UK Report Urges Schemes to Invest Responsibly

(June 29, 2010) — A new UKSIF report urges pension schemes to increase their skills in sustainability governance while publicly disclosing how their responsible investment strategies are implemented.

The report from UKSIF, a UK-based sustainable investment and finance association, said that over the next 10 years, it expected responsible ownership and investment to become the norm for major occupational pension schemes. The group said that norm would be reflected by an increase in sustainability governance, with it becoming good practice to have at least one trustee with sustainability expertise, according to a release. Additionally, the group predicted a move toward greater online disclosure of how responsible investment strategies are implemented.

“We are fast approaching a tipping point when responsible investment will become the norm for major investors worldwide,” said UKSIF Chief Executive Penny Shepherd. “However, this will require commitment from governments, asset owners and civil society. It is clear that there is growing awareness and concern about where investment is made and its consequences. You only have to look at the current situation in the Mexican Gulf to see the potential environmental risks and the pressure for change.”

Ten years ago, the UKSIF announced pension disclosure regulation, requiring all pension schemes to reveal social, environmental or ethical considerations in the selection, retention and realization of investments. Since the regulations came into effect on July 3, 2000, UKSIF’s calls for regulatory disclosure have been implemented globally — such legislation was passed in Germany, France, Sweden and Australia in 2001; Norway, Belgium and Italy in 2004; Austria in 2005 and Canada in 2008. A similar law is currently pending in Spain. The introduction of pensions disclosure regulation by the UK association a decade ago sparked a rapid growth in responsible investment activity with more than 400 asset managers and nearly 150 professional service providers that have signed the UN-backed Principles for Responsible Investment (PRI).

For the cover story in ai5000‘s June issue on socially responsible investing, click here.