Fiduciary duty and long-termism drives SRI among European pension fundsNovember 2011
More than half of European corporate pension funds have an SRI policy, and a further quarter expect to implement one within a year, according to the first comprehensive study of funds in European Union countries.
In the Eurosif study, based on interviews with 169 funds from 12 EU countries, two-thirds of respondents believe that having an SRI policy is a fiduciary duty, while 60% see CSR factors as important for long-term performance.
However, Eurosif could not explain why certain funds lacked SRI policies, saying there is no clear trend, but added that performance and risk concerns, unfamiliarity with SRI and scant resources to create, implement and monitor a policy are all possible factors.
There are also inconsistencies in policies on particular asset classes. Equities and bonds, for instance, are the focus of responsible investment activities, but only 7% of respondents have a commodity markets policy.
Where funds wish to start or develop their SRI policies, Eurosif recommends that these should correspond with the company’s CSR policy, that fund boards and members should be involved, and that other corporate pension fund policies should be consulted as a potential model.
Eurosif says that, where an existing SRI policy is expanded, multiple asset classes should be covered and various instruments used for implementation. Greater transparency and involvement in collaborative programmes – such as the UN Principles on Responsible Investment and the Carbon Disclosure Project – should be priorities, it adds.
Eurosif president Giuseppe van der Helm said: “The results are revealing. For example, of the 169 pension funds that responded to our survey, 66% feel that having an SRI policy is part of their fiduciary duty. However, only 56% have such a policy, and this percentage is probably lower for the total market.
“Eurosif recommends that funds build their knowledge around SRI, consult with participants and stakeholders, and extend their policies to all asset classes. Greater transparency should be given to the execution of this policy.”
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