GERMANY/UK -Two separate studies into attitudes towards responsible investing suggests UK pension funds and major German investors are looking at investments wth environmental and social governance (ESG) in mind, though further work is still needed to get all investors onboard as just a handful have fully embraced the concept.
Analysis of the top 30 UK pension funds conducted by Fair Pensions showed only six pension funds have signed up to the UN's Principles for Responsible Investments, while only 14 schemes said they assess a fund's managers responsible investment credentials as part of their manager selection process, and only seven used the UN PRI membership as a significant element of its selection process for suitable managers, or plan to do in the future.
That said, at least 17 schemes require some form of responsible investment engagement with their managers, even if it is perhaps directed more towards assessment of their voting policy, the study found.
And 13 schemes revealed they have RI policy within their investment management agreement, according to the survey based on the proactive responses of 20 schemes along with the data available on websites and other sources for the remaining 10 schemes.
In contrast, the study conducted by Union Investment found 64% of the 256 professional investors polled had committed to sustainable strategies, although at least 37% felt themselves to be poorly or very poorly informed on the subject.
Union commissioned Schleus Marktforschung in Hanover to do the study on the knowledge, preferences and perspectives of people at banks, insurers and major corporations and found just 4% were aware of the UN PRI, in part because investors were not totally sure as to what constitutes a sustainable investment and how it fits into asset management.
Its investigation also found just 48% thought there was an economic element to any ESG decisions, and at least 75% of the remaining group who do not consider sustainable investments thought its contained costs. At least 73% of those dismissing sustainable investments argued they decreased returns.
Interestingly, however, supporters of ESG in investments said economic aspects were a secondary consideration, and only half believe sustainable investing will actually lead to higher returns,
Alexander Schindler, board member responsible for institutional business at Union Investment, said the key link missing may be information as investors appear to want to improve their knowledge and "there is still considerable need for improvement in the quality of consultation".
The need for information is particularly high when it comes to putting sustainable strategies into practice and the costs involved, according to Union, as investors want to know the make-up of individual sustainability funds, which selection criteria are used, and which evaluation methods are applied.
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