Corporate pension funds still not doing enough on ESG investment, says UKSIF

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  • Corporate pension funds still not doing enough on ESG investment, says UKSIF

EUROPE - Corporate pension funds have made progress in addressing responsible ownership, but this progress is still insufficient, according to the UK's sustainable investment and finance association UKSIF.

UKSIF's 2011 'Responsible Business: Sustainable Pension' report highlights early signs of a step change in how corporate pension funds are responding to the case for responsible ownership and investment.

It found that:

BT Pension Scheme, Co-operative Group Pension Scheme (PACE) and F&C Asset Management Pension Plan each achieved Platinum ranking, giving three funds this highest ranking, up from only one in the two earlier surveys. One in four participating funds achieved one of the two highest rankings - Platinum and Gold - up from one in eight in 2009 and one in 11 in 2007. Participation in the survey has increased overall to one in five corporate pension funds surveyed, up from one in eight funds for the 2009 and 2007 surveys. Responsible investment (RI) policies are regularly being applied to a broad range of asset classes. Private equity, bonds and property all showed strong growth in the use of RI policies compared with 2009. Nearly one-third of funds use specialist mandates to implement their RI policy. This proportion has doubled since 2009. Funds that start on the RI journey tend to deepen their practices over time. The 2011 report provides increased evidence for this trend, which UKSIF first identified in its 2009 report.

Nevertheless, UKSIF said this progress was still not enough to reflect today's strong corporate awareness of the value of sustainable business approaches and the challenge to investors posed by the Kay Review, the Stewardship Code and other initiatives.

Penny Shepherd, UKSIF's chief executive, said: "Today, the Kay Review, the Stewardship Code and other initiatives are shining a spotlight on the role of investors as stewards of the long-term health of companies.

"But a large number of corporate pension funds are still lagging behind the leading schemes in their approach to responsible ownership and investment.

"This is why we are calling on plan sponsors to assist and encourage their pension funds to deepen their responsible investment focus."
UKSIF will call on leading companies to assist and encourage their corporate pension funds to support the UK Stewardship Code and implement responsible ownership and investment practices at Friday's launch of the 2011 'Responsible Business: Sustainable Pension' report, hosted by the National Association of Pension Funds.

The organisation is also of the opinion that plan sponsors should educate employees, customers and suppliers about the value of responsible investment practices.

This third biennial Corporate Pension Funds Report by UKSIF is based on questionnaire responses from UK corporate pension funds of companies included in the FTSE4Good Series and the Carbon Disclosure Leadership index in January. The survey was previously run in 2009 and 2007.

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