Ethical Performance
inside intelligence for responsible business


SRI disclosure law targets Australian pension funds

October 2001

The Australian parliament has paved the way for a UK-style pensions disclosure regulation that will require fund managers to state their policy on socially responsible investment (SRI).

The newly-passed Financial Services Reform Bill will require pension and other investment fund managers to disclose ‘the extent, if any, to which labour standards, environmental, social or ethical considerations are taken into account in the selection, retention or realization of the investment’.

The Australian Securities and Investments Commission will draft regulations based on the law and will oversee implementation. They will be based on similar disclosure legislation in the UK which took effect in July 2000. Research shows the UK regulation has spurred most pension funds to make some kind of concession to SRI.

Janice Carpenter, joint president of the Ethical Investment Association of Australia, said the law had been passed amid growing interest in SRI in the country. Investments screened for environmental and social factors grew in value by more than 80 per cent over the past year, she said. The association estimates that £460million ($676m) of Australian funds are under SRI management, which includes retail and pension funds.

Pension disclosure regulations are also being introduced in other countries. In Germany a disclosure regulation for private pension schemes will come into force on 1 January 2002.

The law bringing in the German regulation, which was passed earlier this year, means every pension fund trustee must report yearly on ‘whether and how ecological, ethical and social needs have been considered in the investment of pension contributions.’

Christoph Bals of the German Foundation for Sustainability said the regulation would be ‘a big step towards more sustainability in investments’.

In France, a ministerial decree is expected this month to clarify details of SRI disclosure legislation passed by parliament last year. The legislation will force fund managers of employee savings plans, which hold more than £37billion in assets, to state their policy on SRI.



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