Environmental and social factors can have a material impact on fund’s returns, finds survey

Most UK pension funds are beginning to see the benefits of responsible investment policies, according to a new survey.

The survey found that trustees of three quarters of surveyed funds now believe that environmental, social and governance factors can have a material impact on the fund’s investments in the long term. Responsible investment funds take into account these factors before investing in stock.

UKSIF, the sustainable investment and finance association, surveyed the pension funds of UK companies.

BT, Barclays, BP, and HBOS all had pension scheme’s that performed well in the survey.

The initiative was sponsored by leading investment managers Hermes Fund Managers and KBC Asset Management.

Michael Deakin, chair of the UKSIF Sustainable Pensions Advisory Board said:

‘Given all the challenges faced by pension fund trustees over the last two years, I find the clear signs of progress made on implementing Responsible Investment policies very encouraging. More funds now have a Responsible Investment policy, and more significantly, of those funds that completed both the 2007 and 2009 surveys more than half have achieved a higher ranking this year.’

Rupert Clarke, chief executive officer of Hermes Fund Managers said: ‘It is very positive to see such progress and co-operation amongst pension funds, which is the foundation stone for a truly responsible approach to asset management and ownership. We now need a similar commitment from their investment managers, to re-examine investment processes and engage more effectively with companies on their behalf.’

Steve Falci, vice president sustainable investment, KBC Asset Management said: ‘As pension funds navigate their course over the coming years, Sustainable and Responsible Investment practices provide essential elements for delivering the requisite long term returns required to meet pension obligations. Investors are increasingly seeing that consideration of material environmental, social and governance issues will be an important component of future returns.’

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