New research from the UK Social Investment Forum (UKSIF) highlights “clear and exciting evidence” that a group of Responsible Investment (RI) champions is beginning to emerge among UK corporate pension funds. Three quarters of repeat respondents achieved a higher score this year than in 2007 and, according to the report, the driving force behind the change is coming from trustee leadership.
Michael Deakin, Chair of the UKSIF Sustainable Pensions Advisory Board said: “Given all the challenges faced by pension fund trustees over the last two years, I find the clear signs of progress made on implementing Responsible Investment policies very encouraging. More funds now have a Responsible Investment policy, and more significantly, of those funds that completed both the 2007 and 2009 surveys more than half have achieved a higher ranking this year.”
The survey found that trustees of three quarters of surveyed funds now believe that ESG (environmental, social, governance) factors can have a material impact on the fund’s investments in the long term. Two thirds of trustees thought it was important to align the plan’s RI policy with the fund sponsor’s CSR policies. BT Pension Scheme retained its Platinum ranking in this second bi-annual survey, while The Barclays UK Retirement Fund, BP Pension Fund and HBOS Final Salary Pension Scheme all progressed to a Gold ranking from Silver.
UKSIF, the UK’s sustainable investment and finance association, was sponsored by Hermes Fund Managers and KBC Asset Management to survey the pension funds of UK companies highly regarded for their Corporate Responsibility. Commenting on the findings, Rupert Clarke, Chief Executive Officer of Hermes Fund Managers called for a closer integration between governance and investment: “It is very positive to see such progress and co-operation amongst pension funds, which is the foundation stone for a truly responsible approach to asset management and ownership. We now need a similar commitment from their investment managers, to re-examine investment processes and engage more effectively with companies on their behalf”.
Steve Falci, Vice President – Sustainable Investment, KBC Asset Management Ltd said: “As pension funds navigate their course over the coming years, Sustainable and Responsible Investment practices provide essential elements for delivering the requisite long term returns required to meet pension obligations. Investors are increasingly seeing that consideration of material environmental, social and governance issues will be an important component of future returns.”