Pension funds still out of touch on SRI issues

A watchdog has warned that UK pension funds’ risk management and accountability performance shows dangerous gaps, and has raised questions about the fund management industry’s ability to meet changing client demands.

Research by the campaign group FairPensions examined the UK’s 30 largest pension funds, which together have five million members and manage assets of £351billion ($526bn).

It found that, even though ‘funds are now acknowledging the potential of non-financial issues to affect the value of investments’, public transparency is disappointing, and that still only a minority of funds ‘now require fund managers to have stronger ESG risk management capabilities’.

An assessment which awarded pension funds scores out of 100 came up with an average of 40. However, some – including BAE Systems, Coal Pension Trustees, IBM, Lloyds TSB and Unilever – disclosed too little information even to be ranked. Catherine Howarth, chief executive of FairPensions, which is funded by NGOs such as Amnesty International, Oxfam and WWF, said: ‘Pension funds are now recognizing that non-financial issues can become financial matters, but many still need to match words with deeds if they are to be ready for major challenges associated with issues like climate change.’

The top five pension funds were: USS, BT, Strathclyde, Merseyside, and British Airways.