MPs Call for Parliament’s Pension to Divest from Fossil Fuels

Fifty members of Parliament from various political parties have expressed their support for an environmental campaign that is seeking to divest Parliament’s £612 million pension fund from fossil fuels.

The campaign, called Divest Parliament, which was initiated by environmental activist group Fossil Free UK, is calling on all election candidates to commit to reducing the UK’s use of fossil fuels.

“We congratulate these 50 MPs for their commendable leadership on climate change,” said Daniel Selwyn, a member of the Divest Parliament campaign. “Any candidate asking for our vote at this election should recognize their responsibility to not only uphold the UK’s international climate commitments, but also to protect people’s jobs, pensions, and livelihoods, as well as the health of our planet for future generations.”

Following pressure from constituents and MPs, Parliament’s pension fund, the Parliamentary Contributory Pension Fund (PCPF), made its top 20 holdings public for the first time in March. The top 20 investments also account for 20% of the total fund. Among the top investments for Parliament’s pension fund that are seen as environmentally unfriendly are oil companies BP and Royal Dutch Shell, tobacco company British American Tobacco, and mining company Rio Tinto.

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“Climate change represents a serious financial risk to pension savers and investors across the UK,” said Conservative MP Laura Sandys in a statement. “Climate change represents a serious financial risk to pension savers and investors across the UK.”

According to Divest Parliament, more than 700 institutions and 58,000 individuals have joined the global campaign for fossil fuel divestment, representing $5.46 trillion in assets.

For its part, the PCPF said in its 2016 annual report that it is developing an engagement policy that will set out the terms of their engagement on environmental, social, and governance (ESG) issues in relation to investments.

“The trustees have agreed to formally incorporate the fund’s position on responsible investment into a separate statement within the fund’s investment principles,” said the report. “The trustees believe that [ESG] issues can have a material impact on the long-term performance of its investments.”

Tags: Fossil Fuels, MP, Parliament, UK

Hedge funds are demanding more service and lower costs, and that is translating into greater turnover among service providers.

That’s the conclusion of a recent survey by Preqin that found that 25% of all hedge fund managers surveyed at year-end 2016 changed at least one service provider over the preceding 12 months.

The main reasons for the changes: cost and quality of service.

Of the hedge funds surveyed, 75% changed one service provider, 18% changed two, while 7% changed three or more service providers during the year. Hedge funds that changed administrators, custodians, auditors, and law firms said they made the change because of costs, and those that changed prime brokers and marketers mostly did so because they did not like the service they received.

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Among the services provided to hedge funds (fund administrators, fund custodians, prime brokers, fund auditors, law firms, and fund marketers), prime brokers were the hardest hit with a 39% turnover. The main reasons cited were quality of service issues, growth in assets under management, and prime brokers asking that the hedge fund find another provider. The most used prime broker was Goldman Sachs.

The second-largest switch in service providers occurred in fund administrators (31%), followed by auditors (28%), fund marketers (22%), and law firms (20%.)

According to Amy Bensted, head of Preqin hedge fund research, “in order to retain hedge fund clients and win new business, service providers need to address concerns over cost and quality of service, particularly as investor scrutiny over fees and performance continues to grow. These firms will need to maintain a careful balance by improving their service offering while still reducing costs.”

Another key reason is that the industry is changing. More new hedge funds are being launched and the regulatory environment has accelerated consolidation among service providers, particularly among hedge fund administrators. For instance, SS&C GlobeOpbought the hedge fund administration businesses from Citigroup and Wells Fargo in 2016. This made SS&C Globe Op the largest provider of hedge fund services, as measured by both total number of funds serviced (1,512) and new business acquired. The other largest fund administrators ranked by Preqin are Citco Fund Services (1,304 funds serviced), State Street (International Fund Services with 1,083 funds), BNY Mellon (553 funds), Morgan Stanley Fund Services (495 funds), and Northern Trust Fund Administration (452 funds.)

Tags: Hedge Funds, managers, Preqin, service provider