UK – Shropshire County Council’s 520 million pound (814 million euro) pension fund has decided to adopt a socially responsible approach, adding a socially responsible investment overlay provided by ISIS Asset Management to its 80 million pound (125 million euro) UK index portfolio, currently managed by State Street Global Advisors.
Essentially the fund will have the normal qualities of a UK equity index tracking portfolio and remain under management by SSgA, but ISIS Asset Management will approach the companies whose stock is being held, and engage in ongoing dialogue to encourage the firms to be more socially responsible.
This service, called REO (Responsible Engagement Overlay) was developed by ISIS AM when it was still Friends Ivory & Sime, three years ago. In September 2001 ISIS AM and SSgA entered into a formal alliance whereby SSgA could participate in the REO service.
Says Derek Woodvine, chair of the pensions committee at Shropshire County Council Pension Fund: “Having taken the decision to become more socially responsible in the management of our pension funds we decided to opt for REO because of the unique approach it employs which separates the investment process from the engagement process.
“This approach will allow us to fulfil our fiduciary duty whilst remaining socially responsible because there is no compromise in terms of investment returns.”
Socially responsible overlays are becoming increasingly popular as an alternative to the traditional screening method. In August this year, Morley Fund Management’s socially responsible investment arm also launched a SRI engagement overlay programme, called Sustainable Futures.