SRI gets a boost from local authority plans
Local authority pension funds have put their backing firmly behind
positive engagement as their preferred form of socially responsible
investment (SRI).
The details of research carried out by voting agency, Manifest,
on behalf of investment manager JP Morgan, will be revealed at the
Chartered Institute of Public Finance & Accountancy conference this
Wednesday.
The study showed that almost three-quarters of local government
scheme respondents (73.3%) believe that SRT is fully compatible with
their fiduciary duties to maximise returns for their members. Positive
engagement was supported by 67.7% of the schemes.
The research also highlighted a communication gap between local
authority schemes and their fund managers who will be responsible for
carrying out the SRI policy. When it came to who pension schemes were
seeking advice from on SRI, fund managers were ranked sixth; lawyers
ranked higher in third place.
Sarah Wilson, managing director of
Manifest, said; "This surprised me I would have thought the
fund managers would have been the first people scheme's turn to for
advice. Fund managers have still got a lot of work to do to fill the
information gap.
In creating the SRI framework for their statements of investment
principles, it seems local authority pension schemes have not been
taken in by the heavy lobbying they have received from campaigning
groups such as Friends of the Earth.
"We shouldn't expect fireworks. The City should take heart from
that," Wilson said.
She is anxious that any SRI policy is more than words on a page and
is acted on and monitored by the schemes. She hoped lessons had been
learnt from the corporate governance experience of the 1990s where it
took the publication of league tables, initially by Manifest,
to expose how few institutional shareholder votes were being cast,
despite everyone claiming to have a policy.
"Schemes want fund managers to take responsibility but few are
auditing. I wonder who is going to be policing it and whether they
will be following it up and quantifying it."
Wilson said the research had produced a ranking of what SRI
issues schemes saw as most important and she said she was surprised by
the results of this.
By Karen Talbot, Pensions Week
12 June, 2000
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