Many of the UK's largest pension funds are failing to assess environmental, social and governance (ESG) risks and are guilty of ignoring issues such as climate change and human rights policies when making investment decisions.
That is the conclusion of a new report into the UK's 20 biggest pension funds by lobby group FairPensions, which found that despite numerous recent reports claiming strong ESG performance frequently equates with strong financial performance, only half have a clear policy covering ESG issues. Moreover, only a fifth of the top 20 funds disclosed their voting records and only a quarter reported on their ESG strategies.
The report found pension funds' performance on environmental issues varied widely, with the Universities’ Superannuation Scheme and BA's and BT's pension schemes scoring nine out of 10 against FairPensions' criteria, while Barclays Bank plc UK Retirement Fund, BAE Systems Pension Scheme, and National Grid plc Pension Scheme all scored less than one point out of 10.
Alex van der Velden, executive director of FairPensions, said that many of these funds were taking financial risks by not paying more attention to ESG factors. "[We're] concerned that others haven't yet woken up to these issues," he said. "We hope these funds do wake up in time to avoid the next Enron-style shock."
The report comes days after a group of European and Australian pension and investment funds, including many UK public sector pension funds, called on politicians gathered at the UN climate change conference in Bali to deliver progress towards a clear international legislative framework.
In a letter to delegates at the Bali conference, the Institutional Investor Group on Climate Change argued that "credible and effective climate policy" was urgently required to help investors protect and enhance the value of their investments.
Ban Ki-moon argues post-Kyoto agreement needs "input from the business community" 12 Oct 2007
Pension and investment funds insist global climate change framework is " critical" if they are to protect their investments 07 Dec 2007
Influential coalition of investors calls on Congress to force companies to disclose climate change risks in public reports 01 Nov 2007US rejects UN push to include emission reduction goals in Bali agreement 10 Dec 2007
Building giant details plans to develop three more commercially viable zero carbon homes over next three years 16 May 2008
Toyota claims the iconic hybrid vehicle has helped cut global carbon emissions by approximately 4.5m tonnes in the last decade 16 May 2008
More news
After two decades of development countless nanotechnologies are fast approaching commercial viability – and they have the potential to redefine the clean tech sector 16 May 2008
Green business courses are springing up think and fast, but as Vanessa Crossgrove Fry warns it could still be several years before we see Green MBAs take their place in the largest firms 14 May 2008 More in-depth
Post your comment
Send an email to the Business Green editor at feedback@businessgreen.com
