UK – The UK Social Investment Forum, the UK’s membership network for socially responsible investment, has launched a two-year project to encourage schemes to consider environmental and social issues in their investments.
The initiative, which was designed over the past year, will focus on companies that are already “leading the way” on corporate social responsibility – a “name and fame” project rather than naming and shaming schemes which don’t adhere to SRI principles.
“We plan to highlight schemes with particularly good practice so that others can learn from them,” said a spokesperson from UKSIF.
“In addition, schemes will be given confidential feedback. We believe that this approach will provide the most effective support and encouragement at this stage.”
The initiative will also target local government pension funds, and encourage them to support government’s commitment to SRI.
According to UKSIF, there is increasing concern and interest about financial security in retirement on the one hand and sustainable development and climate change on the other.
“We expect to see a convergence of these two concerns. It is increasingly obvious that financial security in retirement requires a greater focus on sustainable investment,” said an UKSIF spokesperson.
She added: “For public sector pension funds, the importance of sustainable public procurement is rising up the agenda including today’s publication of “Procuring the Future”, the recommendations of the UK government’s sustainable procurement taskforce. Selecting asset managers is one aspect of procurement, which is likely to increase in importance over time.”
According to Treasury chief secretary and former pensions reform minister Stephen Timms, SRI is an “important component of investment strategies”.
UKSIF is due to contact the pension schemes of roughly 300 UK listed companies in the autumn, including those in the Carbon Disclosure Project’s Climate Leadership Index, and ask them how they incorporate environmental and social principles.
The results will be published in February/March 2007 and UKSIF will also highlight examples of public sector leadership later this year, said the spokesperson.
“We want schemes to press their investment consultants to advise them on which issues are most significant to protect and enhance investment returns and to recommend the most appropriate fund managers to address these issues,” said UKSIF.
“We anticipate that climate change and the transition to a low carbon economy will have a high priority for many trustees.”
Michael Deakin, former Insight Investment chief investment officer and board member of the London Pension Fund Authority and Pension Protection Fund, will chair the project’s advisory committee.
Other industry heavyweights on the committee include FTSE Group responsible investment chief Will Oulton, Mercer senior analyst Emma Hunt and Watson Wyatt sustainable investment and corporate governance head Tim Currell.
According to Deakin, “The time is ripe for this important leadership initiative. Extra-financial issues are increasingly recognised as a fiduciary concern.”
Oulton added that the FTSE Group, being a signatory of the UN Principles for Responsible Investment, supports the UKSIF initiative. “Responsible Investment is now a mainstream investment issue for pension funds,” he said.
According to UKSIF, “We hope this programme will have a significant impact over its two year life. Towards the end of this period, we will consider what further support is needed and how that might best be provided.”
The project was funded by independent UK grant making foundation, the Esmée Fairbairn Foundation. UKSIF members and others are providing additional in kind support, said the spokesperson.