Quarterly focus hinders sustainability – Gore
UK - Former US vice president Al Gore has told pension funds that their expectance of quarterly outperformance from managers and companies hinders sustainability.
Speaking at the UK National Association of Pension Funds (NAPF) investment conference in Edinburgh today, Gore said that companies are not making long-term decisions that could lead them to miss quarterly return expectations.
"If you give financial incentives on a quarterly basis, are you surprised to see that performance is maximised only on a quarterly basis?" Gore asked the delegates at the conference. Similarly pension fund trustees should take a more long-term approach on performance expectations in their relations with managers.
Gore complimented pension fund trustees on the "excellent job" they are doing, but urged them to look at "hidden underlying debts" in companies they are investing in like non-disclosed carbon emission figures, treatment of company employees, and other social responsibility issues.
Pension fund trustees should find a way to include assessment of these metrics, which do not appear on companies' result sheets, when they review sustainable investments.
The NAPF has also launched an online poll on the Myners principles. The association wants to get the industry's views on the current voluntary approach for compliance
The poll will be open until March 30 and interested parties can register on www.napf.co.uk.