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SRI disclosure regulations begin to gather momentum

October 2003

Regulators in Belgium, the UK and Australia are requiring institutional investors to make greater disclosure of information on their socially responsible investment policies.

In Belgium, the government is expected to issue guidelines this month on how pension funds should implement an SRI disclosure regulation that will come into force on 1 January 2004.

The guidelines will detail how funds must comply with an occupational pension law passed in May, which from 2004 requires all pension fund managers to declare each year the degree to which they take ethical, social and/or environmental criteria into account when selecting investments.

According to Mercer Investment Consultants, there are 250 pension funds in Belgium, collectively managing approximately €11billion ($12.9bn, £7.6bn) in assets. On average each fund holds 55 per cent of its assets in equities.

In the UK, the government announced last month that it had accepted the case that charities should now be subject to an SRI disclosure law on their investments in the same way as occupational pension funds.

The Home Office has confirmed it favours the idea, put forward last autumn by a government strategy unit, that charities with a total annual income of more than £1million should declare their SRI stance in annual reports (EP4, issue 6).

The Home Office will now work on a timetable to introduce regulations to that effect.

According to the Charity Commission, there are 3820 charities in the UK with an income of more than £1m per year, and the new regulation could apply to upwards of £20bn worth of funds.

However, the Home Office has made it clear that it will expect smaller charities with significant equity holdings to make voluntary SRI declarations.

The government department said consultation had shown ‘clear majority support’ among charities for the proposal, with 78 per cent in favour and large charities prominent among supporters.

In Australia, the authorities moved a step closer last month to implementing the world’s toughest SRI disclosure requirements when the Australian Securities and Investments Commission issued draft guidelines on the subject. These specify how investment funds must comply with a disclosure law that comes into force for most funds at the beginning of 2004. The guidelines state that if fund managers take social and environmental matters into account when making investment decisions, they must tell consumers which matters they take account of, and how.

In other countries, such as the UK, funds have merely had to state whether they take such an approach and are not required to give any further detail.

Consultation on the Australian draft guidelines ends on 15 October and they should take effect from March 2004.

Total savings and investments made on an SRI basis in The Netherlands rose from €5.4bn to more than €6bn last year, according to the Dutch Association of Investors for Sustainable Development. By comparison, retail SRI funds in the UK were worth £4bn (€5.75bn) at June 2003, EIRIS figures show.




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