Pension funds leading responsible investment

Geneva, Switzerland – Pension funds are among the leaders in incorporation of environmental, social and governance factors in investment decisions, says a new report from the UN Environment Programme Finance Initiative (UNEP FI) and the UK Social Investment Forum.

Responsible Investment in Focus: How leading public pension funds are meeting the challenge (PDF) looks at the responsible investment strategies of 15 leading pension funds. The authors claim it is the first “in-depth practical report describing how leading pension funds from across the globe are meeting the challenges of responsible investing”.

The organizations prepared the report in response to what they perceived as a significant increase in the number of institutional investors and pension funds taking an interest in responsible investment, and environmental, social and governance (ESG) issues in particular, following the summer 2006 release of the United Nations Principles for Responsible Investment (UNPRI).

The UNPRI are six broad Principles accompanied by thirty-five specific action suggestions that investors can undertake to enhance the integration of ESG factors into the global financial marketplace.

According to the UNEPFI, a wide range of issues that five years ago were considered “non-financial” such as climate change, human rights and board remuneration are now coming to the fore as factors that can have a significant impact on investment value.

With increased interest, there also appeared to be a need on the part of the trustees, consultants, and managers of these institutions to understand better the why and how of integrating such considerations into the investment process, says the report.

The results are examples of practical, concrete strategies being employed by some of the world’s leading public pension funds, with assets ranging from $33 million to $460 billion. Strategies for portfolio management, stakeholder engagement, and proxy voting are covered.

“The 15 case studies offer a snapshot of the current state of play among leading public pension funds, highlighting a range of some of the most advanced and creative approaches to responsible investment,” the co-chairs of the project write. “We offer this document as a practical guide to the institutional investment community, particularly trustees of pension funds, foundations and life insurers, and their agents,” they said.

The 15 pension funds featured are: ABP; AP2; ARIA; Caisse de dépôt et placement du Québec; CalPERS; CIA; Environment Agency Pension Fund; ERAFP; Fonds de Réserve pour les Retraites; Government Pension Fund Global (Norway); Government Pension Fund (Thailand); Metallrente; PGGM; PREVI; and TIAA-CREF.

For More Information: United Nations Environment Programme

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