costs and benefits of adopting a RI approach for the entire scheme as well as offering an SEE option to its members. Contact anne.desgagniers@uksif.org.
1. UK PENSIONS The Environment Agency Pension Fund (EAPF) shares its sustainable private equity investment experience
The EAPF has outlined in a report the development of the £80m mandate to Robecco which comprises 5% of the EAPF's assets and how the financial and ESG performance of the mandate is being assessed. The report is available to other asset owners and institutional pension funds from Howard.Pearce@environment-agency.gov.uk.
The Local Authority Pension Fund Forum (LAPFF) calls for performance-related pay schemes to encourage non-financial risk management
LAPFF’s research found that executive directors are not sufficiently rewarded for good management practices on non-financial business issues. Only seven companies in the FTSE 100 are currently building these issues into a long-term incentive plan. Visit www.lapff.org.uk
Railpen Investments presses Japanese companies on corporate governance
Railpen, the manager for the £17.8bn UK Railways Pension Scheme, has increased corporate governance pressure on Japanese companies by writing to nearly 200 to outline its stance on various CG issues. Railpen recently re-appointed Governance for Owners, the engagement specialist, to oversee governance in its £690m Japanese equity portfolio. Visit www.railpen.co.uk.
2. INTERNATIONAL PENSIONS
TIAA-CREF sets 10% energy reduction goal for Real Estate Portfolio by 2010
TIAA-CREF, the $435bn US pension, insurance and financial services company, and one of the USA’s largest institutional real estate investors, says it aims to cut energy waste in its property portfolio by 10% before 2010, reducing carbon dioxide emissions. The group owns a $70bn global property investment portfolio. Visit www.tiaa-cref.org
PGGM to invest €200 million in microfinance
The €88bn Dutch healthcare pension fund’s investment will be focused on small firms or family-owned operations in developing countries. It has made an initial investment of €27m to Dexia Microcredit Fund which is operated by BlueOrchard Finance. Visit www.pggm.nl.
AP7 to invest €300 million in environmental technology
AP7, the €9.3bn Swedish buffer fund, will invest over €300 million over the next 3 years via two or more clean tech private equity fund-of-funds. Visit www.ap7.se.
ABP systematically incorporates climate change risk & opportunity into research
Dutch pension fund ABP is reviewing its investments in energy. ABP has set up a large scale ‘cross-departmental research exercise’ carried out by its research department, to try to understand the commercial opportunities and risks of climate change. The fund has already invested €500m in carbon funds and trade emission credits, €250m in clean technology private equity, and around €100m has recently been invested in a new fund which will support renewable energy infrastructure. Visit www.abp.nl
VicSuper and PNO appoint SRI Adviser
VicSuper, one of Australia’s largest superannuation funds, and PNO Media, the €2.8bn Dutch media pension fund, have selected Hermes Equity Ownership Services (EOS) to represent their ownership and engagement interests and conduct SRI research. This mandate brings Hermes EOS’s funds under advice to £70bn. Visit www.hermes.co.uk.
Major pension funds step-up transparency
The €250bn Norwegian Government Pension Fund has disclosed how it engages and measures results with multinationals on issues such as child labour, climate change, executive pay and governance. It will also start disclosing its voting activity on the internet. Visit. www.Norges-bank.no. The first annual report by the joint ethical council of Sweden’s AP funds will include all the names of the companies it is currently engaging with. Visit www.ap1.se. The two large Dutch pension funds, ABP and PGGM they will disclose all the investments they own going forward. Visit www.abp.nl and www.pggm.nl.
PGGM and the European Parliament’s pension fund divest from PetroChina due to Human Rights violations in Sudan
PGGM sold its €37m investments in oil company PetroChina because of the firm’s human rights violations in Sudan after extensive efforts to engage the company over its practices failed. Visit www.pggm.nl. The European Parliament’s pension fund followed suit after campaigners and MEPs demanded divestment from PetroChina’s because of its relations with the Sudanese government. Visit www.theindependent.com
Major pension funds turn their backs on cluster bombs investment
The New Zealand Superannuation Fund, the Irish National Pension Reserve Fund (NPRF) and Danika Pension, the pension’ arm of Danske Bank,are divesting from cluster munitions manufacturing companies. This follows either recent public criticism over these holdings or their governments signing in February the draft of an internationally binding treaty banning the use of cluster munitions. The new treaty is expected to be ratified at an international meeting in Dublin in May. Visit www.nzsuperfund.co.nz, www.nprf.ie and www.danicapension.dk.
3. COLLABORATIVE INITIATIVES BY PENSION FUNDS
Investor coalition holds companies accountable for their UN Global Compact commitments
The Environment Agency Pension Fund and USS have joined a largegroup of institutional investors, with more than $2.1 trillion in assets, who wrote to the CEO’s of 103 companies. Collaborating under the United Nations Principles for Responsible Investment (UNPRI), the investors warned some CEO’s that they are falling short on commitments to the UN Global Compact, which aims to advance human rights, labour standards and good environmental practice in company management while praising others for their good performance. Visit www.morleyfm.com.
50 US and European institutional investors announce climate change action plan
The plan, intended to address climate change risks and opportunities, was announced at the Investor Summit on Climate Risk hosted by Ceres and the UN. Nearly 50 investors managing over $1.75 trillion in assets have signed up including pension funds CalPERS and CalSTRS. Visit www.ceres.org.
Investor coalition calls for greater sustainability disclosure in emerging markets
Over 40 global investors representing more than $850bn in assets signed the The Investor Statement on Emerging Markets Sustainability Reporting, a sign-on statement encouraging emerging market companies to improve their sustainability disclosure. Visit www.siran.org.
Carbon Disclosure Project (CDP) makes sixth disclosure request and starts looking at supply chains.
The CDP, a collaboration of over 385 institutional investors with assets of more than $57 trillion, has made its sixth request for investment-related information concerning risks and opportunities due to climate change. In addition, the CDP has begun working with some of the world’s largest companies to assess greenhouse gas (GHG) emissions in their supply chains, including their subsidiaries in China as part of the CDP Supply Chain Leadership Collaboration (SCLC). Visit www.cdproject.net.
Watson Wyatt report urges pension funds to explore sustainability issues
‘Investing for the Future’ suggests that greater consideration of sustainability issues, such as the impact of environmental regulation, could decrease uncertainty over growth and returns. Visit www.watsonwyatt.com.
UKSIF is grateful for financial support from Esmée Fairbairn Foundation for the Sustainable Pensions Project. 
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