Councils look for next step forward on SRI
 

The results of a socially responsible investment (SRI) survey by voting agency Manifest, on behalf of investment manager JP Morgan, were revealed last week at the Chartered Institute of Public Finance & Accountancy conference (CIPFA).
 

The survey approached over 100 local authorities, out of which 31% responded. The survey highlighted that most local authorities already had their SRI policies in place. Rob Hardy, JP Morgan Investment Management (JPMJM) corporate governance analyst, told delegates: 90% of local authorities have corporate governance, 74% have SRI, 97% vote UK proxies and 10% vote overseas proxies.

Hardy questioned whether SRI should be looked at within a global context. He also thought that SRI was here to stay but must evolve to meet the changing needs of society. None of the local authorities thought SRI should remain static," Hardy said. The challenge is to question what is the next step in this evolution," he added.

The survey also highlighted whether SRI is compatible with the fiduciary duty of schemes and achievability an issue.
"Environment was seen as the most important among local authorities, but was not seen as the most achievable."
Sustainability was seen as the most achievable followed by human resources policy on diversity.

Although the survey highlighted many positive aspects of SRI, it pointed out many unanswered questions.
The survey asked who should determine SRI and whether it should be considered in a global context.
What happens when positive engagement fails?" Hardy wondered. And how can changing societal attitudes be accommodated.

"The job of trustees is becoming more and more complex," said John Plender, chairman of Pensions Investment Research Consultants.
"Socially responsible behaviour in global context is a hugely complex matter," he added.

Manifest stated: "Many local government pension schemes are embracing the issues surrounding SRI which has probably been heightened by the imminent requirement for disclosure of SRI considerations."
"While 74% of the funds surveyed currently have an SRI policy, this is expected to rise over the coming months."

The local government survey revealed that 64.5% of schemes developed their corporate governance policy internally. While 96.8% of the schemes vote their UK shares at annual general meetings, only 10% vote their continental European shares, 10% vote their North American shares and 6.7% of other non-domestic shares are voted by the local government schemes.
Of the 74.2% of schemes with SRI policies, 26.1% have a policy of 'no action' or include it as a subset of their corporate governance policy. Only 47.8% have a separate positive SRI policy.

SRI Facts

Source: Manifest
 

Pensions Week

19 June, 2000

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