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IPE special report May 2018

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Over half of corporate pension funds have SRI strategy in place, says Eurosif

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  • Over half of corporate pension funds have SRI strategy in place, says Eurosif

EUROPE - Over half corporate pension funds have a socially responsible investment (SRI) policy in place today, according to the 2011 Corporate Pension Funds Study by the European Sustainable Investment Forum (Eurosif).

The study also found that a quarter of those respondents without an SRI policy intend to have one in place on the coming year, while 56% had already put in place their own procedures.

A higher percentage - 60% - feel that environmental, social and governance (ESG) factors affect the long-term performance, while two-thirds believe its integration into investment decisions is part of investors' fiduciary duty. Equities, bonds and real estate are the most popular asset classes when implementing SRI policies.

François Passant, Eurosif's executive director said: "For the first time on this scale, it has been shown that the inclusion of ESG factors in the investment philosophies of European pension funds is, overall, becoming mainstream with such high percentages of European pension funds already having or planning to have an SRI policy in place.

"Certainly, there is still a long way to go, but the study clearly shows that pension funds take their fiduciary duty seriously," he added. "The debate thus moves from whether or not a pension fund should have an SRI policy to how to design the most appropriate SRI policy."

The findings are based on a survey of 169 respondents from 12 European Union (EU) member states, created with the support of DB Advisors and HSBC Global Asset Management. Eurosif's study is the first comprehensive EU-wide examination of to what extent and in what manner corporate pension funds across Europe have adopted sustainable investment practices.

The study further shows that pension fund boards and the corporate social responsibility (CSR) policies of the funding company have the most significant impact on corporate pension funds' SRI policies - 85% of the respondents feel the sponsor's regarding these areas significantly shapes the scheme's SRI policies.

Along with real estate, equities and bonds are the most popular asset classes for the implementation of corporate pension fund SRI policies. Conversely, commodities, are used by only 7% of the survey respondents.

Additionally, Eurosif found that the three instruments most commonly used for SRI policy implementation were voting, negative screening and integration, with country variations.

Voting is widespread among Spanish, Dutch, and British, funds, while negative screening is frequently used in Austria, Spain, and Sweden, with the AP funds ethical council an example of such practices. Engagement is most common in Austria, the UK, and the Netherlands.

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