UK – The UK Environment Agency pension fund has appointed State Street Global Advisors to manage an ‘eco-enhanced” index fund.
The fund, due to commence in January 2003, will track the FTSE 350 index quite closely, but will use companies’ environmental performance, management capacity, and strategic positioning as the basis for over and underweighting individual stocks in the index.
No one at the Agency would disclose the size of the mandate.
The fund is based on specialised company and industry research provided by Innovest Strategic Value Advisors. Innovest analyses companies’ environmental and social performance and their impact on competitiveness, profitability, and share price performance. The Dutch civil service pension fund ABP, Europe’s largest pension fund, is also one of Innovest’s clients.
Says the Environment Agency’s chief executive, Barbara Young: “There is a growing and compelling body of evidence that superior environmental management can actually reduce a company’s risk level and improve its financial performance. Given our mandate as the Environment Agency, this new fund represents a very logical way to encourage strong environmental performance from U.K. companies while still minimizing investment risk and pursuing a modest level of out-performance.”
“We sincerely hope that other UK pension funds will follow our lead,” adds Young.